Indonesia Emerging Financial Conglomerate

Insurance brokers placing risk into Indonesia are watching a market where the number of independently owned insurers is shrinking, and a newly approved deal by South Korea's KB Financial Group shows exactly how that reshaping works in practice.

Regulators have cleared KB Financial to fold six Indonesian units, including KB Insurance Indonesia, under a single local holding company, making it one of the first visible tests of a rule that will touch every large financial group operating in the country.

The requirement traces back to Law No. 4 of 2023, Indonesia's P2SK Law, and its implementing rule, OJK Regulation No. 30 of 2024. Together they require any large financial conglomerate to appoint a Financial Conglomerate Holding Company, or PIKK, to sit above its regulated units.

The threshold -is specific enough that brokers can use it to assess which counterparties are affected. A group triggers the mandate once it holds at least Rp100 trillion (US$5.7 billion) in assets and operates two or more regulated entities across two or more financial sectors, or between Rp20 trillion (US$1.14 billion) and Rp100 trillion (US$5.7 billion) in assets with three or more entities across three or more sectors.

Once OJK approves a group's restructuring plan, that group has one year to complete it - the same clock now running for KB Financial, whose deadline falls in August 2027.

For a broker, the practical read is this: any Indonesian insurer sitting inside a larger banking or financial group is likely to see its ownership structure formalized under this rule over the next two years, whether or not the insurer itself changes hands.

What changes for the counterparty, what doesn't
KB Financial's application cleared OJK on the 5th, with industry sources reporting the decision on the 18th, after an earlier version was rejected late last year and resubmitted in March.

Rather than build a new PIKK, the group is converting an existing IT subsidiary, KB Data Systems Indonesia, into the holding company. KB Data Systems currently holds a 95.1% stake in the Indonesian unit and will transfer nearly all of it to Kookmin Bank, retaining only a token share.

Six affiliate stakes then move under that structure: Kookmin Bank's holding in KB Bank Indonesia, KB Securities' stake in KB Valbury Sekuritas, KB Insurance's position in KB Insurance Indonesia, KB Kookmin Card's holding in KB Finansia Multi Finance, KB Capital's stake in Sunindo Kookmin Best Finance, and KB Asset Management's position in KB Valbury Asset Management.

For brokers assessing security, KB Insurance Indonesia's rating position is unchanged by any of this. AM Best affirmed the unit's Financial Strength Rating of B++ (Good) and Long-Term Issuer Credit Rating of "bbb+" (Good) last August, citing a five-year return-on-equity ratio of 4.7% and a combined ratio of 98.8%.

The insurer remains a joint venture between KB Insurance Co., Ltd., holding 70%, and PT AB Sinar Mas Multifinance, holding the remaining 30%, and that joint-venture ownership sits outside the scope of the parent-level restructuring altogether.

The more relevant question for distribution is whether a unified holding structure lets a bank-owned insurer push business through its own banking channel more easily. It doesn't, automatically.

Under OJK Regulation No. 8 of 2024, any bancassurance arrangement between an insurer and a bank still requires prior OJK approval and a separate written agreement, regardless of common ownership above them. Common ownership does not, on its own, grant a shortcut around that approval step.

A pattern, not a one-off
KB Financial is not the only Korean group consolidating its Indonesian position under this pressure. In January this year, Hanwha General Insurance took a controlling 61.5% stake in PT Lippo General Insurance Tbk, absorbing a 46.6% holding previously owned by an affiliated Hanwha entity and making Lippo General a consolidated subsidiary.

The deal came as the wider Hanwha group increased its activity in insurance and financial services across the region, part of a broader pattern of Korean insurers entering ASEAN markets to diversify earnings outside their home base.

The PIKK rule sits alongside other structural changes that are narrowing the field of independent insurers a broker can place business with.

Under OJK Regulation No. 11 of 2023, insurers must spin off takaful business lines into separate entities, and OJK is phasing in higher minimum paid-in capital requirements, with conventional insurers required to hold Rp250 billion (US$14.25 million) by 2026, rising to Rp500 billion (US$28.5 million) for smaller entities and Rp1 trillion (US$57 million) for larger ones by 2028.

Industry observers have said some insurers may struggle to meet those thresholds, a factor expected to drive further consolidation.

Banking side still carries the larger balance sheet story
KB Bank, the group's Indonesian banking unit, has built its corporate finance business through the current year, extending its client base from Korean firms operating locally to large Indonesian corporates and small and mid-sized businesses.

It has taken part in arranging syndicated loans for major local companies, including state-owned petrochemical firm PON, since the start of the first half of this year.

