The Chairman of the Indonesian General Insurance Association (AAUI), Mr Budi Herawan, hopes that the government will make it an option. rather than a requirement, for insurance companies to increase their investments in the stock market to 20% from 8% of total investments.
"The plan to increase the share investment portion should be considered a flexible option, not an obligation, and we should continue to await further technical provisions from the regulator to ensure its implementation strikes a balance between financial market development and protecting policyholder interests," he told the news agency Antara.
On 30 January, the Coordinating Minister for Economic Affairs Airlangga Hartarto and Finance Minister Purbaya Yudhi Sadewa revealed the plan to raise the ceiling. This followed a rout on the Indonesia Stock Exchange (IDX) after Morgan Stanley Capital International (MSCI) said on 28 January that it would temporarily freeze adjustments to the weightings of major Indonesian stocks. MSCI said that its main concerns are the lack of transparency of share ownership as well as the risk of coordinated trading. The Indonesia Stock Exchange Composite Index (IHSG) plunged as a consequence.
In the initial phase, the implementation of the new investment ceiling will focus on large-cap stocks included in the LQ45 index, which tracks 45 of the most liquid and high-quality stocks on the IDX.
"Indonesia is opening up opportunities for insurance companies and pension funds to invest in good stocks," said Mr Airlangga at the 2026 Indonesia Economic Summit in Jakarta on 3 February.
Investment ratios
Mr Budi said that a Financial Services Authority regulation (POJK Number 26 of 2025) on "Management of Assets and Liabilities of Insurance and Reinsurance Companies" actually sets out that the maximum investment limit for insurance and reinsurance companies in stock instruments is 40%.
He said that the proportion of stock investments by the general insurance industry is currently still relatively low, namely, less than 5%, "primarily due to the short-term nature of general insurance products, high claim frequency, and significant liquidity requirements, which leads to a conservative investment approach".
According to the Indonesian Life Insurance Association (AAJI), life insurers’ stock investments reached IDR124.57tn ($7.43bn) as of 30 September 2025. This was around 21.8% of the total investment portfolio in the life branch as of that date.
Mr Budi urged AAUI member companies to strengthen investment risk management, particularly market and liquidity risk management. "In a volatile market, caution is key to ensuring that increasing the shareholding doesn't put pressure on claims payment capacity," he said.