Fitch Ratings expects that higher minimum equity thresholds for Indonesian insurers and reinsurers will accelerate market consolidation, as weaker insurers may seek additional capital to meet the tougher requirements or become acquisition targets.
The first stage of the higher threshold takes effect at the end of 2026, with roughly 90% of Fitch-rated insurers already meeting this. However, about 70% will need additional equity to meet the second stage, which commences at the end of 2028.
Insurers with a credit insurance business face higher requirements than those without, but 25% risk retention by banks is expected to moderate capital exposure and support underwriting capacity.
Fitch believes that any resulting consolidation will be credit positive for insurers that meet the tougher thresholds, strengthening their market positions, while those that fall short may become part of an insurance business group.
Insurers that adopted Indonesia’s new accounting standard for insurance contracts, PSAK 117, in January 2025 have so far shown limited equity impact. Fitch expects their risk-based capital metrics to evolve as guidance is finalised.
Indonesia’s newly established sovereign wealth fund, Daya Anagata Nusantara Investment Management Agency, plans to consolidate 15 state-owned insurers and reinsurers into a single entity per segment. In June 2025, it announced the merger of three state-owned reinsurers. Fitch expects the merged group’s capacity to decline.
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