Can Indonesian insurers sustain 20% to 40% growth targets?

The non-life insurance market slowed significantly in 2024 with GWP rising 6%.

Whilst some Indonesian insurers still aim for ambitious 20% to 40% growth targets, macroeconomic headwinds and softening demand in key sectors like motor and engineering are likely to temper these expectations, Gallagher Re said.

Indonesia's non-life insurance market slowed significantly in 2024, with gross written premiums (GWP) growing just 5.7% to $7.2b, down from 25% growth the previous year, Gallagher Re's Asia Pacific October 2025 Market Watch report said.

Data from the regulator OJK shows the industry swung to an after-tax loss of IDR8.9t, a sharp reversal from the IDR9.1t profit recorded in 2023. 

This decline was driven by a negative underwriting result of IDR1t and a net combined ratio that reached 140.1%, largely due to reserve adjustments and losses in the credit insurance sector.

Whilst Indonesia’s insurance market faced a relatively calm year for natural disasters and fire losses in 2024, the industry is navigating a complex landscape of regulatory overhauls and economic shifts. 

Medical cost inflation and long-tail credit insurance claims continue to pressure margins. In response, the regulator OJK has implemented Regulation 23, which mandates a phased increase in minimum capital. 

Non-life insurers must reach $15.4m by 2026, with further increases up to $61.5m by 2028 depending on their classification. 

This move is expected to trigger market consolidation as smaller players struggle to meet these higher thresholds.

Operational challenges persist as insurers deal with frozen tariff rates for property and motor lines, which have not been adjusted since 2017. 

With the regulator resisting rate hikes, companies have turned to volume growth, intensifying domestic competition. 

However, a shift in the international reinsurance market has provided some relief. 

Softening conditions in 2025 have increased capacity and led to risk-adjusted rate reductions of 5% to 15% for loss-free accounts, offering a boost to insurer profitability that was absent during the "hard market" of previous years.

Looking ahead, the market faces a mix of headwinds and tailwinds. Fragile GDP growth and a weakening rupiah could drive up claim costs and credit risks. 

Conversely, the benign catastrophe environment and the stabilising effects of credit insurance reforms offer a path toward more disciplined underwriting. 

Whilst the regulatory burden is increasing, the abundance of reinsurance capacity and innovative risk-sharing structures are helping firms manage their solvency as they move toward the 2026 capital deadlines.