Indonesian Motor Vehicle Insurance Premiums Decline Amid Sluggish Market

Significant Drop in Premium Income

The Indonesian General Insurance Association (AAUI) has reported a significant decline in motor vehicle insurance premiums, with a 4% drop to Rp14.11 trillion in the third quarter of 2025 compared to the same period last year. This contraction in premium income reflects the challenging conditions in Indonesia's automotive market.

Impact of Sluggish Automotive Sales

AAUI Chairman Budi Herawan explained that the decline in insurance premiums is directly related to the sluggish sales of conventional vehicles, which have seen a drastic reduction. This downturn in vehicle sales has had a ripple effect on the insurance industry, particularly impacting insurance coverage for vehicles financed through finance companies. The decrease in vehicle sales has led to lower insurance uptake, resulting in reduced premium income for insurers.

Industry Implications

The decline in motor vehicle insurance premiums highlights the interconnectedness of Indonesia's automotive and insurance sectors. As vehicle sales continue to face challenges, the insurance industry is likely to experience sustained pressure on premium income. This trend underscores the need for insurers to adapt their strategies to the changing market conditions.