The car insurance business in Indonesia is expected to continue to be one of the main pillars of the general insurance industry this year.
According to a report by Contan.
Mr. Dody Dalimunthe, Vice President for Information and Applied Technology at the Indonesian Association of General Insurance (AAUI), said that the optimism surrounding the motor insurance business is in line with the recovery in economic conditions and commercial activities, as well as the increase in vehicle production.
“At the start of the COVID-19 pandemic, people’s purchasing power declined, and that impacted vehicle purchases,” he said. This has had an impact on the demand for car insurance.
Data from AAUI shows that in the first nine months of 2021, car insurance premiums rose 1.5% to IDR 11.17 billion ($778 million), compared to the corresponding period of 2020. Automobile was also the second largest contributor to the general insurance total. premiums after the property insurance business line.
Gaikindo (Indonesian Automotive Industry Association) has set a national car sales target of 900,000 for 2022. This is around 4% more than retail sales of 863,348 units in 2021.
Mr. Yohannes Nangoi, chairman of Gaikindo, said that if conditions improve, the target will be increased.
The government helped by providing luxury vehicle tax reductions last year. The tax cut pushed average monthly car sales to around 75,000 units from March to November 2021, up from around 50,000 in January and February last year, according to Fitch Ratings. The government is seeking to further stimulate the auto industry by extending the tax cut for part of this year.