Indonesia Life Insurance Industry to Potentially Boost Stock Investments in 2026

Changing Investment Landscape

The Indonesian life insurance industry is on the cusp of a potential strategic shift in its investment approach for 2026. According to Yurivano Gani, Head of Operational Excellence at the Indonesian Life Insurance Association (AAJI), there are indications that life insurance companies may increase their allocation to stock investments next year. This potential change is driven by improving market indicators and growing confidence in government policies.

Current Investment Profile

Currently, life insurers maintain a conservative investment stance, with the majority of their portfolios allocated to fixed-income instruments. BCA Life, for instance, primarily invests in government bonds, while Ciputra Life also maintains a significant portion of its investments in state and corporate bonds. As of Q3 2025, the industry's stock investments stood at Rp124.57 trillion, representing a 14% year-on-year decline.

Factors Influencing Investment Decisions

Industry experts identify several key factors that influence life insurers' investment decisions:

1. Internal factors: Liability profile, risk appetite, and company-specific investment policies
2. External factors: Macroeconomic conditions, risk-return profiles of various asset classes, and regulatory frameworks

Potential Shift to Equities

While fixed-income instruments remain the primary investment choice due to their stability and liability matching requirements, there is growing interest in selectively increasing exposure to the stock market. Companies like Ciputra Life are continuously evaluating potential additions to their equity portfolios, particularly in stocks with strong fundamentals but currently low valuations.

Expert Perspectives

Wahyudin Rahman, an insurance expert, notes that while the primary allocation will likely remain in fixed-income instruments, there are opportunities to increase stock exposure in sectors with strong fundamentals. He also highlights the growing importance of diversification into alternative assets such as infrastructure and ESG-based instruments to enhance stable returns.

Industry Outlook

The life insurance industry's investment strategy for 2026 is expected to be more opportunistic while remaining cautious. Companies will likely maintain a balanced approach between traditional fixed-income investments and selective equity investments, all within a framework of strict asset-liability matching and risk management practices.