Indonesian Insurance Association Warns of Persistently High Credit Insurance Claims Ratio

Concerns Over Credit Portfolio Quality

The Indonesian General Insurance Association (AAUI) has expressed concerns that the credit insurance claims ratio may remain at a relatively high level in 2026 unless there's an improvement in credit portfolio quality. As of October 2025, data from the Financial Services Authority (OJK) showed that the general insurance and reinsurance industry recorded premium income of Rp19.67 trillion for credit insurance, while claims reached Rp16.83 trillion.

Key Statistics and Market Implications

This translates to a claims ratio of 85.56%, indicating that a significant portion of the premiums collected were paid out in claims. AAUI Chairman Budi Herawan emphasized that general insurance companies need to be vigilant about several factors that could potentially increase the credit insurance claims ratio further. Key risk factors include deteriorating economic conditions and risk concentration in specific sectors.

Industry Response and Future Outlook

The high claims ratio in credit insurance reflects the inherent risks in this line of business, which is closely tied to the overall economic performance and creditworthiness of borrowers. As the industry looks towards 2026, maintaining a cautious approach to underwriting and risk management will be crucial for insurers to manage their exposure effectively.