The Indonesian insurance industry will face great opportunities as well as significant challenges in 2025, a senior official of the Financial Services Authority (OJK) has said.
The director of General Insurance and Reinsurance Supervision at OJK, Mr Munawar said that one concern is the level of insurance penetration in the country which is still low compared to developed countries, according to the news site, Kontan.
Although the low penetration is a challenge, it also opens up great growth opportunities for the insurance industry," said Mr Munawar at a recent event on the outlook for the insurance sector in 2025. He said that the public's need for financial protection products continues to increase, supported by stable economic growth.
"Moreover, there are still many people who are not protected by insurance, so the room for growth in this industry is still quite large," he added.
Awareness
A second concern is the need to increase insurance literacy in the community. Mr Munawar pointed out that collaboration between government, industry, and the media is very necessary to increase public awareness of the importance of insurance.
Optimism that the insurance industry will continue to grow is driven by the government which is targeting economic growth to reach up to 8% in 2025. This will have a positive impact on the insurance industry.
Mr Munawar also said that the growth of the insurance industry in Indonesia next year is also backed by a number of strategic programmes, one of which is the construction of 3m houses per year. This project is expected to increase demand for property insurance.
Furthermore, given the government's programme to increase economic activity, demand for credit insurance is also predicted to grow.
Challenges
However, Mr Munawar also said that the insurance industry must still be prepared to face challenges from global uncertainty, including economic and geopolitical fluctuations. Not only that, the implementation of new regulations, in December, will affect the operations of insurance companies.
Insurance companies must increase their technological capacity and governance to meet standards.
In addition, Mr Munawar emphasised the importance of ethical standards in the insurance industry. He reminded industry associations to be more active in ensuring that members comply with ethical standards, including imposing strict sanctions for violations.