Indonesia’s motor insurance market is expected to remain on a steady growth path through the end of the decade, with gross written premiums forecast to rise from IDR16.9 trillion in 2026 to IDR20.5 trillion in 2030 as insurers expand digital capabilities, refine underwriting, and respond to the growing role of electric vehicles in the country’s auto market.
According to GlobalData, the market is projected to record a compound annual growth rate of 5% over the 2026 to 2030 period. For 2026 alone, the firm expects annual growth of 3.9%, supported by digital distribution gains, product innovation, and stronger underwriting discipline. The outlook comes even as insurers contend with rising vehicle prices, softer consumer purchasing power, and growing losses tied to weather events.
Katam Prasanth, senior insurance analyst at GlobalData, said the market is being reshaped by a mix of structural and policy changes. “Indonesia’s motor insurance industry is being reshaped by EV purchase incentives (VAT and luxury tax exemptions), the emergence of EVs as a high-premium segment with distinct underwriting needs, and accelerating digitalization alongside favorable regulatory developments,” Prasanth said.
The shift toward electric vehicles is becoming increasingly important for insurers. Data from the Association of Indonesian Automotive Industries showed EV sales reached 55,255 units from January to September 2025, up 27.9% from 43,188 units in the same period a year earlier. As EVs and hybrids account for a larger share of the vehicle fleet, insurers are being pushed to address new risk categories, including battery-related exposures, charging infrastructure risks, and the higher cost of specialized parts and repairs.
That has encouraged product differentiation across the market. Insurers are developing EV-specific offerings that allow customers to choose between comprehensive and total loss only plans. More comprehensive products may include battery and charger protection, roadside and medical assistance, broader third-party and personal accident cover, and added protection against catastrophe and civil unrest risks.
The market could also receive a boost from regulatory reform. Under Indonesia’s 2023 Development and Strengthening of the Financial Sector law, the government has the authority to mandate motor third-party liability coverage. Although the measure had been expected to take effect in 2025, implementation has been delayed pending supporting regulations. Once in force, it is expected to expand insurance penetration by bringing more currently uninsured vehicles into the formal insurance market.
At the same time, profitability pressures remain. GlobalData said paid motor insurance claims rose 9.2% in 2025 due to higher mobility, more frequent minor accidents, and greater exposure to weather-related losses. Claims growth is expected to ease to 7.4% in 2026, but Prasanth said premium softness, claims-cost inflation, and implementation uncertainty mean pricing discipline and stronger claims management will remain essential.
He added that insurers and insurtech partners are increasingly relying on digital and AI-enabled platforms to streamline underwriting, issuance, and servicing. “The Indonesian motor insurance market is expected to remain on a growth path through 2030,” Prasanth said. “To capture this opportunity, insurers will need to translate digital and AI spend into real adoption, improve protection in underinsured segments, and ensure underwriting and capital management keep pace with a more complex risk environment.”
