OJK: BI-Rate Hike Impacts Insurance Industry
The Financial Services Authority (OJK) has explained that the increase in Bank Indonesia’s benchmark interest rate, the BI-Rate, to 5.75 percent can have an impact on the insurance industry’s investments. Ogi Prastomiyono, Chief Executive of Insurance, Guarantee, and Pension Fund Supervision at OJK, explained that the movement of the BI-Rate affects the industry in managing its portfolio.
“The increase in the BI-Rate can, in principle, influence the investment strategy of the insurance industry, particularly in fixed-income and money market instruments,” Ogi Prastomiyono stated in a written response quoted on Wednesday.
Nevertheless, Ogi explained that the impact of the BI-Rate increase on the insurance industry must be viewed comprehensively. Investment performance is not only influenced by interest rates but also by financial market conditions, asset price movements, and the portfolio characteristics of each company.
According to Ogi, despite the BI benchmark rate increase, the stability of Government Securities (SBN) yields has been maintained, thereby helping to support the industry’s investment performance. On the other hand, the stock market is still facing volatility influenced by various global and domestic factors.
Fundamentally, investment placement decisions are the authority of each company, in accordance with their liability profiles, product characteristics, and risk management. The OJK continues to conduct supervision to ensure companies implement good investment governance, comply with investment placement limit provisions, and prioritise the precautionary principle so that financial resilience and the ability to meet obligations to policyholders are maintained.
Based on OJK data up to April 2026, the investment performance of the general insurance industry is still showing positive results. The investment yield for conventional general insurance was recorded at 0.55 percent, an increase from 0.27 percent in March 2026. Meanwhile, sharia general insurance recorded an investment yield of 0.44 percent, up from 0.36 percent in the previous month. “This development shows that the industry is still able to maintain its investment performance amidst dynamic market conditions,” Ogi said.