Repricing Ensures Optimal Insurance Protection
Indonesia’s insurance industry stands at a critical juncture, caught between a dynamic economy, evolving societal needs, and rising medical inflation. This challenge is not unique to Indonesia but affects countries across Asia and beyond.
In Asian nations including Singapore, Hong Kong, India, and Thailand, hospital and pharmaceutical costs are rising significantly faster than general inflation. In Europe and the United States, ageing populations and increasing chronic diseases such as diabetes and heart disease are driving up health insurance claims. Furthermore, advances in medical therapies and technology, whilst improving patient care outcomes, have increased treatment costs substantially.
Indonesia faces a comparable situation. Data from the Directorate General of Health’s Basic Health Survey under the Ministry of Health shows that the prevalence of non-communicable diseases has increased year on year. Critical disease cases in Indonesia rose by 11% in 2024, from 29.7 million to 33 million cases, meaning one in three Indonesian adults faces the risk of developing multiple chronic conditions simultaneously.
Whilst the insurance industry is experiencing positive growth, with the Financial Services Authority (OJK) projecting industry assets to grow 5–7% by 2026, Indonesia’s medical inflation is estimated to reach 17.8% by the same year, among the highest in Southeast Asia. This means health costs are rising far faster than economic growth, underscoring the importance of robust governance structures.
UNDERSTANDING REPRICING
In insurance, repricing is the process of reviewing and adjusting health insurance premium contributions due to factors such as medical inflation and increased health claims experience. Without regular premium review, premiums may no longer align with continuously rising claim costs, risking service quality and product sustainability. In essence, repricing is a preventative measure ensuring protection remains viable not only today but also in future years.
However, repricing is often perceived solely as a premium increase. This interpretation is not entirely accurate. Fundamentally, repricing is the process of reviewing premium pricing based on changes in risk conditions and cost structures over time.
Health insurance premiums must be adjusted in line with evolving health needs and costs—for instance, medical expenses, medication prices, hospital care, and medical procedures tend to increase annually. Alternatively, repricing may reflect improved benefits through new technologies, expanded coverage, or broader hospital networks available to policyholders. Additionally, premiums may be adjusted as policyholders age, increasing their health risk profile, leading to corresponding adjustments in subsequent premium payments.
OJK REGULATIONS
To govern repricing practices, the OJK has issued POJK 36/2025 on Strengthening the Health Insurance Ecosystem, which includes provisions regulating premium review and repricing mechanisms.
The regulation permits insurance companies to review and reset premiums a maximum of once annually with written notification provided 30 calendar days in advance to policyholders. This regulatory framework strengthens oversight to maintain a healthy insurance industry amid medical inflation. Its primary objective is protecting policyholders by ensuring insurance benefits remain usable long-term as healthcare costs rise, allowing premium adjustments to be more predictable and anticipated by policyholders through consideration of their health history.
PART OF A BROADER MECHANISM
Vivin Arbianti Gautama, Chief Customer Marketing Officer at Prudential Syariah, explained that premium review constitutes a mechanism designed to maintain long-term insurance protection usability.
“Prudential welcomes the issuance of this new regulation and will continuously comply with all applicable laws and regulations in our business and operational practices. Through transparent premium review mechanisms conducted only once annually in accordance with regulatory requirements, we aim to ensure that the protection we provide remains reliable and affordable long-term for all policyholders,” she stated.
WHY REPRICING IS NECESSARY
Beyond cost considerations, regulators and industry players also account for shifting risk profiles. Currently, approximately 28% of national health spending is paid directly by consumers (out-of-pocket), meaning the financial risk from illness remains substantial, keeping demand for supplementary coverage high.
Private health insurance complements government schemes, particularly for specific services or facilities. However, for products to remain available and function optimally, periodic review forms part of prudent risk management.
This review considers: claims trends, medical inflation projections, age and risk profiles, and operational efficiency. All measures aim to ensure insurers remain capable of paying claims when policyholders need them.