Post-pandemic insurance market to recover quickly, AAUI forecasts

Post-pandemic insurance market to recover quickly, AAUI forecasts

Documentation: The national insurance industry's assets swelled to Rp949.44 trillion until the end of July 2021, an increase of 8.11 percent compared to the year-ago period, the Financial Services Authority (OJK) has said. (ANTARA PHOTOS/Akbar Nugroho Gumay/foc)

Jakarta (ANTARA) - The total global insurance premiums in 2021 are expected to be 10 percent higher than in the period before the 2019 crisis, the Indonesian General Insurance Association (AAUI) has said.

"The post-pandemic insurance market will recover faster because unlike the 2008-2009 global financial crisis, global growth is estimated to be 10 percent higher," AAUI executive director Dody Dalimunthe said during an online discussion on Wednesday.

However, AAUI has not predicted premium growth for Indonesia because the market is still too volatile, he said.

"The minimum (total insurance premium) for Indonesia is the same as 2019. If the global estimate is 10 percent, this is an optimism for us in Indonesia," Dody remarked.

The positive outlook for the global industry, including in Indonesia, is also supported by the post-pandemic economic recovery that has triggered high global growth, he said.

"Many observers predict that the global economy will grow 5.8 percent in 2021. The real gross domestic product of developing countries is estimated to grow 6.6 percent in 2021," he noted.

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Likewise, global insurance demand is predicted to reach above 3.3 percent in 2021 and 3.9 percent in 2022.

The biggest growth will be seen in the commercial line of general insurance and increased risk awareness will drive demand for risk protection, Doddy said.

Another factor that will drive the growth of the industrial industry is the increase in insurance rates, especially in general insurance, which will encourage growth in the product line of commercial general insurance, he said.

Liability insurance and financial insurance will be insurance products demanded by corporations in addition to other traditional insurance products, he projected.

The consolidation and growth of the role of insurance in emerging markets will increase, especially in the Asian region, which will become increasingly dominant, he said.

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"It is estimated that emerging markets will outpace developed markets. Asia will outperform other regions because the source of global insurance growth will shift with economic strength from west to east," he said.

Meanwhile, Deputy Director of Insurance Supervision 2 at the Financial Services Authority (OJK) Kristianto Andi Handoko said that the insurance industry had grown compared to before the COVID-19 pandemic as of July 2021. This is in line with the increase in premiums recorded by the insurance industry, he added.

He said insurance premiums in the general industry in July 2021 amounted to Rp3.37 trillion, an increase of 1.20 percent compared to July 2020 when they stood at Rp3.37 trillion. Health insurance premiums in the life industry increased 4.73 percent from Rp8.45 trillion in July 2020 to Rp8.85 trillion in July 2021, he added.

"This shows that the COVID-19 pandemic is increasing awareness among the public to protect themselves with health insurance," he remarked.

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