Jakarta: Global credit rating agency, AM Best has maintained its outlook on Indonesia’s non-life insurance segment at stable, citing resilient growth prospects, ongoing regulatory refinements, and robust investment returns.
According to BERNAMA News Agency, AM Best expects continued expansion in Indonesia’s non-life market, supported by ongoing infrastructure development, solid household consumption, and sustained government spending, which should drive higher demand for commercial insurance.
The report titled ‘Market Segment Outlook: Indonesia Non-Life Insurance’ also noted that rising healthcare awareness is expected to boost growth of the health insurance segment, and ongoing regulatory refinements also support the long-term financial stability of the domestic non-life insurance industry.
As of June 2025, most non-life insurance companies have complied with the first phase of the new minimum capital requirements set forth by Indonesia Financial Services Authority’s (OJK) Regulation 23 of 2023.
‘While the minimum equity requirements impose short-term stress on financially weaker insurers, greater financial resilience of the industry is supportive of sustainable insurance market growth over the long term,’ said AM Best financial analyst, XinYa Ong in a statement.
The report also unveiled that interest rates remain robust in Indonesia compared with historical levels. Given that term deposits and fixed-income instruments constitute most of the segment’s investments, the robust interest rate environment is expected to benefit the overall earnings of non-life companies.
At the same time, the report notes that underwriting performance in the credit and health insurance segments remains under pressure, as paid loss experience of credit lines has continued to adversely develop in recent periods, while health insurance claims have been adversely impacted by high medical inflation and fraudulent behavior.
Another moderating factor to the stable outlook is statutory tariffs on the property and motor business lines, which limits Indonesian insurers’ ability to adjust premium rates. Pricing risk is also emerging in the motor segment with the growth of electric vehicle adoption in Indonesia.