Indonesia's Financial Watchdog Signals Target Revision for Insurance Sector Amid Slow Growth

Indonesia's Financial Services Authority (OJK) is considering revising the growth targets for the insurance, guarantee, and pension fund (PPDP) sector due to underperformance and economic headwinds. The sector's total assets grew minimally by 0.37% year-to-date as of July 2026, reaching Rp 2,964.56 trillion. This sluggish growth is attributed to a combination of external risks, including the strong impact of El Niño and global geopolitical uncertainties.

The OJK highlighted that the value of investments within the PPDP sector has declined by 0.15% year-to-date. This decrease is primarily driven by pressures in the capital markets and rising interest rates, which have negatively affected the market value of investment portfolios. Furthermore, the number of PPDP accounts has dropped by 13.95% year-on-year, indicating a contraction in the customer base.

“

So, one of the main causes of the decrease is the decrease in investment value. This happened because of the declining stock market conditions. Besides that, along with the increase in interest rates, the market value of the investment portfolio also experienced adjustments.

Ogi Prastomiyono, Head of Supervisory for PPDP and Member of the OJK Board of Commissioners, explained that the decline in investment value is largely due to the current downturn in the stock market and adjustments in market values corresponding to interest rate hikes. He emphasized that these losses are currently unrealized, meaning they are potential, temporary losses unless asset owners are forced to sell their holdings due to liquidity needs.

Beyond investment performance, a significant factor impacting the sector is the decline in public purchasing power. As economic conditions tighten, long-term financial products like insurance and pension plans are becoming secondary priorities for consumers. This shift directly affects sales, prompting the OJK to re-evaluate earlier projections of 6-8% growth for the insurance sector.

“

Purchasing power or people's ability has decreased, so the purchase of insurance products or pension programs becomes a secondary priority. This has a direct impact on us. Whereas, in the Financial Services Industry (IJK) Annual Meeting, we had projected the insurance sector's growth to be around 6–8 percent. With the current conditions, it is possible that we need to revise or make corrections to these growth targets.