Learning from Default Cases, Life Insurers More Cautious in Placing Investments

The history of default cases in the life insurance industry, which once eroded public trust due to poor investment management, is considered an important lesson for industry players to improve. This was stated by insurance observer and lecturer in the MM Programme at the Faculty of Economics and Business, Universitas Gadjah Mada, Kapler Marpaung, when responding to the industry’s investment results that increased significantly by 103.1% (year-on-year/YoY) throughout 2025. “This is a valuable lesson, making colleagues in life insurance even more prudent in placing their investments. This is truly extraordinary; investment results in 2025 increased by 103.1% compared to 2024. On the other hand, investment capital only increased by more than 9%,” he told Bisnis, quoted on Monday (23/3/2026). Kapler opined that the 103.1% YoY increase in investment results was influenced by two factors. First, the increase in investment capital from Rp513.7 trillion in 2024 to Rp590.54 trillion in 2025. Second, better and more cautious investment management in handling investment portfolios. Furthermore, he assessed that the life insurance industry still needs to maintain the placement of its investment funds in Government Securities (SBN). This is because such instruments have the lowest investment risk compared to other types of investments. In addition, he added, currently the largest investment portfolio of life insurers is still in SBN, followed by equity instruments. However, investments in stocks in markets or indices that are highly volatile, especially with escalating foreign geopolitics, require extra caution. Moreover, US-Iran relations will certainly greatly affect the Indonesian capital market, Kapler stressed. Kapler added that issuers often considered by the life insurance industry include the Artificial Intelligence (AI) sector, renewable energy, mining especially nickel and gold, finance and banking, infrastructure, pharmaceuticals and health, property, and consumer goods. “But this also needs a review following the current unconducive foreign politics,” he said. Therefore, Kapler suggested that the life insurance industry should further optimise the diversification of its investment portfolios. Although in 2025, he assessed that the diversification was already good. “Yes, in my opinion, the 2026 investment target should focus more on the security of investment results, not on high investment returns. Because remember, high return means high risk,” he said. Furthermore, he also reminded that the main income of life insurance should be from underwriting profits, not from increases in investment results. “Moreover, if we delve deeper into the ratio of own capital to premium reserves and claims against the amount of investment. Not all life insurance investment capital is pure equity,” he concluded. For information, the Indonesian Life Insurance Association (AAJI) recorded that investment results in the life insurance industry throughout 2025 rose significantly by 103.1% YoY. AAJI Board Chairman Albertus Wiroyo stated that the positive investment performance boosted the total revenue of the life insurance industry, thus reaching Rp238.71 trillion. “So, up to December last year, the industry’s investment results experienced an increase of 103.1% compared to 2024, becoming Rp47.32 trillion,” he said at the AAJI press conference in Jakarta on Friday (13/3/2026). On the same occasion, AAJI Marketing and Communications Division Chairman Harsya Wardhana Prasetyo conveyed that the life insurance industry manages 88.5% of its assets in the form of investments. He revealed that throughout 2025, the total investment assets of the life insurance industry were recorded at Rp590.54 trillion or up 9% YoY. Upon examination, the investment instruments that experienced significant growth were Government Securities (SBN), which grew 20.9% to Rp248.25 trillion.