AAJI: Many Understand Insurance but Remain Reluctant to Buy
Yogyakarta, CNBC Indonesia — The insurance industry notes that public understanding of insurance has improved in recent years. However, public interest in purchasing insurance products remains relatively low.
Handojo G Kusuma, Chairman of the AAJI Department for Inter-Institutional Cooperation, Domestic and International Regulators and Stakeholders, stated that insurance literacy has risen significantly.
“Insurance literacy was around 36% in 2024 and has now risen to approximately 45%,” Handojo said during the Educational Class at the Jogja Financial Festival 2026 titled ‘Young and Wealthy, Old and Prosperous’ at Jogja Expo Centre (JEC) on Saturday (23/5/2026).
He added that the rise in literacy indicates improved public understanding of insurance.
“People’s experience with insurance is now improving,” he said.
Nevertheless, insurance inclusion remains relatively low despite increasing from around 12% to 28%.
“But compared to 45% awareness, inclusion is still low. People understand insurance but say, ‘I’ll buy it later’,” he said.
This aligns with data from the Financial Services Authority (OJK), which shows Indonesia’s insurance penetration still lags behind ASEAN peers such as Singapore, Malaysia, the Philippines, Thailand, and Vietnam. Indonesia’s insurance penetration rate stood at 2.7% in 2025.
Handojo explained that insurance operates on a mutual aid concept, where society helps each other when a member faces misfortune.
“We pool money together to help those affected by disasters,” he said.
He also noted that taking out insurance at a younger age is typically cheaper due to lower premiums and insurers being more willing to accept the risk.
He stressed that insurance plays a vital role in safeguarding family welfare, particularly when the breadwinner faces hardship.
“If the breadwinner falls ill or cannot work, the whole family suffers financially. That’s why insurance is crucial,” he said.
During the discussion, several students cited reasons why young people remain reluctant to buy insurance despite understanding the importance of financial protection.
Some cited the complexity of insurance terminology, while others view it as lacking returns, preferring investment instruments like shares when they have spare funds.
The event also featured Sumarjono, Head of OJK’s Insurance and Support Services Supervision Department, and Heru Handayanto, Chief Financial Officer of Indonesia Financial Group (IFG).