This operational analysis of non-life insurance in the first semester of 2018 is based on unaudited financial report of 74 non-life insurance companies and five reinsurance companies, of their non-life book from January 2018 to June 2018.
ECONOMIC SITUATION
Economic growth in the first semester of 2018 was recorded at 5.27%, which is a positive trend compared to the same period in 2017 (5.06%).
Source: SEKI Bank Indonesia -- Central Bank of Indonesia
As shown in the above graph, the development of Financial and Insurance Service (Jasa Keuangan dan Asuransi) is at 3% year on year for Q2 2018 and 3.68% year to date for Q2 2018.
GROSS WRITTEN PREMIUM (DIRECT AND INDIRECT)
Gross written premium (GWP) for non-life insurance for semester one 2018 is recorded at IDR33.1trn, which compared to semester one 2017 (IDR29.8trn) shows an increase of 11.0%. Almost all business lines recorded positive growth in semester one 2018, except for hull and machinery, energy and engineering insurance, which recorded negative growth in this semester compared to the same period of the previous year.
GROSS CLAIMS
Gross claims in semester one 2018 were recorded at IDR12.9trn, compared to semester one 2017 (IDR12.5trn), showing growth of 3.3%.
There was a decrease in claims in the property, cargo, hull and machinery, aviation and satellite, energy and liability business lines. However, credit insurance, guarantee, personal accident, miscellaneous and motor vehicles recorded an increase in claims compared to the first semester of 2017.
The claims ratio of semester one 2018 was 38.8%, down from 41.8% last year.
LOSS RATIO
The loss ratio for semester one 2018 is recorded at 38.9%, down from last year's 41.8%.
Almost all lines of business recorded a decrease in loss ratio except for engineering business
lines, credit insurance and guarantee, with the highest increase occurring in credit insurance (35.9%), compared to last year's semester one.
MARKET SHARE OF NON-LIFE INSURANCE
The biggest market share is, as always, dominated by motor vehicles and property lines with a proportion of 53%, a fall of 3% compared to semester one of last year.
Third is credit insurance with a proportion of 9% better than health insurance.
CLAIMS
In line with the premium market share, claims contribution is also dominated by the motor vehicle and property lines, with a proportion of 50.4% -- down by 1.5% compared to the first semester of last year. The third and fourth positions are credit insurance and health insurance with a proportion of 27.4%, up by 9.4% compared to last year.
REINSURANCE
Reinsurance gross premiums in non-life for semester one 2018 are recorded at IDR7.5trn and grew by 31.2% compared to the same period last year (IDR5.7trn).
Speaking of gross claims, at semester one 2018, it was recorded at IDR2.1trn and grew by 22.5% compared to the same period last year (IDR1.7trn).
SUMMARY
- GWP in non-life insurance in the first semester of 2018 shows a positive growth of 11.0%. Almost all lines recorded positive growth in semester one 2018, except for hull and machinery, energy and engineering lines, which recorded negative growth in this semester compared to the same period of the previous year. Meanwhile, claims have increased but are slower than premium growth.
- The largest gross premium growth in nominal occurred in the motor vehicle line, but the largest growth was recorded by health insurance, although it was seen from the nominal side that it was still far below the motor vehicle line.
- The growth of motor vehicle insurance premiums illustrates the high demand for new vehicles and insurance protection for post-financing vehicles.
- The market share of non-life insurance premiums is still dominated by the two largest business lines, namely property and motor vehicle insurance with a total contribution of 53.6%.
- Gross claim of general insurance in semester one 2018 again recorded an increase of 3.3% compared to the previous year.
- The claims ratio paid to premiums during semester one 2018 reduced by 38.9% compared to the previous year.
- Indonesian reinsurance companies experienced positive growth in the first semester of 2018 at 31.2%, while reinsurance claims in the first semester of 2018 increased by 22.5%.
Russel Effandy is head of expansion at NASCO Insurance Group in South East Asia and goodwill ambassadors for the CII in Indonesia
GLOSSARY OF TERMS
1. Harta Benda is property
2. Kendaraan Bermotor is motor vehicle
3. Pengangkutan is cargo
4. Rangka Kapal is hull and machinery
5. Penerbangan dan Satelit is aviation and satellite
6. Energi is energy
7. Rekayasa is engineering
8. Tanggung Gugat is liability
9. Kecelakaan Diri is personal accident
10. Kesehatan is health
11. Asuransi Kredit is credit insurance
12. Penjaminan is guarantee
13. Aneka is miscellaneous