How digitalization and technology contribute to increasing insurance penetration rate in Indonesia

Written by Student Reporter (Rafif Adit Saksono, Management 2021)

  • According to Organisation for Economic Co-operation and Development (OECD), Indonesia has a low insurance penetration rate of 1.8 and Hong Kong, China 18.2

  • of the national GDP in 2016 and predicted to gain 125 million internet users by 2025. Indonesia also has 112% mobile penetration with a total of 266 million mobile subscribers and is the world’s 4th largest mobile market.

    With this opportunity, for the insurance industry, the use of technology is in form of information sharing, product information and assistance, online registration, and also online claim. Knowing the convenience of using an insurance product could attract more and more customers to use insurance services and increase Indonesia’s insurance penetration rate.

    Knowing Indonesia has an opportunity, the next question is why Indonesia still has a low insurance penetration rate? According to, the first challenge is about geographical location. Indonesia has more than 17,000 islands and makes there’s a lot of people that far away from each other and this is related to the insurance distribution channel. The second one is education, some people may consider and be concerned about the safety and protection insurance offers, and some may not. Education has an important role to reach a wider target. The third one is regulation, in Indonesia, the insurance industry is highly bond and regulated by the government, insurtech regulation is not proper yet and completes compared to fintech.

    There’s always room for improvement, especially in using technology and digitalization to boost Indonesia’s insurance penetration rate. Collaboration from every stakeholder is needed to pursue this goal. Moreover, the people or potential customers themselves must realize and aware of the advantages and the importance of having insurance as a way to mitigate risk and protect our lives for a better future.