The insurance industry in Indonesia recorded positive growth in the first quarter of 2024. Based on data released by the Indonesian Life Insurance Association (AAJI) in its first quarter performance report, total revenue grew by 11.7%, where total premium income grew slightly by 0.9 %.
This positive growth increases optimism for the growth of the life insurance industry this year, amidst the challenges faced by the industry, namely medical inflation and increasing health claims. AAJI recorded an increase in the number of health claims in the first quarter of 2024 of 29.4%, where the ratio of health insurance claims to premium income for this product has reached 97%.
This fact is proof of the current high national medical inflation, which is even predicted to continue to rise to 13% in 2024, higher than the average medical inflation in the Asian region. The impact of medical inflation includes increases in prices for health facilities, hospital costs and spending on medicines. This condition will certainly be a concern for health insurance policy owners, whether it will have an impact on the size of their health insurance premiums considering that medical inflation will occur every year.
Therefore, it is necessary to commit to improving the quality of long-term protection services carried out collectively amidst medical inflation, namely by prioritizing a series of strategic steps. Some of these include reviewing hospital treatment costs, evaluating the suitability of insurance products and premiums based on the customer’s health history, and strengthening the health services/facilities ecosystem through collaboration with various relevant stakeholders, especially the community.
Transparency of clinical management for inclusive health care
Currently, Indonesia still does not have a policy or regulation on medical treatment rates that apply nationally, so there are variations in the costs of care and treatment in various health facilities that are difficult to control. This condition risks triggering the quality of medical services to be unequal and increasingly difficult for the wider community to reach, especially in the midst of soaring medical inflation which has an impact on soaring costs for health care facilities.
For people who enjoy BPJS Health services, the Government has issued Minister of Health Regulation Number 3 of 2023 concerning Health Service Tariff Standards in the Implementation of Health Insurance, which aims to increase transparency, quality and efficiency of services and reduce variations in clinical services. It is hoped that this tariff adjustment can also be implemented in the private sector, especially in the life and health insurance industry. Because with standardization of tariffs in place, it is hoped that this can maintain the sustainability of health protection provided by insurance companies through quality control (clinical pathway) by providing efficient, effective and quality health services. In addition, there is transparency in the costs of health services according to the patient’s medical needs based on tariff patterns determined through price controls.
As a response to the many factors behind the increase in health care costs every year, especially transparency in medical costs, implementation can be implemented through open, comprehensive partnerships, in order to create standard clinical treatment guidelines that provide peace of mind to patients by estimating treatment prices in advance. This step also encourages the acceleration of the claim approval process for health insurance policy holders, one of which was confirmed by Prudential Indonesia through PRUPriority Hospitals.
Ensuring the balance of the health protection system
Medical inflation triggered by the impact of the pandemic several years ago pushed up prices of medical goods, as well as delayed medical treatment, which was the cause of an increase in the nominal value of health insurance claims. Of course, this condition is a challenge for the industry, in the form of high claims numbers and high medical inflation. These two things require insurance companies to adjust insurance costs/premiums for health insurance products so that customers can continue to get optimal health protection.
Therefore, insurance industry players continue to try to find the right formula to maintain long-term protection commitments for their customers. This commitment is also important to ensure the principle of fairness when determining the value of insurance costs/premiums for customers/potential customers, which is seen from a series of factors such as age, gender, health history, type of work, and lifestyle.
Prudential Indonesia seeks to overcome these challenges by applying fair pricing to each customer based on regular reviews of their risk profile. This effort prevents imbalances in claims and insurance costs/premiums in the health insurance protection system, and ensures that all customers receive protection benefits that suit their risk profile and health history.
The purpose of the fair pricing concept does not mean that customers will not experience increases or adjustments in insurance costs/premiums. Customers will still experience an increase in insurance costs/premiums, but the percentage increase is lower compared to customers who choose treatment at hospitals outside the PRUPriority Hospitals network (non-PPHos). The aim is to provide incentives to Prudential customers to use services at 325 hospitals included in the PRU Priority Hospitals network in 105 cities/regencies throughout Indonesia. Prudential will continue to open communication and increase the number of hospitals in the PRUPriority Hospitals network that agree to implement minimum service standards and clinical pathways that prioritize quality health services.
Prudential Indonesia brings this fair pricing solution as the background in designing its newest health insurance products, namely PRUWell Medical and PRUWell Health, which offer affordable and fair premium options for each customer. Providing leading-edge financial protection that is customer oriented, customers will get the optimal premium benefits possible according to their risk profile and health history.
Thus, customers who maintain their health and have a good health history have the potential to get reduced insurance costs/premiums, as a form of appreciation for their efforts in maintaining their health. This not only encourages customers to take proactive steps in maintaining their health, but also helps create a more sustainable health insurance protection system.
A shared collective effort through the adoption of a healthy lifestyle
It cannot be denied that with medical inflation, the costs of treatment and care are now skyrocketing. The risk of expensive medical costs can affect the financial stability of yourself and your family. For this reason, collective efforts are needed from society through the adoption of a more intense and sustainable healthy lifestyle to reduce the risk of contracting diseases that can disrupt financial stability amidst medical inflation.
Some examples that can be implemented immediately at home include eating a balanced diet in terms of portions and nutrition, regular exercise for at least 15-30 minutes every day (starting gradually with light movement), getting enough rest at night, and many others.
As the leader of the insurance industry in Indonesia, Prudential Indonesia is committed to providing more than just protection services, but also assisting customers and the Indonesian people to live healthier and fitter lives. Prudential Indonesia believes that prevention is better than treatment, so it continues to urge customers to always maintain their health.
With the spirit of #SehatPangkalBisa, Prudential Indonesia encourages people to adopt a healthy and sustainable lifestyle. By being aware of rising medical costs and taking anticipatory steps, people can improve their quality of life, maintain financial stability, and reduce the burden of medical cost inflation.
Prudential Indonesia will continue to be committed to being a trusted partner and protector for customers and the Indonesian people by providing optimal protection that applies not only now, but also for future generations. The hope is to help customers maintain their financial stability in a sustainable manner, for every life, for the future.
