Indonesia's Insurance Market Shifts: Unit-Linked Premiums Decline as Traditional Policies Rise

Significant Drop in Unit-Linked Insurance Premiums

The Financial Services Authority (OJK) has reported a substantial decline in premiums for unit-linked insurance products, also known as PAYDI (Produk Asuransi yang Dikaitkan dengan Investasi), for the period ending September 2025. The total premium income for these investment-linked insurance products reached Rp30.67 trillion, representing a 17.57% year-on-year decrease. Ogi Prastomiyono, Head of OJK's PPDP, attributed this decline to changing consumer preferences in the insurance market.

Growing Preference for Traditional Life Insurance

The Indonesian Life Insurance Association (AAJI) has observed a significant shift in consumer behavior towards traditional life insurance products. According to Togar Pasaribu, Executive Director of AAJI, traditional life insurance now accounts for approximately 63% of total premium income. This trend aligns with patterns observed in more mature Asian insurance markets where traditional products typically dominate with 80-90% market share.

Overall Insurance Market Performance

Despite the decline in unit-linked insurance premiums, the overall commercial insurance sector showed marginal growth. OJK reported that total commercial insurance premiums reached Rp246.34 trillion by September 2025, representing a 0.38% year-on-year increase. The overall growth was driven by different segments within the insurance industry: life insurance premiums contracted by 2.06% year-on-year to Rp132.85 trillion, while general insurance and reinsurance premiums grew by 3.38% year-on-year to Rp113.49 trillion.

Market Implications

The shift towards traditional insurance products reflects changing consumer preferences and risk appetites in the current economic environment. The insurance industry will likely need to adapt its product offerings and marketing strategies to meet these evolving consumer needs while maintaining financial stability and growth.