Indonesia's Personal Accident Insurance Market Faces Challenges in 2025

Decline in Premium Income

The Indonesian personal accident insurance sector experienced a significant contraction in Q3 2025, with premium income declining by 7.3% year-on-year to Rp2.05 trillion according to data from the Indonesian General Insurance Association (AAUI). This downturn reflects broader economic pressures affecting household budgets and insurance purchasing decisions.

Economic Pressures and Consumer Behavior

Industry expert Dedy Kristianto, a member of the Indonesian Insurance Writers Community (Kupasi), explained that the decline doesn't indicate a rejection of personal accident insurance products, but rather a shift in consumer priorities. "When household cash flow is constrained, consumers tend to postpone purchasing additional protection products," he noted. The current economic environment has led to a reduction in travel and mobility, further impacting demand for personal accident insurance.

Changing Consumer Preferences

Dedy highlighted that consumers are now prioritizing more comprehensive health insurance and critical illness coverage over personal accident insurance. "Personal accident insurance is seen as supplementary protection, not a primary need," he explained. This shift in consumer behavior is driving insurers to reassess their product offerings and distribution strategies.

Strategic Recommendations for Insurers

To revitalize growth in the personal accident insurance segment, Dedy suggested three key strategies:

1. Product Innovation: Developing more relevant products by combining personal accident coverage with other benefits such as outpatient treatment or daily hospital allowances.
2. Digital Ecosystem Integration: Implementing product bundling through digital platforms like e-commerce, online transportation services, sports communities, and travel agencies.
3. Microinsurance Expansion: Focusing on microinsurance products that can be quickly absorbed by the mass market.

Market Outlook for Q4 2025

While Dedy projects that personal accident insurance premiums will remain under pressure through year-end, he anticipates some stabilization in Q4 2025. "There might be a slight improvement due to increased year-end travel activities, but it won't be enough to achieve positive growth. Recovery will depend heavily on improvements in consumer purchasing power," he concluded.

Claims Ratio Improvement

Interestingly, despite the premium decline, the claims ratio for personal accident insurance improved significantly. The ratio dropped to 13.6% as of September 2025, down from 19.3% in the same period last year. The absolute claims amount also decreased by 34.8% year-on-year to Rp279 billion.