JAKARTA. General Insurance Association of Indonesia (AAUI) reported that Nusantara Capital City (IKN) projects have triggered surge in industry premium in 2023.

This government-borne infrastructure projects have prompted an increase in engineering insurance premium by 63.4%. The premium grew from IDR 3.2 trillion in 2022 to IDR 5.23 trillion at the end of 2023.

“Inarguably, with such a mass utilisation of state budget for IKN [it triggers growth],” said Budi Herawan, Chairman of AAUI, yesterday (28/2).

AAUI also noticed a surge in suretyship products, whose premium income proliferated 32.4%. By amount, suretyship segment generated premium income of IDR 1.8 trillion, increasing from IDR 1.36 trillion seen in 2022.

Despite the evident premium income surge due to jumbo expenditure in the infrastructure sector, Herawan believes that the value could be higher. According to him, using the state budget spent by the government for IKN projects as the reference, the premium income booked by the insurance industry has yet to match the numbers.

“Apparently, many have yet to conduct a risk management. The premium could have been higher, as construction expenses in the state budget increased 7%-8%,” Herawan added.

Trinita Situmeang, Vice Chairman of Statistic Division of AAUI, mentioned that the premium income surge may also originate from other infrastructure projects outside IKN. “There are also industry revitalisation post-pandemic, many factories that are adding new lines, and building renovation,” she explained. (PP/ZH)