The Indonesian life insurance industry is forecast to grow at a compound annual growth rate (CAGR) of 3.8% over 2024–28, from IDR161.3 trillion ($10.5 billion) in 2024 to IDR187.2 trillion ($12.1 billion) in 2028, in terms of gross written premiums (GWP), according to GlobalData, a leading data and analytics company.

GlobalData’s Insurance Database reveals that the decline in the Indonesian life insurance industry’s growth that began in 2022 is expected to continue in 2023 and 2024. The decline will be driven by a drop in the sales of endowment insurance policies, which are anticipated to account for nearly 70% of life insurance premiums in 2024.

Manogna Vangari, Insurance Analyst at GlobalData, comments: “The Indonesian life insurance industry is expected to decline by 2.0% in 2024, after witnessing a 5.4% decline in 2023. The decline can be attributed to a decrease in the sales of investment-linked insurance products due to heightened volatility in global financial markets, as well as a decline in new premiums due to changing consumer preferences.

“However, the industry is set to make a turnaround in 2025, driven by an increase in the demand for traditional life insurance policies and changes in the country’s demographic factors.”

Endowment insurance is the largest life insurance product in the Indonesian life insurance industry, accounting for an estimated 69.3% share of the GWP in 2024. It is expected to decline by 7.0% in 2024 after declining by 10.9% in 2023 due to high market volatility that has resulted in lower returns over a prolonged period. As a result, consumer purchasing behavior has been inclined towards buying traditional long-term and protection insurance plans.

Manogna adds: “Positive regulatory developments are expected to support endowment insurance growth. In January 2024, the Financial Services Authority of Indonesia (OJK) issued a regulation that provides guidelines on the supervision of the marketing of investment-linked insurance products. These include consumer data protection principles, rights and obligations of potential consumers, the inclusion of fees and commissions/rewards to marketing agents/intermediaries, and handling complaints and dispute resolution.”

The guidelines are expected to strengthen consumer confidence and support the growth of endowment insurance over the long run. Endowment insurance is expected to grow at a CAGR of 1% over 2024–28.

Personal Accident and Health (PA&H) insurance is the second-largest product, accounting for an estimated share of 13.8% of the GWP in 2024. PA&H insurance is expected to grow by 13.1% in 2024, supported by increasing health awareness.

Vangari continues: “The cost of health and medical services in the country increased in 2023, driven by high medical inflation and a substantial increase in health-related risks. The trend is expected to continue in 2024, which will support PA&H insurance growth.”

Demographic changes such as an aging society and a high life expectancy will also support PA&H insurance growth. According to GlobalData’s Macroeconomic Database, the population aged 65 years and above is expected to reach 8.2% in 2025 from 7.4% in 2022. Moreover, according to the Department of Economic and Social Affairs of the United Nations, life expectancy in Indonesia is expected to reach 73.2 years in 2028 from 72.5 years in 2024. PA&H insurance is expected to grow at a CAGR of 10.8% during 2024–28.

Term life insurance is the third-largest product, accounting for an estimated 12.9% share of Indonesia’s life insurance GWP in 2024. It is expected to grow by 9.8% in 2024, due to the aging population, and a rise in consumer disposable income.

New product developments by insurers like affordable term insurance plans will also support term life insurance growth. These plans provide protection benefits in the case of death for premiums starting IDR40,000 ($2.7) per month. Term insurance is expected to grow at a CAGR of 7.9% during 2024–28.

General annuity, whole life, and pension products are expected to collectively account for the remaining 4.0% share of GWP in 2024.

Vangari concludes: “Growing awareness of financial protection, rising disposable income, changing demographic factors, and favorable regulatory and product developments are expected to support growth in the Indonesian life insurance industry over the next five years.”