Indonesian Motor Vehicle Insurance Market to Reach $1.3 Billion in 2030

GlobalData Senior Insurance Analyst Katam Prasanth comments:

"Indonesian motor vehicle insurance industry; electric vehicle purchase incentives (VAT and luxury consumption tax) exemptions) are being reshaped by the emergence of EVs as a high-premium segment and accelerating digitalization coupled with positive regulatory developments.”

According to the Indonesian Automotive Industry Association, electric vehicle sales increased by 27.9% to 55,255 units in the January-September period of 2025, compared to 43,188 units in the same period of 2024. As the share of electric and hybrid vehicles in fleets increases, insurers; It focuses on new risk categories such as battery risks, charging ecosystem issues and high-cost specialist parts. These dynamics; encouraging product differentiation, including usage-based approaches and battery warranty-backed features.

Innovative Insurance Plans and Regulatory Developments

Insurers are innovating in EV insurance and distribution models, where customers can choose between “Comprehensive” and “Total Loss Only” (TLO) plans. Comprehensive plans; It includes battery and charger coverage, roadside assistance, medical support, extensive third-party and personal accident protection, as well as disaster and social events coverage.

In accordance with the Law on the Development and Strengthening of the Financial Sector (UU P2SK), which came into force in 2023, the government may require compulsory liability insurance (Traffic Insurance). This practice was expected to come into force in 2025, but has been postponed because supporting legislation has not yet been approved. Once implemented, it is expected to significantly increase insurance penetration by covering currently uninsured vehicles.

Loss Management and the AI Factor

Prasanth adds, “The industry is also managing premium stagnation, claim cost inflation and enforcement uncertainty, making pricing discipline, operational efficiency and strong claims management increasingly critical.”

By 2025, increased mobility and the increase in the frequency of minor accidents as well as weather events Damages paid due to related losses recorded 9.2% annual growth. This has led to a focus on risk acceptance discipline and pricing adequacy. With the impact of these initiatives, damage growth is expected to decrease to 7.4% in 2026. It can expand access."

According to GlobalData's conclusion; The Indonesian motor vehicle insurance market is expected to remain on growth path until 2030. To capture this opportunity, insurers will need to transform digital and AI spending into real adoption and adapt to the increasingly complex risk landscape.