The credit insurance business in Indonesia is facing challenges in terms of profitability and risk exposure as claim costs outpace premium growth and higher interest rates threaten to worsen loan quality, reported the JakartaGlobe.id.
Data from the Indonesian General Insurance Association revealed that the credit insurance loss ratio was above 100% in the first quarter of 2026. The association reported a claim ratio of 102% during the January-March period. Credit insurance claims rose 17% from a year earlier to IDR 4.2tn ($236m), while premium income increased only 3.2% to IDR4.1tn.
Data from the Financial Services Authority showed gross non-performing loans in the banking sector increased to 2.14% in March 2026 from 2.05% at the end of 2025. Loan-at-risk ratios also rose to 8.94% from 8.77%. The financing industry experienced similar pressure. Gross non-performing financing climbed to 2.83% from 2.51%, while net non-performing financing edged up to 0.8% from 0.77%.
The implementation of PSAK117, Indonesia's latest insurance accounting standard, will help insurers to focus on business lines with healthier and more measurable risks.