Indonesia’s non-life insurance sector is navigating a challenging environment, as insurers grapple with rising natural disaster claims alongside strict capital requirements. Increasing liabilities from floods, wildfires, and other calamities have raised concerns over premium hikes, higher operational costs, and potential coverage limitations.
Analysts indicate that insurers must adapt their strategies to align with new capital standards if they wish to maintain stable profitability. According to Fitch Ratings, competition may ease slightly as companies focus more on financial stability and risk management. Policies in high-claim areas such as credit and health insurance are likely to face stricter underwriting, which could stabilise returns. Additionally, fixed investment returns and internal interest rates will continue to support overall income.
Premium growth is expected to improve only modestly. Fitch projects a 3% increase in the first nine months of 2025, followed by marginal growth in 2026. Weakness in motor insurance, primarily due to stagnating vehicle sales, is anticipated to be partially offset by growth in property, credit, and health insurance segments.
Projected Non-Life Insurance Landscape for 2026
| Insurance Segment | Contribution to Non-Life Premiums | Expected Growth in 2026 |
|---|---|---|
| Motor | ~50% | Weak / Minimal |
| Property | ~25% | Moderate |
| Health | ~15% | Moderate |
| Credit | ~10% | Moderate |
GlobalData anticipates an overall non-life premium growth of 8.4% in 2026. Recurrent floods and wildfires have heightened public risk awareness, while regulatory changes and government initiatives have spurred investment in disaster mitigation. Severe flooding in Bali and other regions in December 2025 exposed significant uninsured losses, reinforcing demand for broader flood and wildfire coverage.
Senior analyst Swaroop Kumar Sahu from GlobalData noted, “Post-disaster risk awareness, policy revisions, and disaster-linked new products will accelerate non-life insurance growth.” In 2026, automatic insurance offerings following floods or earthquakes are expected to safeguard government assets and could eventually extend to private property.
Nevertheless, disaster insurance penetration remains extremely limited. Fewer than 0.1% of homes currently carry natural disaster coverage, and property insurance coverage is estimated at only 0.13%, leaving over 80% of losses from major floods uninsured.
Government measures, including enhanced reinsurance capacity, have improved access to property insurance. However, challenges persist for insurers in pricing, coverage expansion, and profitability. Experts emphasise that product innovation, efficient distribution, and building public trust will be key strategies for closing Indonesia’s insurance protection gap.
The central question remains: how will insurers expand property and disaster coverage across a predominantly uninsured market while safeguarding profitability amid escalating natural disaster risks?