OJK Reports Decline in Life Insurance Premiums Amid Product Shift

Industry Dynamics and Consumer Preferences

The Financial Services Authority (OJK) has reported a 2.06% year-on-year decline in life insurance premiums, amounting to Rp132.85 trillion by September 2025. According to Ogi Prastomiyono, Head of the OJK's Insurance, Pension Fund, and Guarantee Division, the slowdown is primarily driven by the dynamics of the financial market throughout the year and a notable shift in consumer preferences within the life insurance sector. The shift is particularly evident in the decreased demand for unit-linked insurance products (PAYDI), which dropped by 17.57% YoY to Rp30.67 trillion during January-September 2025.

Shift to Traditional Insurance Products

The OJK observed that consumers are increasingly favoring traditional endowment and pure protection insurance products over unit-linked products. This trend is supported by data from the Indonesian Life Insurance Association (AAJI), which indicates that traditional insurance premiums now constitute approximately 63% of total premium income. Togar Pasaribu, Executive Director of AAJI, noted that this shift mirrors patterns seen in more mature Asian insurance markets, where traditional products typically account for 80%-90% of total premiums.

Industry Outlook and Key Indicators

Despite the current decline in premium income, OJK remains optimistic about the life insurance industry's prospects for the remainder of the year. The authority highlighted several fundamental indicators that suggest resilience: strong capital reserves, adequate liquidity, and robust claim payment capabilities. These factors are expected to support the industry's stability and growth potential moving forward.

Recent Trends and Historical Context

The decline in life insurance premiums is not an isolated incident; it follows previous contractions observed in July and August 2025, where premiums fell by 0.84% and 1.21% YoY, respectively. This consistent trend underscores the ongoing shift in consumer preferences and the evolving dynamics within the life insurance market. The OJK's continued oversight and the industry's adaptive responses will be crucial in navigating these changes and sustaining growth.