Entering 2026, the Indonesian insurance industry will be influenced not only by economic dynamics and risks, but also significantly by the policy direction of the government and regulators, particularly the Financial Services Authority (OJK). Regulation is no longer merely a supervisory instrument, but rather a tool for shaping a healthier, more resilient, and long-term industry structure. This second article discusses how changes in regulation and public policy will impact the business model, products, premiums, and governance of the Indonesian insurance industry.
1. Regulation as a Determinant of the Direction of the Insurance Industry
In recent years, OJK has shown a more proactive approach.interventionist but constructive. The main focus is:
- consumer protection,
- capital strengthening,
- improving the quality of governance,
- and industrial sustainability.
This approach is expected to continue into 2026. This means that insurance industry growth will no longer be measured solely by premium volume, but rather by portfolio quality, financial resilience, and adherence to risk management principles.
For industry players, regulations must now be understood as a strategic framework, not just an administrative obligation.
2. OJK Regulations with the Most Impact in 2026
- Strengthening Insurance Products and Marketing
The Financial Services Authority (OJK) is increasingly stringent in regulating product design, benefit transparency, and marketing methods. Insurance products—particularly health and unit-linked products—must:
- actuarially realistic,
- clear in terms of benefits,
- and balance between the interests of companies and consumers.
The impact, going forward:
- High-risk products without strong reinsurance support will be increasingly difficult to market.
- Underpricing to pursue market share will be reduced.
- Human Resources Regulation and Industrial Competence
Strengthening the competency of directors, commissioners, and technical staff is a serious concern. The OJK encourages the industry to have:
- competent underwriting staff,
- actuary independent,
- a real risk management function, not a formality.
By 2026, insurance companies that do not invest in quality human resources will be left behind, both in terms of compliance and reinsurance market trust.
- Governance and Risk Management
Good Corporate Governance (GCG) has now reached the operational level. The OJK’s assessment looks not only at policy documents but also at actual implementation:
- claims control,
- risk accumulation management,
- supervision of problematic portfolios.
3. Impact of Regulation on Premiums and Consumers
One of the most noticeable impacts of regulatory policies is the change in premium structure, particularly in health insurance and commercial insurance with high loss ratios.
- More Realistic Premiums, But Not Always Cheap
Regulation encourages premiums that reflect true risk. This means:
- premiums may increase,
- but the benefits become more clear and sustainable.
In the long run, this reduces the risk of claim default and increases public confidence.
- Consumers are more protected
Policy transparency, restrictions on ambiguous wording, and strengthened complaint mechanisms create a more balanced position for insureds. For corporate clients, this means:
- clearer policy wording,
- dispute claims are more measurable,
- and the claims process is more predictable.
4. Regulatory Implications for Reinsurance
Changes in insurance regulations directly impact the reinsurance structure.
Some important implications heading into 2026:
- Insurance companies are required to have adequate and well-documented reinsurance programs.
- Reinsurance is no longer just about meeting retention requirements, but must be aligned with the company’s risk profile.
- OJK is increasingly concerned about risk concentration and excessive reliance on certain reinsurance.
This encourages companies to:
- reviewing reinsurance treaties,
- improve the quality of underwriting information,
- and work more closely with brokers who understand global market and regulatory expectations.
5. Compliance Risk: The Hidden Challenge
Many insurance companies consider claims to be the primary risk. However, by 2026, compliance risk could become just as serious.
Compliance risks can arise from:
- product design errors,
- violation of authority limits,
- mismatch between policy and practice,
- or weak reinsurance documentation.
Regulatory sanctions, product restrictions, and even reputational damage can have a direct impact on a business. Therefore, compliance must be positioned as a strategic function, not simply a legal one.
6. Opportunities Behind Strict Regulations
Although often considered restrictive, regulations actually open up opportunities for industry players who are ready to adapt.
- Differentiation through Quality
Companies with strong governance and solid reinsurance programs will be more trusted by:
- big clients,
- bank,
- investor,
- and international reinsurance markets.
- The Role of Brokers is Increasingly Strategic
Complex regulations increase the need for brokers who:
- understand OJK policies,
- able to bridge the interests of clients, insurance and reinsurance,
- and able to design compliant and bankable risk transfer solutions.
- Healthier Industrial Consolidation
As we head towards 2026, the likelihood of consolidation will increase. Regulation acts as a natural filter for companies that are undercapitalized, inefficient, or unadaptive.
7. Strategic Recommendations Towards 2026
In closing, here are some strategic steps that industry players need to consider:
- Conduct regulatory impact assessments on all products and portfolios.
- Realize the strengthening of risk management and compliance functions.
- Re-evaluate reinsurance programs to align with risk profiles and regulatory expectations.
- Invest in human resources and underwriting data, not just sales.
- Involve brokers early in the design of insurance products and structures.
Conclusion: Regulation as a Pillar of Sustainability
Heading towards 2026, regulations will no longer be merely rules to be followed, but rather a pillar of sustainability for the Indonesian insurance industry. Companies that can read policy directions, adapt their business models, and build a strong risk foundation will grow more steadily and gain market trust.
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