Insurers in Indonesia could benefit from the tightening regulation surrounding credit insurance, where banks will be required to retain 25% of the insured default risk. Similarly, Sompo Insurance Indonesia Chief Executive Officer (CEO) Eric Nemitz told Insurance Asia about the huge potential insurers now have in Indonesia's market, whilst adapting to huge regulatory changes.
Prior to this change made earlier in the year, insurers carried 100% of the insured risk. "Tougher minimum equity requirements for Indonesian insurers are likely to reduce the number of companies operating in the sector and encourage a healthier competitive landscape," Fitch Ratings said in an insight.
The Financial Services Authority (OJK) plans to significantly raise minimum equity requirements by the end of 2026, with a further increase by the end of 2028. Insurers offering a full range of products, including credit insurance, will face higher-tier minimums, and reinsurers will also see increased requirements.
Fitch estimated that around 90% of its rated issuers already meet the 2026 requirements, but 62% of the rated portfolio, particularly in the non-life and reinsurance sectors, will need more equity to meet the 2028 standards.
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Denne historien er fra Issue No. 23-utgaven av Insurance Asia.
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Poor Tech Locks Insurers Into Outdated Systems
Only 56% of local insurance companies in Indonesia use IT, and 38% have not embraced digital marketing channels.
What Insurers Must Do To Withstand Market Shifts
Whilst the market drives towards growth, new rules shrink insurer presence.
EDUARD SARGSYAN
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