This article is compiled based on a study and analysis of insurance industry data sourced from official industry reports, including:AAUI Report Book-Q3-25-Web-1.pdfas well as insurance statistics reports up toThird Quarter of 2025This analysis is used as a basis for compilingwork program of the Center for Industrial Studies and Research (PKRI) Department of the Indonesian Insurance and Reinsurance Brokerage Companies Association (APPARINDO), with the note that the full 2025 industry performance report has not yet been published, so the figures, including loss ratio, still has the potential to experience adjustments.
2025 will be a crucial year for the Indonesian general insurance industry. Behind the continued positive premium growth, there is one crucial indicator that business players and company management cannot ignore:industry loss ratio continues to increase.
For many business owners, the termloss ratioIt may sound technical and far removed from day-to-day operations. However, in practice,loss ratio is the main determinant whether premiums will increase, policies tightened, or claims become more difficult to pay.
This article will discuss comprehensively:
- What is the loss ratio and the condition of the Indonesian general insurance industry in 2025?
- the direct impact of increased claims on premiums and policy terms,
- and why the role of insurance brokers as risk advisors is becoming increasingly important, not just as a police salesman.
What Is Loss Ratio and Why Is It Important?
Loss ratio is a comparison between claims with premium received by insurance companies within a certain period.
Simply:
Loss Ratio = Claims Paid ÷ Premiums Received
If the loss ratio is in the range:
- 40–60%→ relatively healthy industry
- 60–80%→ starting to get stressed
- above 80%→ underwriting margins are very thin
- approaching or above 100%→ industry is under serious pressure
In 2025, industry data shows thatIndonesia’s general insurance loss ratio is moving to an increasingly high level, even in some segments approaching critical limits.
It means:
- most of the premiums paid by customers immediately used up for claims,
- underwriting profit space is narrowing,
- and insurance companies are being forced to make aggressive adjustments.
Loss Ratio Overview of the Indonesian General Insurance Industry in 2025
Based on the industry performance report through the third quarter of 2025, there are several key trends that businesses should pay attention to:
- Claims growth is almost in line with premium growth
The premium increases no longer create an adequate profit cushion. - Several business lines are the largest contributors to claims, among others:
- credit insurance,
- Health Insurance,
- motor vehicle,
- marine and certain liabilities.
- Claim pressure is not temporary, but rather structural:
- healthcare cost inflation,
- increase in defaults,
- increasingly complex vehicle claims,
- and escalation of loss value.
In aggregate, these conditions place the general insurance industry in a phasehigh risk – low margin.
The Direct Impact of Increased Claims on Insurance Customers
Many business owners ask:
“If claims increase in the industry, what impact will it have on my company?”
The answer:very direct and real.
- Insurance Premiums Tend to Increase
When the loss ratio increases, insurance companies have little choice but to:
- increase premium rates,
- or limit the guarantee capacity.
As a result:
- policy renewal becomes more expensive,
- discounts are becoming rarer,
- and price comparisons between insurance companies are becoming increasingly narrow.
Companies that have been enjoying low premiums will experience a significant increase in insurance costs.
- Police Terms and Conditions Are Getting Tighter
Apart from the increase in premiums, another impact that is often overlooked is tightening of policy wording, among others:
- addition of exception clauses,
- sub-limits for certain types of claims,
- higher deductibles,
- limitation on the extension of guarantees.
Many problematic claims cases in Indonesia are not due to the absence of a policy, but because:
The police are no longer as flexible as they were a few years ago.
- Risk Selection is Getting Tighter
Insurance companies are now more selective in accepting risks. Businesses with the following characteristics:
- high historical claims,
- weak risk management,
- incomplete documentation,
will face:
- denial of closure,
- limited capacity,
- or much more severe conditions.
Common Mistakes Companies Make in Dealing with This Condition
Amidst the pressure of industrial loss ratios, many companies are making strategic mistakes, including:
❌Focus on the Cheapest Premiums
Choosing a policy based on the lowest price without understanding:
- collateral structure,
- exception,
- claim readiness.
As a result, when a claim occurs, the protection does not work optimally.
❌Copy–Paste Insurance Program
Using old policies or copying other companies’ programs without actual risk analysis.
❌Considering Brokers to be Just Police Salesmen
Many companies still view brokers only as transaction intermediaries, not as risk management partners.
This is Where the Role of Insurance Brokers Changes: From Salesperson to Risk Advisor
In the stressful industrial conditions of 2025, the role of a professional insurance broker is becoming increasingly strategic.
Brokers who function risk advisor does not work with a “sell the police” approach, unless:
- Understand Business Risks Thoroughly
Brokers do:
- risk assessment,
- loss exposure mapping,
- identify key risks that have a major financial impact.
The goal is not to sell as many guarantees as possible, but:develop relevant and sustainable insurance programs.
- Developing the Right Insurance Program Structure
Amid rising premiums and tightening reinsurance, brokers are helping:
- determine reasonable risk retention,
- arrange layers and limits efficiently,
- avoid over-insurance and under-insurance.
This approach helps companies:
- control costs,
- without sacrificing critical protection.
- Negotiating Policy Wording and Clauses
In an era of high loss ratios,words in the police become very decisive.
Brokers play a role in:
- negotiating important clauses,
- ensure policy compliance with client operational practices,
- minimize grey areas when claiming.
- Proactive Claims Assistance
Claims are not simply events that occur after the policy is purchased.
Brokers who act as risk advisors:
- assist with claim preparation from the outset,
- ensure complete documentation,
- monitor communication with the guarantor.
This has been shown to increase the chances of claims being paid fairly and on time.
Why 2025 Is Not the Right Time for Insurance “Trial and Error”
With a high industry loss ratio:
- a small mistake in drafting a policy can have big consequences,
- wording differences can mean billions of rupiah in claims,
- decisions based solely on price are increasingly risky.
Insurance can no longer be treated as:
just an administrative obligation.
It should be part of the company’s risk management strategy.
What Should Companies Do Now?
Some practical steps to consider:
- Review your insurance program before renewing., not when it is due.
- Evaluation of historical claims and potential future risks, not just last year.
- Discuss risk retention and transfer strategies, not just premiums.
- Engage a broker who understands your industry and risks, not just the price.
Conclusion: High Loss Ratio is an Alarm, Not Just a Number
The loss ratio of Indonesian general insurance in 2025 is a loud alarm for the business world. It indicates that:
- the risk is getting more expensive,
- mistakes are increasingly not tolerated,
- and protection must be structured more intelligently.
In this situation,professional insurance brokers act as strategic partners, not a policy seller. Brokers help companies:
- understand the risks,
- arranging proper protection,
- and ensure insurance actually works when needed.
🔎It’s Time for Risk Consultation, Not Just Buying a Policy
If your company is facing:
- premium increase during renewal,
- increasingly strict police,
- or concerns about claims not being paid,
Don’t wait until a problem occurs.
Consult your business risks and insurance programs with a professional insurance broker.
The right approach today can save your company’s finances in the future.
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DON’T WASTE YOUR TIME AND SECURE YOUR FINANCES AND BUSINESS WITH THE RIGHT INSURANCE.
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