JAKARTA: Companies across the country cut insurance spending up to 30% this year as economic headwinds prompt businesses to contain costs, according to a general insurers association.
Both state-owned and private firms were cutting costs, with insurance services among the first to go, said Budi Herawan, chairman of the Indonesian General Insurance Association (AAUI).
Budi added that the trend clouded the outlook for the non-life insurance sector in the third quarter.
“It depends on each company, but revenues have taken a hit across the board.
“Industries are contracting, export demand is falling, imports are down and raw materials are getting more expensive. It’s tough,” Budi said on Monday, as quoted by Bisnis.com.
Most firms were cutting costs in similar ways, often by scaling back on property, motor and health insurance, he explained.
Budi pointed out that broader economic uncertainty was also weighing on investment and household spending power, while the impact of recent government policies on the real sector and financial services had yet to be felt.
“Even if we only match last year’s growth, that would already be a good outcome.
“We should not expect growth to be stronger than last year,” Budi said.
Weak car sales have also dragged down motor insurance premiums, while marine cargo insurance has declined in line with shrinking trade volumes.
Construction and engineering insurance also remained sluggish as new projects had yet to materialise, Budi added.
He also noted that import tariffs imposed by the United States on shipments from trading partners weighed on Indonesia’s trade flows, which in turn compounded pressure on the general insurance industry.
The domestic general insurance industry booked 58.5 trillion rupiah in premiums in the first half of 2025 (1H25), up 5.8% year-on-year (y-o-y) from 55.2 trillion rupiah a year earlier, according to AAUI data.
The industry posted a net profit of 7.9 trillion rupiah in 1H25, swinging from a 4.2 trillion-rupiah loss recorded in the same period last year.
The increase in premiums was mostly driven by property, health and engineering insurance.
Property insurance premiums contributed the biggest gain, up 8.1% y-o-y to 17.3 trillion rupiah.
Health insurance premiums jumped 28% y-o-y to 6.08 trillion rupiah in 1H25 from 4.75 trillion rupiah a year earlier.
Credit insurance premiums rose 5% to 8.5 trillion rupiah from 8.1 trillion rupiah.
By contrast, motor vehicle insurance recorded a 6.2% drop in premiums to 9.4 trillion rupiah from 10 trillion rupiah in 1H24.
Declines were also seen in aviation, where premiums fell to 679 billion rupiah, surety insurance, down 11% to 798 billion rupiah, and personal accident insurance, which dropped 8.7% to 1.3 trillion rupiah. — The Jakarta Post/ANN
