Indonesian Reinsurance Industry Growth: A Cautious Outlook on Meeting Minimum Equity Requirements

Premium Growth Analysis

The Indonesian reinsurance industry recorded a significant 11% year-on-year growth in premiums to Rp14.53 trillion by the third quarter of 2025, according to data from the General Insurance Association of Indonesia (AAUI). While this growth is notable, PT Reasuransi Indonesia Utama (Indonesia Re), the country's state-owned reinsurance company, has issued a cautious statement regarding the industry's ability to meet the minimum equity requirements set by the Financial Services Authority (OJK) for 2026 and 2028 through organic growth alone.

Cautious Stance on Organic Growth

Delil Khairat, Director of Technical Operations at Indonesia Re, emphasized that it's premature to conclude that the observed premium growth will be sufficient to meet the OJK's minimum equity requirements. He stressed the need for a detailed analysis of the premium growth, including its distribution across different reinsurance companies and business lines. The concern is that the growth may not be evenly distributed, with some companies potentially experiencing contractions in their premium income.

Key Considerations for Industry Stakeholders

1. Distribution of Premium Growth: Understanding whether the growth is evenly distributed across the industry or concentrated in specific companies or business lines.
2. Business Line Performance: Analyzing which business lines (e.g., property, casualty) are driving the premium growth.
3. Company-specific Performance: Assessing whether all reinsurance companies are experiencing growth or if some are facing challenges.

Implications for the Indonesian Reinsurance Market

The cautious stance by Indonesia Re highlights the complexities involved in assessing the industry's ability to meet future regulatory requirements. While the overall premium growth is a positive sign, a comprehensive analysis is necessary to understand its implications fully. The OJK's minimum equity requirements for 2026 and 2028 are significant regulatory milestones that will impact the industry's capital management strategies and potentially its competitive landscape.