The Indonesian Express
The Indonesian Life Insurance Association (AAJI) has identified four challenges currently facing the insurance industry, which are expected to persist until 2025. These challenges include the rise in medical claims due to medical inflation, changes in regulations concerning the principle of utmost good faith, a decline in public purchasing power, and a low penetration rate of insurance. These factors could significantly hinder the growth of the industry. AAJI's Executive Director, Togar Pasaribu, noted that the increase in medical claims compels insurance companies to adjust their premiums to offset the heightened risk of claims. "This measure is essential for companies to maintain operational sustainability while providing optimal services to policyholders," Togar stated to Bisnis on Sunday, November 24, 2024. He expressed hope that these adjustments would help balance the protection offered with the companies' ability to continuously meet the needs of policyholders. Throughout 2024, the life insurance sector in Indonesia is expected to face considerable challenges, particularly from rising medical claims driven by global medical inflation. According to projections from Mercer Marsh Benefits (MMB), medical inflation in Indonesia is anticipated to reach 14.6% in 2024. This inflation is influenced by various factors, including general inflation, advancements in medical technology, increased demand for healthcare services, and reliance on imported medical equipment and pharmaceutical raw materials. Since the onset of the Covid-19 pandemic, medical inflation in Indonesia has already reached 13.6% and is predicted to continue rising into double digits by 2024. Another challenge is the constitutional review process in the Constitutional Court regarding the fundamental principle of utmost good faith as stipulated in Article 251 of the Commercial Code.