Rising medical inflation in recent years has placed increasing pressure on the performance of health insurers across the Indonesian insurance industry.
The Financial Services Authority (OJK) expects medical inflation to remain a key challenge for the health insurance sector this year.
According to the Indonesian General Insurance Association (AAUI), these cost pressures are most acutely felt in the individual health insurance segment, where claims sensitivity to rising healthcare costs is typically highest, reported Kontan.
AAUI Chairman Budi Herawan noted that the individual health insurance segment is generally more sensitive to medical inflation pressures.
He explained that, by their nature, individual policies are more exposed to higher utilisation rates and anti-selection, while premium adjustments tend to be less flexible compared to group policies.
He also said that with group policies, the risk spread is greater. In comparison, group policies typically benefit from a broader risk spread, making claims experience easier to assess over time, while benefit structures and pricing are generally more flexible to review and adjust at renewal.
However, Mr Budi noted that aggregate data published by the AAUI typically reflects overall performance for the health line and does not always provide a detailed breakdown of claims ratios between individual and group segments.
He also expects medical inflation to remain a major challenge for the insurance industry this year, including for general insurers with health insurance portfolios.