The national insurance industry is once again facing challenging dynamics. While profits and capitalization are improving, premium growth is slowing, claims pressure is rising, and regulations are tightening. From growing health insurance to the threat of fraud and medical inflation, to agent concerns about tax policies, to the Financial Services Authority (OJK)’s concerns about minimum capital and industry consolidation, all provide a clear indication that the insurance sector is undergoing a structural test. This week, several key issues reflect the new direction and significant challenges facing the Indonesian insurance industry.
Health Insurance Continues to Grow, But It’s Secretly Haunted by Fraud and Exploding Medical Costs!
The Indonesian health insurance industry is projected to continue to record positive growth, in line with rising healthcare costs, the demographic dividend, and improving service quality from insurance companies. However, despite this bright outlook, serious challenges remain looming over the industry’s sustainability. Abitani Taim, Chairman of the Indonesian Institute of Risk Management and Insurance (STIMRA), identified three key challenges facing the life insurance industry in marketing health insurance products: fraud, excessive treatment by unscrupulous medical personnel and hospitals, and uncontrolled medical cost inflation.
Abitani believes that controlling the claims ratio doesn’t always require premium increases. Education and literacy for participants, doctors, and hospitals are considered more effective if supported by regulators and collaboration with healthcare stakeholders. He also highlighted the issuance of POJK No. 36 of 2025, which regulates strengthening the health insurance ecosystem, including risk-sharing or deductible schemes to reduce moral hazard.
This view aligns with insurance observer Wahju Rohmanti, who believes risk sharing can ease the burden on insurance companies and discipline policyholders. The Financial Services Authority (OJK) is optimistic that health insurance growth will continue, as reflected in the 17.23% annual growth in life insurance premiums through November 2025, reaching Rp 30.84 trillion. This optimism is reinforced by growing public awareness of the importance of health protection, both through the Social Security Agency (BPJS) and private insurance.
Insurance Agents Worried! Taxes Deemed Unfair, Government Urged to Evaluate Regulations Immediately
Tax policies regarding insurance agents have drawn sharp criticism. The Indonesian Insurance Agents Association (PAAI) has officially requested that the government review tax regulations, which it deems to create legal uncertainty and not reflect the real conditions of the insurance agent profession. This controversy arose in response to the implementation of Finance Minister Regulation (PMK) 168/PMK.03/2023, the Core Tax Administration System, and the circulation of a misinterpretation of PMK 81/2024, which stipulates that insurance agents are required to register as Taxable Entrepreneurs (PKP).
The Chairman of PAAI, Muhammad Idaham, emphasized that insurance agents are generally tax compliant. However, existing policies have resulted in many agents experiencing significant underpayments in their tax returns. Furthermore, agents with income exceeding Rp 4.8 billion (approximately US$400,000) lose access to the Net Income Calculation Standard (NPPN) and are required to maintain full bookkeeping records like business entities.
PAAI Deputy Chairperson Wong Sandy Surya believes there is a mismatch between regulations and practice. Insurance agents, who are only allowed to work for one company, are treated as service providers. This view is reinforced by the view of PAAI Chairperson for Taxation and Investment, Henny Dondocambey, who believes agents lack a formal business structure.
PAAI emphasized that PMK 81/2024 is more appropriately applied to insurance brokers, not individual agents. In an official letter to the Minister of Finance and the Director General of Taxes, PAAI encouraged open dialogue for a fair, proportional tax policy that provides legal certainty for insurance agents, without neglecting their contribution to state revenue.
Source: https://www.metrotvnews.com/read/bzGCeyO3-pemerintah-diminta-tinjau-ulang-pajak-agen-asuransi
Profits Rise, Premiums Stagnant! Indonesia’s Insurance Industry Faces a Tough Test
The Indonesian insurance industry in the third quarter of 2025 displayed an interesting paradox. In terms of profitability and capitalization, industry performance improved. However, the main driver of the business, premium growth, actually slowed. This was revealed in the Insurance Quarterly Report Q3 2025 released by IFG Progress.
Life insurance premiums remained stagnant through the first nine months of 2025. Financial Services Authority (OJK) data shows a slight 1.5% year-on-year (YoY) decline to Rp116.2 trillion, while AAJI data shows a slight 0.7% year-on-year (YoY) increase. Weak new business premiums, particularly from bancassurance and agent channels, were the main factor hampering growth. General insurance premium growth was only 5.8%, lower than in 2024, and is expected to become the new normal due to a slowdown in the credit, property, and motor vehicle sectors.
Despite slowing premium growth, industry profits remained solid. Life insurance posted a profit of IDR 8.3 trillion, supported by investment returns and a decline in claims. General insurance even recorded a profit of IDR 11.5 trillion thanks to increased underwriting and investments.
However, IFG Progress warned of a potential surge in claims due to natural disasters in Sumatra and Aceh in November 2025, which could depress future underwriting results. Globally, premium growth has also slowed due to the post-boom consolidation phase of the global insurance industry. This situation underscores the importance of strengthening risk management and new growth strategies for the national insurance industry.
Global Trade Turbulence: Developing Countries Become New Export Engines
Amid growing international trade uncertainty due to geopolitical tensions and changing global trade policies, developing countries are seen as a new source of growth for global trade. This situation requires businesses, particularly exporters, to be more adaptive in managing risks and expanding markets into non-traditional regions.
In this situation, export guarantees and insurance are considered increasingly crucial as risk mitigation tools. The Chairman of the ICC Banking Commission Indonesia, Herry Hykmanto, emphasized that guarantees and insurance enable exporters to penetrate new markets, participate in international tenders, and minimize the risk of default. Furthermore, the existence of these instruments also strengthens banking confidence in channeling export financing.
