OJK Details Impact of BI Rate Hike on Insurance Industry

Indonesia's Financial Services Authority (OJK) has outlined the potential impact of Bank Indonesia's benchmark interest rate increase to 5.75 percent on the nation's insurance industry.

Ogi Prastomiyono, OJK's Chief Executive of Insurance, Guarantee, and Pension Fund Supervision, explained that the rising BI Rate can fundamentally alter investment strategies, particularly for instruments in the fixed income and money markets. This adjustment is a key consideration for insurers managing their portfolios.

However, Prastomiyono emphasized that the effect of the BI Rate hike is not solely determined by interest rates. Investment performance is also shaped by broader financial market conditions, the movement of asset prices, and the specific characteristics of each insurance company's portfolio. This nuanced view suggests that the industry's resilience depends on multiple factors.

“

The increase in BI Rate can fundamentally affect the investment strategy of the insurance industry, particularly in fixed income instruments and the money market.

Despite potential challenges, the stability of government bond yields is helping to maintain the insurance industry's investment performance. Conversely, the stock market continues to experience volatility due to a combination of global and domestic economic factors. Each company is ultimately responsible for making investment decisions aligned with its liabilities, product features, and risk management strategies.

Data from the OJK indicates that the investment performance of the general insurance industry remained positive through April 2026. Investment yields in conventional general insurance saw an increase from 0.27 percent in March to 0.55 percent in April. Sharia general insurance also recorded an improvement, with yields rising from 0.36 percent to 0.44 percent in the same period. Prastomiyono concluded that these developments demonstrate the industry's capacity to sustain its investment performance amidst dynamic market conditions.

“

This development shows that the industry is still able to maintain its investment performance amidst dynamic market conditions.