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 the Best’s Market Segment Report, “Market Segment Outlook: Indonesia Non-Life Insurance,” 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. In addition, rising health care awareness is expected to boost growth of the health insurance segment.

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 XinYa Ong, financial analyst, AM Best.

Interest rates also remain robust in Indonesia compared with historical levels, according to the report. 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 behaviour. 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 as electric-vehicle adoption grows in Indonesia.

“The lack of pricing flexibility, coupled with increased exposure to catastrophe losses, inflationary pressures and evolving risk profiles, heightens pricing risks,” said Chris Lim, associate director, analytics, AM Best. “Nonetheless, regulatory refinements under consideration and potential adjustments to property and motor insurance tariff rates may alleviate this risk over time.”

To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=358676.

Financial Analyst XinYa Ong will give a presentation on AM Best’s outlook for Indonesia’s non-life insurance segment at the 29th Indonesia Rendez-Vous Conference, which is scheduled for 15–17 October 2025, in Bali, Indonesia. AM Best is a sponsor of the event and will be exhibiting as well.

To arrange a meeting with Rob Curtis, managing director and chief executive officer of AM Best’s Singapore operations, and Johnathan Wong, market development analyst, at the conference to learn more about AM Best, its role in the insurance industry and the resources it offers to insurance professionals, including Best’s Credit Ratings, please email rob.curtis@ambest.com or johnathan.wong@ambest.com.

For more information on the Indonesia Rendez-Vous, please visit the official event website and agenda.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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