With the advancement of digital technology, global trade payment methods are shifting. Previously dominant Letters of Credit (LC) are now being replaced by more flexible non-LC schemes. This shift increases the need for additional risk protection through guarantee products.
Indonesia Eximbank offers a strategic solution for banks through Credit Guarantees. This product offers benefits in the form of a reduction in asset risk weighting (RWA) of up to 0–20% and an exemption from the calculation of the Legal Lending Limit (BMPK), thus providing banks with greater room for financing expansion. With a combination of guarantee products and guarantees based on international standards, Indonesia Eximbank is expected to strengthen banking competitiveness and drive sustainable national export growth.
Fintech Credit Insurance Enters a New Phase! OJK Approves Consortium Scheme, Here’s the Impact
The Financial Services Authority (OJK) has officially approved the implementation of a consortium scheme to provide credit insurance for the fintech lending industry (Pindar). This policy is seen as a strategic step to maintain the stability of the ever-growing digital financial ecosystem while strengthening risk mitigation amid high rates of online loan defaults.
Insurance observer Irvan Rahardjo believes the consortium scheme has a positive impact on the insurance industry. This mechanism allows risks to be shared within the consortium rather than borne by a single insurance company. This is considered capable of curbing unfair price competition and reducing the currently high claims burden in the credit insurance sector.
Fundamentally, credit insurance holds significant potential because it protects creditors from the risk of debtor default. However, Irvan cautioned that key challenges remain, such as high claims ratios, macroeconomic risks, and suboptimal risk management practices, including the risk of fraud and information asymmetry.
Financial Services Authority (OJK) data shows that by October 2025, credit insurance premiums reached IDR 19.67 trillion, with claims totaling IDR 16.83 trillion, resulting in a claims ratio of 85.56 percent. This figure indicates continued significant risk pressure. Therefore, the OJK is encouraging strengthened underwriting discipline, actuarial-based tariff setting, adequate reserves, and the implementation of risk sharing with lenders through POJK 20/2023. This approach is expected to create a healthier and more sustainable credit insurance industry.
The OJK Alarm Sounds! 29 Insurance Companies Still Haven’t Met the Minimum Capital, Who’s at Risk?
The Financial Services Authority (OJK) revealed that 29 insurance and reinsurance companies still haven’t met the minimum equity requirements stipulated in applicable regulations. This finding serves as a warning signal for the industry, given that the first phase of capital adjustments is due at the end of 2026.
The Chief Executive of the Insurance, Guarantee, and Pension Fund Supervisory Agency (OJK), Ogi Prastomiyono, stated that by the end of November 2025, 115 of the total 144 insurance and reinsurance companies—or around 79.86 percent—had met the minimum equity requirements required for December 2026. This means that the majority of industry players are on the right track, but there are still some companies that need to make serious improvements.
This provision is stipulated in POJK No. 23 of 2023, which requires capital adjustments to be made in two stages. In the first stage, by December 31, 2026, conventional insurance companies are required to have a minimum equity of IDR 250 billion, reinsurance companies IDR 500 billion, sharia insurance companies IDR 100 billion, and sharia reinsurance companies IDR 200 billion.
The second phase, scheduled for December 2028, will establish higher capital standards based on business scale classifications (KPPE). This policy aims to strengthen the financial resilience of insurance companies, increase public trust, and ensure the industry’s ability to face long-term risks. The OJK hopes that accelerating capital requirements will encourage consolidation and create a healthier and more competitive insurance industry.
Not Automotive! Property Insurance Predicted to Be the Main Driver of General Insurance Premiums by 2026
The Indonesian General Insurance Association (AAUI) projects that property insurance will remain the backbone of the general insurance industry’s premium income throughout 2026. AAUI Chairman Budi Herawan emphasized that the strength of this line does not only rely on the residential property sector, but is also heavily influenced by commercial and industrial property activities, such as industrial estates, warehouses, and offices.
As long as the development and operation of these sectors remain active, property insurance will continue to play a strategic role in the portfolios of general insurance companies. AAUI sees several opportunities that can be optimized to drive growth, including leveraging digitalization to improve product distribution efficiency and claims services, strengthening risk management and underwriting, and developing retail and commercial property insurance products that are more adaptive to market needs.
However, challenges remain. The increasing risk of natural disasters due to climate change, as well as the concentration of risk in high-value properties in the commercial sector, are serious industry concerns. Therefore, AAUI urges general insurance companies to maintain a balance between premium growth and portfolio quality to ensure business sustainability.
In terms of performance, as of the third quarter of 2025, property insurance was recorded as the largest premium contributor, with revenue of Rp24.75 trillion, representing 5.4% annual growth, equivalent to 29.2% of total general insurance premiums. This figure underscores property insurance’s strategic position as a key driver of the industry.
—
These developments emphasize that the insurance industry can no longer rely solely on organic growth and investment returns. Moving forward, strengthened risk management, disciplined underwriting, cross-stakeholder collaboration, and adaptation to regulatory and market behavioral changes are key to sustainability. Whether in the healthcare, credit, property, or underwriting sectors, the OJK’s policy direction and industry response will determine whether the insurance sector can emerge from the “rising profits, declining premiums” paradox and achieve healthier, more balanced, and more resilient long-term growth.
—
DON’T WASTE YOUR TIME AND SECURE YOUR FINANCES AND BUSINESS WITH THE RIGHT INSURANCE.
HOTLINE L&G 24 JAM: 0811-8507-773 (PHONE – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: halo@lngrisk.co.id
—
