Indonesia’s tighter capital requirements could change which insurers are allowed to write credit, trade credit and specialized commercial risks, potentially narrowing the panel of insurers available for those placements from 2029.
In an October 12 assessment, Fitch Ratings found that around 70% of the 17 Indonesian insurers it rates did not yet meet the higher equity requirements due by the end of 2028. Many are unlikely to make up the shortfall through earnings alone, increasing the likelihood of capital injections or consolidation. Fitch estimates rated insurers would need average annual equity growth of 37% to meet their 2028 targets.
The findings come as Indonesia’s Financial Services Authority (OJK) prepares to tie insurers’ business activities to their capital levels under phased minimum equity requirements. Life and non-life insurers must hold at least IDR250 billion (about US$16 million) in equity by the end of 2026, rising to IDR500 billion or IDR1 trillion by the end of 2028 depending on their classification. Reinsurers face thresholds of IDR1 trillion or IDR2 trillion by 2028, again by classification.
Most insurers have met the first stage. Based on end-2025 results, 13 of the 17 Fitch-rated insurers, or 76%, were already compliant. Across the wider sector, 117 of 147 insurers and reinsurers, or about 81%, met the end-2026 requirement in OJK’s August 2026 monthly report, Kompas reported.
Under OJK’s proposed equity-based classification, known as KPPE, insurers would be divided into two groups. KPPE 1 covers insurers with equity of IDR500 billion to less than IDR1 trillion, and KPPE 2 those with IDR1 trillion or more. Non-life insurers in KPPE 1 would no longer be allowed to write credit insurance or trade credit insurance. They would also face a retention limit of IDR10 billion on certain marine hull, aviation, satellite, energy and engineering risks, while the draft sets IDR20 billion for KPPE 1 reinsurers. KPPE 1 life insurers would face restrictions on annuities, unit-linked policies and certain whole life products. KPPE 2 insurers could offer the full range.
Brokers placing credit, trade credit and large specialty risks in Indonesia would have fewer eligible insurers at the lower-capital end, and lower-capital insurers could retain less on the lines they are still allowed to write.
Under the draft, OJK would classify insurers using audited 2028 financial statements, with the first classification period running from July 1, 2029 to June 30, 2030, according to Indonesian reporting. Fitch said the impact on existing business remains unclear because OJK has not yet explained how and when the restrictions would be enforced. OJK has said the draft is not final.
The higher capital requirements also come as general insurance premiums decline. OJK’s latest industry figures show general insurance and reinsurance premiums fell 2.35% year on year to IDR99.61 trillion in the first eight months of 2026, while life insurance premiums rose 7.01%.
For insurers unable to raise enough capital themselves, joining an Insurance Business Group (KUPA) could be an alternative to a full merger or sale. Subsidiaries would still need to meet the initial equity requirements, while the parent must meet the higher KPPE 2 threshold and have enough financial resources to support the group.
Fitch identified PT Asuransi Eka Lloyd Jaya as facing a high risk of failing to meet the stricter requirements. The agency placed its BBB(idn) National Insurer Financial Strength Rating on Rating Watch Negative in November 2025.
OJK also plans new solvency rules from 2027 that would reflect insurers’ risks more closely, potentially raising capital requirements for companies with weaker assets or smaller financial buffers. Early testing with 10 insurers produced lower solvency ratios under the proposed rules.
For now, the industry is well above the existing minimum solvency ratio of 120%. In August 2026, risk-based capital ratios stood at 471.57% for life insurers and 331.52% for general insurers and reinsurers. Meeting today’s solvency requirements does not guarantee meeting the higher equity thresholds, which could also decide which products insurers can offer and how much risk they can retain.
