Microinsurance Demand & Market Prospects – Indonesia

Publication Date: Aug 2006
Published by: Allianz AG, The Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH & United Nations Development Programme (UNDP)
Document Type: Paper

View this Document   Email this Document

This study examines the potential demand for microinsurance in Indonesia.

With 238 million people, Indonesia has one of the largest populations in the world, in which a great number of people are self-employed in low-income activities. While people in the low income segment benefit from the provision of financial services such as credit and savings, these services are not always enough to support families during crises.

This fact led to the study conducted by Alliance AG, GTZ and the UNDP on the potential for microinsurance in Indonesia. The study aimed to:

• Estimate the demand for microinsurance in Indonesdia;
• Understand the potential supply and risk-takers;
• Become aware of the different delivery channels.

The demand among potential microinsurance policy holders was strong. The policy holders found five risks that poor people faced:

• Serious illness,
• Education of children,
• Poor harvest,
• Death of relative,
• Social obligations.

The study found that despite the demand for microinsurance, very few insurance providers had tapped the market. However, they did look at potential partners with microinsurance providers:

• People’s Credit Bank,
• Commercial Banks,
• Microfinance Providers,
• Village Banks.

The study concludes that:

• In order for microinsurance interventions to take place in Indonesia, capacity development for agent training and market education is necessary.
• Microinsurance regulation is also important as the country currently has no laws.