According to Fitch ratings, the increase in the budget allocated to infrastructure is likely to boost the economy. The latter will go from 317 000 billion IDR (23.6 billion USD) in 2016 up to 387 000 billion IDR (28.8 billion USD) in 2017. The insurance sector is poised to benefit indirectly from the economic activity thanks to the expected increase in the demand for insurance products.
Several factors are supporting sustained market growth: the economic activity is encouraging, the large population is under-insured and Indonesian people are more aware of the need to be protected. Moreover, insurance companies are adopting more cautious investment practices making recourse to reinsurance in most optimal fashion.
State bonds in connection with infrastructure development programs may also stand as interesting investments for life insurance companies. The rating agency maintains its stable outlooks for the life and non life insurance.
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