Monday, February 26, 2018

Indonesia’s larger infra budget to benefit insurers

Indonesia will see a bigger infrastructure budget for 2017 and it will be favourable to many insurance companies.

In a report, Fitch Ratings noted that the increase in Indonesia’s infra budget will likely usher in economic growth that will indirectly pave the way for higher demand for insurance products.

For next year, the government has pegged the infra budget at Rp387 trillion (US$29 billion) from this year’s Rp317 trillion.

Fitch’s rating outlook for the country’s life and non-life insurance sectors in 2017 is stable, on the back of rising insurance awareness, conservative investment practices, economic growth and enhancement of reinsurance coverage.

This stable outlook also reflects Fitch’s view that Indonesia’s large population, low insurance coverage, growing middle-income sector and greater insurance awareness should also support sector growth.

In the nonlife segment, motor and property insurance will still be main growth drivers.

In addition, Fitch said prudent investment measures will enable Indonesia to mitigate effects of volatile markets in operating results.


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