Extreme El Niño Threatens Insurance Industry, OJK Head Reveals Reasons

The Financial Services Authority (OJK) views the extreme El Niño phenomenon as having the potential to increase risks in the insurance industry, particularly related to droughts, forest and land fires, and disruptions in the agriculture and health sectors. The Head of the Executive for Insurance, Guarantee, and Pension Fund Supervision (KE PPDP), Ogi Prastomiyono, stated that the industry players already have adequate mitigation through reinsurance programmes, including catastrophic protection, as well as the establishment of technical reserves. “The lines of business affected include property insurance, motor vehicle insurance (especially fire risks), agriculture, and health, in line with the increasing frequency and severity of risks,” he said in a written statement on Thursday (9/4/2026). Ogi emphasised that premium rate adjustments will continue to be carried out in a measured manner in accordance with applicable regulations and taking into account the public’s purchasing power. In addition, OJK is also encouraging the strengthening of product innovations such as parametric insurance and coordination with stakeholders, including Maipark, in updating disaster risk maps. “Overall, the industry is expected to continue strengthening risk management and preparedness to face the potential increase in claims due to extreme weather conditions,” he added.