Sabtu, 27 September 2014
Finance |
An Overview of Indonesia’s Health Insurance Sector
As the wealth and purchasing power of
Indonesia’s middle class continues to grow, the demand for health
insurance from both individuals and corporations grows with it. While
insurance companies have traditionally focused more on life insurance,
the need for healthcare coverage for the middle income segment has been
highlighted as lifestyles have been subject to unprecedented change. In
the past, private health insurance was viewed as a luxury enjoyed by the
top tier income earners, yet greater awareness of health and the rise
of non communicable diseases in urban centres is seeing a change in this
attitude. Moreover, reform of the state healthcare system under Law
40/2004 concerning the National Social Security System has been slow to
make progress, making private coverage a necessity. Health insurance is
therefore a promising but challenging area of Indonesia’s burgeoning
insurance sector to be tapped into.
Further competition in the health
insurance sector is expected in the lead up to the implementation of
universal healthcare coverage.
As GDP growth continues unabated at 6.4% for
2011, the need for universal health care coverage for Indonesia’s 240
million citizens has risen on the national agenda. The first reforming
steps towards this goal were the setting up of Jamkesmas in 2008 which
replaced Askeskin, to cover state employees, the poor and the most
vulnerable members of society. In 2010 this program covered a total of
76.4 million people (Ministry of Health). Jamsostek was established in
1977 to provide social security for private sector employees and had 8.4
million members in 2010. In both cases, funding for the schemes and
lack of state hospital facilities limited their implementation and
effectiveness. Health care coverage for the country as a whole remains
low with an estimated 130 million people lacking any kind of coverage at
all. The main challenge being that most Indonesians work in the
informal sector or are self employed and therefore not eligible for the
tax financed scheme.
In the private sector, health insurance
penetration is estimated at 4% or 7.5 million people mainly concentrated
in urban areas, based on information from the country’s leading
insurers. For the middle income bracket, the ranks of those that can
afford private health coverage is increasing. A shift is also taking
place among employers in medium and large scale companies who are
recognising both the responsibility and the benefits of such coverage.
According to research carried out by consulting firm Deloitte, Indonesia
is following a trend similar to that of the rest of South East Asia in
that the private sector is taking the lead on health coverage as state
progress is proving too slow. The upcoming liberalisation of the sector
under the ASEAN single market in 2015 is contributing to a greater
assertiveness among local insurance players in terms of product
innovation and promotion.
Indonesia’s transition from a state funded
health care system to one based on insurance and state contributions for
the poor has opened up significant opportunities for the private
insurance sector. Jamsostek requires employers with more than 10
employees to contribute to age and death benefits through the state
system, however higher benefit payments such as health coverage can be
taken with private providers. As a result, public health care schemes
tend to be declined by companies that contribute more than 60,000 RP a
month as they prefer to opt for group health insurance coverage. Group
healthcare coverage undertaken by companies makes up the majority of
policies with less than 10% of total policies being purchased on a
prepaid basis by individuals in 2009 (General Insurance Association of
Indonesia).
Competition within the sector is also growing
with international insurance companies entering the market as both life
insurance and general insurance providers are permitted to provide
health care insurance products (See The Prospects for Indonesia’s Insurance Industry).
The issue of price in healthcare coverage makes it all the more
competitive as corporations who are the main purchasers seek out
coverage for their employees at the lowest rates. International
companies here have an edge in securing large scale corporate accounts
that cover expatriate employees. Leading players in the health insurance
sector include Allianz, AXA, AIA, Prudential, ManuLife, AVIVA and BNI
Life. Health insurance schemes tend to be sold as add on products as
opposed to stand alone products but offer attractive revenues. Further
competition in the health insurance sector is expected in the lead up to
the implementation of universal healthcare coverage. While foreign
insurance providers are expected to maintain their lead in the corporate
sector for large scale companies, health care coverage for micro, small
and medium enterprises offers an untapped segment for local insurance
providers to utilise their local knowledge in marketing and product
distribution. This segment of the market offers lower premiums but the
sheer volume of businesses that it comprises still makes it a very
promising sector for group health insurance products.
The issue of fraud is an issue plaguing
Indonesia’s health insurance industry with a 24% fraud rate for health
insurance claims. As health insurance has only been introduced to the
market relatively recently, Indonesian policy holders have shown a
tendency to take advantage of their coverage by unnecessary visits to
the doctor. This creates extensive paperwork for insurance companies to
deal with and drives up the costs of operating. While the issue of
insurance fraud in Indonesia is not restricted to health insurance
coverage, it is particularly challenging to overcome as it involves a
transformation in social attitudes towards the entitlements of insurance
coverage and greater awareness as well as education regarding health.
Indonesia is at an exciting stage in its
socio-economic development in the lead up to the implementation of a
universal healthcare system by 2014 which will stand as a key milestone
in its progression towards becoming a developed country. As the
government prepares state health insurance institutions, so must the
private sector to promote awareness among employers as well as offering
innovative products that provide competitive benefits for employees.
This will present opportunities to local insurance players to carve out
strategic positions in their captive markets and make inroads into
Indonesia’s micro, small and medium enterprises which account for 96% of
national employment.
Global Business Guide Indonesia - 2013
