Why Indonesia insurers face flat 2026 premiums

Traditional policies made up 63% of total premiums and posted 7% growth in H1 2025.

Indonesia’s life insurance premiums are expected to be flat in 2026 after declining 2% in the first nine months of 2025.

Unit-linked sales remain subdued amidst prolonged product redesign and market volatility. 

However, traditional products, which made up around 63% of total premiums, recorded 7% growth in the first half of 2025, supported by rising awareness of medical protection, according to Fitch Ratings’ APAC Insurance Outlook 2026.

On capitalisation, Fitch said higher minimum equity thresholds set by Indonesia’s Financial Services Authority, OJK, are encouraging more disciplined competition. 

According to OJK data, 78% of insurers and reinsurers had met the 2026 capital threshold as of September 2025. More than 90% of Fitch-rated Indonesian issuers have complied. 

Fitch expects most insurers to manage the transition, with non-compliance likely concentrated amongst weaker players. 

Growth is expected to be supported by selective underwriting, stronger margins and retained earnings ahead of the next capital milestone in 2028.

Claims pressure remains a key risk. Credit insurance claims are expected to stay elevated due to macroeconomic challenges, adverse portfolio mix, lagged losses from prior years, concentration risk and weak recoveries. 

This is prompting insurers to reprice policies and tighten underwriting standards. Health insurance loss ratios also remain under pressure from medical inflation and higher utilisation. 

Insurers are responding by tightening policy terms and strengthening cost controls, supported by a government plan to introduce a 5% co-payment for medical insurance to reduce overuse and share costs.

The sector also began implementing PSAK 117, Indonesia’s equivalent of IFRS 17, in January 2025. 

Preliminary results show a 5% decline in sector equity following adoption. OJK is preparing to introduce a new Insurance Capital Standard in 2026, aligned with higher equity requirements. 

The framework will introduce Tier 1 and Tier 2 capital classifications based on redemption features and apply a ‘one-in-200-year’ loss event standard. 

Fitch expects the new rules to support proactive capital management and strengthen well-capitalised insurers, whilst increasing pressure on smaller players to adjust their balance sheets and business mix.