The average health claims loss ratio in Indonesia reached 105.7% in the first quarter of 2024 and is expected to increase even more in 2025, says WTW, a leading global advisory, broking and solutions company.
WTW, in its Global Medical Trends Survey report, says that this is partly influenced by global medical inflation, primarily driven by the rising costs of raw materials for pharmaceuticals and medical equipment.
Additionally, the weakening local currency affects pricing, as most pharmaceutical raw materials and medical equipment are imported.
To maintain financial stability, the insurance industry has been adjusting premium rates and regularly reviewing health products. Insurers are shifting focus away from large employers and are more interested in small and midsize enterprises for their clientele base, as the market has been reluctant to underwrite medical risks for corporations with large populations and comprehensive benefits.
While insurers are trying to manage rising medical costs, they face challenges from hospitals and providers who continue to recommend excessive and unnecessary services using new medical technologies.
As a result, more insurers are imposing reimbursement payment methods instead of cashless systems, as reimbursement costs for regular patients are 15% to 35% lower than for those using cashless payments for similar diagnoses, treatments and drugs.
Indonesia - Medical cost trend with growth rates in %
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Gross increase
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Net of general inflation
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Inflation rate (IMF World Economic Outlook)
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|
2023
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2024
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2025 #
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2023
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2024
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2025 #
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2023
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2024
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2025 #
|
|
12.4
|
15.6
|
19.4
|
8.7
|
13.0
|
16.8
|
3.7
|
2.6
|
2.6
|
|
# projected
Trend provided by both insurers and WTW brokers
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|
Source: WTW Global Medical Trends Survey 2025 — Survey report
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