AM Best maintained its stable outlook for Indonesia's non-life insurance market, citing steady economic conditions, expanding premiums and new initiatives designed to fortify the sector's financial health.
The rating agency’s October 2026 report emphasises that while macroeconomic fundamentals continue to drive premium expansion, the industry faces an ongoing balancing act between robust growth and underlying profitability pressures.
The ratings agency also highlighted measures being introduced to address rising medical costs, which it expects could provide support for Indonesia’s domestic health insurance sector.
AM Best said most (re)insurers in Indonesia had achieved the first-stage minimum equity requirement of IDR250bn ($13.9m) by July 2026, ahead of the end-of-year deadline. However, the agency also said the requirement could continue to put pressure on smaller or financially weaker non-life insurers that have less flexibility in managing their capital positions.
The sector is preparing for the gradual introduction of a new risk-based capital framework, as well. AM Best said regulatory reporting under the new framework is expected to begin in 2027, forming part of efforts to bring Indonesia’s insurance regulatory regime more closely into line with international standards.
According to AM Best, Indonesia’s non-life segment continues to increase pricing in response to rising claims costs, higher claims frequency and pressure on underwriting margins. While this segment remains broadly resilient, margin pressures have intensified across core business lines, such as credit and health insurance.
Non-life insurers in Indonesia continue to benefit from adequate reinsurance capacity, supported by access to both domestic and international reinsurance markets.
AM Best Director Chris Lim said that although the implications for individual insurers will only become clearer as implementation progresses, the transition may drive stronger capital discipline and risk management practices across the industry over time.