Fitch Ratings believes higher capital requirements will pressure Indonesia's insurers over the next two years, particularly smaller firms with weaker capital.
New minimum equity rules are likely to drive capital raising and consolidation, while a more risk-sensitive solvency framework could further reduce capital headroom.
Based on end-2025 results, 76% of Fitch-rated insurers met the first-stage equity requirement effective at end-2026, but 70% fall short of the stricter end-2028 threshold. This gap is likely to prompt capital injections or consolidation. It will also become more significant under the new group insurance rules, which link equity size to business scope, product range and retention capacity.
Fitch expects the new risk-based capital framework from 2027 to raise capital charges for some insurers, adding to pressure from higher equity floors. The risk is greater for life insurers and firms with weaker asset quality or thinner buffers. Equity recovered for most Fitch-rated insurers by end-2025 after the initial effect of PSAK 117 adoption, which should support compliance for some rated issuers.