Insurance Banana Skins 2019 : Indonesia Report

Insurance Banana Skins is a piece of research conducted by the Centre for the Study of Financial Innovation (CSFI), an independent think tank, in association with PwC. It's a survey of insurers and seeks out their views on current risk and future trends. Together with the Centre for the Study of Financial Innovation (CSFI), we interviewed 927 practitioners, regulators and observers of the insurance industry across 53 territories.

This year, Indonesia has received a specific report of what insurers in Indonesia see as the biggest threats and how they are prioritising them. Overall, the Indonesian insurance industry has a higher level of anxiety and feels less prepared than most of the world. Moreover, compared to the global survey results, Indonesian insurers have quite different concerns. The results of this survey are consistent with our Indonesia Insurance CFO Survey which took place at the beginning of 2019. This survey also had talent and technology highlighted as significant risks, but also showed that the market also remains positive overall on the future prospects of the industry. The following are the top three risks for Insurers in Indonesia. 

Top risk Indonesian insurers vs Global insurers

Top risks in Indonesia and PwC suggestions for 2020 planning

  • Reputation is considered as the top risk by insurers in Indonesia, contrasting with it being highlighted only as the 13th biggest risk globally. 
  • The concerns in Indonesia are triggered by the recent damaging high profile news stories about insurers' difficulties. These are magnified by a powerful social media on an industry which is still sensitive to public perception due to the low penetration rates. 
  • There is pressure for insurers to improve their monitoring of agents during the sales process, part of an overall desire to enhance the customer experience with better customer care, clearer distribution or ease of engagement. 
  • Given the low penetration rate, there is also ample opportunity for companies to differentiate themselves both in their brand and public image, but also in the products and services they offer to customers.

  • Respondents in Indonesia share top global concerns about the challenges of new technology. This was the top global risk and was highlighted as the second biggest risk in Indonesia. 
  • Technology is a pervasive theme, which clearly impacts on other risk areas, including cyber, quality of management, and competition. Technology clearly represents a massive opportunity to the industry as well as a threat, but it is the fear of being left behind which appears to be the key driver of the concern.
  • There is an urgent needs for insurers in Indonesia to modernise their operations and to embrace new technologies (via recruitment and investment, cooperation with technology specialists or developing innovative products and distribution strategies).
  • There are some examples in Indonesia of collaboration between insurers and fintech companies, as well as evidence of investment in technology to improve claims process efficiency or to structure new products.

  • Insurers in Indonesia placed quality of management as the third largest risk, a view that is not shared with other global insurers.
  • For multi national insurers, this risk is alleviated slightly by the expertise that they can leverage from other parts of their group. 
  • Given the maturity of the market, it has always been a challenge to find experienced insurance expertise within Indonesia and it is difficult to bring in experienced and appropriate talent from abroad. 
  • Attracting younger talent to nurture future leaders also has its challenges given the competition from other industries. The image of insurance has not been helpful here, with one of the respondents highlighting that, "Insurance isn't sexy and the industry is struggling to attract technologically innovative talent."

Contact us

David Wake

Advisor, PwC Indonesia

Tel: +62 21 509 92901

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