Mortgage Tenors Extended to 40 Years; OJK Reveals Significant Profit Potential for Insurance Industry
The government has extended the maximum tenor for Housing Financing Liquidity Facility (FLPP) mortgages to 40 years. This policy is viewed as an opportunity for the life insurance industry to increase profits by developing credit life insurance products in a healthy and sustainable manner.
The Executive Head of Insurance, Guarantee, and Pension Fund Supervision at the Financial Services Authority (OJK), Ogi Prastomiyoni, stated that this opportunity must be accompanied by the implementation of prudent risk management and accurate actuarial calculations.
“In principle, the extension of credit periods can have an impact on credit life insurance products,” he said in a written response in Jakarta, as reported on Wednesday, 2 September 2026.
Ogi noted that, on one hand, the extension of tenors has the potential to increase premium income because the protection period becomes longer. On the other hand, insurance companies will also face longer risk exposure, thereby increasing the likelihood of claims during the coverage period.
“Therefore, insurance companies need to ensure that premium setting, risk management, and provisioning are carried out adequately in accordance with the characteristics of the risks being assumed,” said Ogi.
For context, the People’s Housing Savings Management Agency (BP Tapera) is accelerating the idea for the Housing Financing Liquidity Facility (FLPP) with plans to extend financing tenors up to 40 years. In this regard, BP Tapera is pushing for a single scheme so that the policy can be implemented immediately.
According to the Minister of Housing and Residential Areas (PKP), Maruarar Sirait, the mortgage scheme with tenors of up to 40 years aims to make it easier for the public to own homes through lighter monthly instalments. This policy follows the directive of President Prabowo Subianto, which aims to expand public access to subsidised housing.
Generally, based on OJK data, the life insurance industry recorded positive growth as of June 2026, with premiums growing by 8.40 per cent year-on-year to a value of Rp94.83 trillion.
Total after-tax profit for life insurance was recorded at Rp13.24 trillion as of June 2026. During the same period, the net claim expense ratio for the conventional life insurance industry was recorded at 72.95 per cent, an improvement compared to May 2026, which stood at 79.63 per cent.