The Financial Services Authority (OJK) of Indonesia is actively working to develop and strengthen the health insurance sector. This effort is part of a broader strategy to increase insurance penetration and density across the country.
Review of Health Insurance Products Underway
OJK is currently reviewing health insurance products as part of this initiative, according to Ogi Pratomiyono, the OJK’s chief executive for insurance, guarantee, and pension fund supervision. Speaking at the 2024 Indonesia Insurance Summit last week, Pratomiyono emphasized the importance of these reviews in driving industry growth.
Growth in Health Insurance Premiums
The health insurance sector has shown significant growth in recent months. From January to June 2024, premiums in the general insurance sector reached IDR 4.81 trillion (approximately $312 million). This marks a 16.88% increase compared to the same period in the previous year.
Rising Health Insurance Claims
The OJK’s focus on health insurance comes in response to a sharp rise in claims. Data from the Indonesian Life Insurance Association shows that health insurance claims have surged by 25-30% since mid-2022. This increase has outpaced the country’s medical inflation rate, which was 13% in 2023. Claims rose from IDR 3.32 trillion in the first quarter of 2022 to IDR 4.6 trillion in the first quarter of 2023, and further to IDR 5.9 trillion in the first quarter of 2024.
Call for Industry Reforms
Mr. Ogi has called on all stakeholders in the insurance industry to commit to comprehensive reforms. “Since the financial crisis in Indonesia in 1998, the insurance industry sector has not carried out many reforms,” he stated, highlighting the need for modernization and adaptation within the sector.
Roadmap for Industry Development
In November 2023, OJK introduced its “Roadmap for the Development and Strengthening of Indonesian Insurance 2023-2027.” This roadmap is designed to guide the industry through necessary reforms and to serve as a reference for the continued development and strengthening of Indonesia’s insurance sector.
The ongoing efforts by the OJK reflect the regulator’s commitment to ensuring a more robust and resilient health insurance landscape in Indonesia, addressing both the challenges and opportunities that lie ahead.
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