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Current Account Balance of Insurance Sector Still in Deficit Trend

December 03, 2021

The insurance industry's current account balance in the 2016 to 2020 period was still in a deficit trend.

Citing the Indonesian Insurance Statistics 2020 data published by the Financial Services Authority (OJK), in 2016 the insurance industry's current account deficit reached Rp7.03 trillion, then improved in 2017 to a deficit of Rp6.72 trillion. Then in 2018 it worsened again to a deficit of IDR 7.48 trillion, continuing in 2019 to a deficit of IDR 9.28 trillion. Meanwhile, in 2020, the current account deficit recorded is Rp. 9.10 trillion.

Reinsurance premiums placed overseas in 2020 amounted to Rp17.83 trillion. This number has decreased by 2.55% compared to 2019.

Commission receipts from the placement of reinsurance abroad amounted to Rp. 1.75 trillion and the recovery of claims received was Rp. 4.59 trillion. Thus, reinsurance transactions abroad experienced a deficit of Rp11.49 trillion.

Meanwhile, reinsurance transactions obtained from abroad in the same year experienced a surplus of Rp2.39 trillion. Thus, the total net insurance industry international reinsurance transactions still experienced a deficit of Rp9.10 trillion.

The balance of payments of the insurance industry from 2016 to 2020 experienced a deficit. In 2020, the deficit ratio of reinsurance to and from overseas to gross premiums was 10.06%, smaller than the deficit ratio in 2019 of 10.58%.

The ratio of claims for reinsurance business received from abroad in 2020 was 17.4%, lower than the ratio of claims for business reinsured abroad which was 25.7%.


Insurance Assets

The total assets of the Indonesian insurance industry in 2020 reached Rp1,450.32 trillion. This amount has increased by 6.87% compared to the total assets of the previous year. From 2016 to 2020, the insurance industry's assets increased on average by 7.66% per year (using the Compounded Annual Growth Rate/CAGR method).

Total assets of life insurance companies increased by 0.09%, from Rp574.59 trillion in 2019 to Rp575.09 trillion in 2020. Meanwhile, total assets of general insurance companies increased by 5.47%, from Rp164.64 trillion in 2019 to Rp173.65 trillion in 2020. Meanwhile, the total assets of reinsurance companies increased by 8.39%, from Rp27.26 trillion in 2019 to Rp29.55 trillion in 2020.

Total assets of social security administering bodies increased by 16.78%, from Rp459.08 trillion in 2019 to Rp536.10 trillion in 2020.

Total assets of companies providing ASN, TNI/POLRI Insurance, General Passenger Accidents and Road Traffic Insurance increased by 3.32% from Rp131.56 trillion in 2019 to Rp135.93 trillion in 2020.