Big Insurance Prospects in Indonesia, Low Literacy!


Big Insurance Prospects in Indonesia, Low Literacy! | Based on the OJK 2019 survey, the literacy rate of the Indonesian population regarding life insurance is 19.4 percent and inclusion is 13.15 percent. Based on Data from the World Bank 2020, insurance penetration in Indonesia was at the level of 2.92 percent in 2020. This value is lower when compared to other developing countries such as Malaysia, Thailand, and the Philippines. Still, the small number of Indonesians who have insurance shows there is still a large growth room in the insurance sector. Based on Globaldata’s analysis, the insurance market value in Indonesia could reach $6.3 bn (Rp96.6 trillion) by 2025. This market value is higher than Vietnam which is $ 3.5 bn. There are at least four causes of insurance not yet in demand in Indonesia (Katadata & Zurich, 2017):


Per capita income is still small.


Based on data from Worldbank processed by Katadata, Indonesia’s per capita income in 2020 amounted to US$ 3,869.59. This value is number 5 in ASEAN, where Singapore is at the top with a value of $ 59,797.75, Brunei Darussalam (27,466.34), Malaysia (10,401.79), and Thailand ($ 7,189.04).


Indonesia’s income is $3,869.59 or Rp56.9 million which means the average income of the Indonesian population is Rp56.9 million per year or Rp4.7 million per month. This number is too small considering the large needs of individual life in Indonesia. For example, in Jakarta with a fairly high per capita income in Indonesia, individual expenditures per month can reach Rp4.86 million per month. This expenditure is smaller when compared to the average per capita income in Indonesia. Given the small per capita income, it is natural for Indonesians to still be reluctant to buy life insurance and spend money to pay premiums.

Education and socialization are still low

Education on finance, financial products, investment, and insurance is never taught from an early age. Education about finances becomes a family responsibility and is never taught in schools. From my point of view, education on how to manage the most basic money taught in every family is to save and not overspend. Of the many financial products taught in the family, insurance is on the last list to be taught because of its uncertain nature.

Socialization related to insurance is also very minimal. When compared to investments in stocks and government bonds, there is no special agent from the government that introduces insurance. For example, the Indonesia Stock Exchange and various securities collaborated with various universities in Indonesia to form a capital market study group (KSPM) tasked with introducing and teaching investments to students and the community around the university. The lack of intensive socialization related to shape, function, and insurance benefits is a factor in people not glancing at insurance.

Not yet considered a basic necessity

Basic needs in Indonesia include clothing, food, and boards. Internet quota is one of the basic needs. Uncertain insurance makes people not glance at insurance products both life insurance, and health. In simple terms, BPJS Kesehatan, which is a program from the government only, is not very desirable and people are reluctant to pay every month. Except for those who are sick.

The level of education of most people is still low.

The level of education affects a person’s literacy level. People who generally have a higher-end education, have a better mindset towards their health protection and assets. They know well the functions and benefits of insurance clearly although there are doubts that a bad event could occur.

These four reasons are the main reason the average Indonesian people do not have insurance. But there is one reason that the author thinks about, and add is: There is no condition that requires a person to buy insurance. For example, in 2021, many people buy stocks because they can be additional income. Insurance is not the case, but some factors can be someone having to buy insurance. One of them is the increasingly expensive health costs. Quoting from some countries, the cost of calling an ambulance alone can cost tens of millions. Imagine this cost applies in Indonesia, and everyone who wants to give birth will spend a lot of money just for the labor process. It’s cruel, isn’t it? Apart from that, there is nothing wrong you buy insurance as protection for your child’s education, life, and health.

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