Inclusive Insurance in Indonesia

A Significant Opportunity: Increasing the Scale of Inclusive Insurance Sustainably

With the fourth-largest population in the world and the largest economy in South-east Asia, Indonesia represents a significant opportunity for the insurance sector, and one that is still largely untapped. The support of national government and commitment of international donors to building resilience and consolidating the developmental gains of the last 20 years, as well as initiatives already underway, make a compelling case for increasing the scale of inclusive insurance sustainably.

• 44 million households in Indonesia fall into the emerging consumer category, thanks to consistent progress in lifting households out of poverty over two decades
• Setbacks due to the impact of COVID-19 should be mitigated, partly, through the Government of Indonesia’s recovery plan, complemented by the fourth phase of the National Long-Term Development Plan 2005-2025 (RPJPN)
• Insurers are working in public-private partnerships to scale up resilience to natural disasters - such as volcanic eruptions and tsunamis - and climate change, notably through index-based solutions
• Rapid urbanisation continues but infrastructure development has not kept pace, suggesting an opportunity to marry private pension provision for the ageing population (40% of which is employed in the formal sector) with investments yielding long-term returns
• Efforts to formalise credit unions and expand properly regulated insurance to their clients and those of more than 200 licenced microfinance institutions (MFIs) are underway, supported by an emerging FinTech sector that is driving digital financial services in alignment with national policy