On a Kookmin Bank consolidated basis, KB Bank recorded a net loss attributable to controlling shareholders of 2.945 billion won for the first half of 2026, against a loss of 53.83 billion won a year earlier.

The bank has continued a restructuring process, including the disposal of non-performing assets, since Kookmin Bank became its largest shareholder in 2020, and posted its first annual profit under Indonesian accounting standards last year.

Brokers with Indonesian placements would do well to track how "synergy" is defined in practice once the structure is finalized, given that distribution approval remains a separate regulatory step from ownership consolidation.

Oona Insurance - Digital General Insurer

Oona Insurance, one of Southeast Asia’s fastest-growing digital general insurers, plans to accelerate its regional expansion and actively pursuing acquisitions across Southeast Asia after delivering strong first-half 2026 growth that significantly outpaced its core markets.

Less than four years after entering Indonesia and the Philippines, Oona has established itself as one of the region’s fastest-growing insurers.

In Indonesia, where the general insurance market contracted by approximately 2% in H1 2026, Oona grew its Gross Written Premium (GWP) by 40%. The company maintained its position among Indonesia’s top 10 motor insurers by GWP while climbing nine places to 23rd in the country’s overall non-life insurance rankings.

In the Philippines, where the non-life insurance industry has historically expanded by around 10–15% annually, Oona delivered 80% GWP growth in the first half of 2026. Broad-based expansion across its multi-channel distribution model helped propel the company into the country’s top 10 non-life insurers by net written premiums.

While premium growth remained strong, Oona’s profitability improved even faster, signalling that the insurer’s expansion strategy is translating into stronger earnings.

Oona Indonesia’s net income grew 55% year-on-year in the first half of 2026, while Oona Philippines recorded 200% growth, demonstrating that strong premium growth has been matched by disciplined underwriting and improving operating leverage. The Group maintained a combined ratio (COR) of 96% across both markets, remaining below the 100% threshold for underwriting profitability — a benchmark achieved by relatively few insurers in the region.

Oona’s growth is being supported by Southeast Asia’s structurally underpenetrated insurance markets. Insurance penetration in both Indonesia and the Philippines remains below 2% of GDP — among the lowest in Asia, leaving substantial room for long-term growth as consumers increasingly adopt digital financial services.

To accelerate its next phase of growth, the company is actively evaluating acquisition opportunities across Southeast Asia. Indonesia and the Philippines remain immediate priorities, while Thailand and Vietnam represent the next phase of its regional expansion strategy.

Oona has built its technology and product architecture to integrate directly into the platforms customers already use—from e-wallets and ride-hailing apps to banks and travel platforms. Rather than asking customers to buy insurance separately, the company enables protection to be embedded naturally into existing digital journeys. For partners, this means faster integration and access to a broader range of insurance products. For customers, it means buying insurance becomes a seamless part of an everyday transaction.

Hanwha Group Updates First-half 2026

Hanwha Life’s first-half 2026 (H1 2026) results offer a concrete measure of a broader strategic shift underway among South Korean life insurers: as domestic premium growth moderates, the country’s carriers are deploying capital into Southeast Asian insurance markets, 

Indonesian banking, and US securities – and the financial returns are beginning to register. The Seoul-based insurer reported on August 13 that its key overseas subsidiaries generated a combined net profit of KRW 103 billion (approximately US$72.7 million) in the first half of 2026, equivalent to roughly 87% of their total net profit for the entirety of 2025. Those subsidiaries – spanning Vietnam, Indonesia, and the US – accounted for approximately 11% of Hanwha Life's consolidated net profit of KRW 904.5 billion (approximately US$638.4 million) for the period.

Vietnam gains arrive at a market inflection point
Hanwha Life Vietnam posted a net profit of KRW 32 billion (approximately US$22.6 million) in H1 2026, up 23% year-on-year, driven by improved claims management, lower operating expenses, and higher investment income from deposits placed amid rising local interest rates. The subsidiary also entered new bancassurance partnerships and launched additional sales operations ahead of H2. That performance comes against a market that has been deeply disruptive for foreign-owned insurers. Vietnam’s life insurance sector entered a prolonged correction following a bancassurance mis-selling crisis that emerged in late 2022, after bancassurance had grown at a 53% compound annual growth rate between 2017 and 2022. 

The market decline was driven primarily by heightened regulatory and public scrutiny of bancassurance sales practices, particularly the bundling of insurance products with bank lending, while equity-market volatility and high-profile customer complaints on social media amplified reputational damage. The resulting trust shock saw new-business volumes fall sharply and first-year lapse rates exceed 70% for some insurers. By 2025, both agency and bancassurance volumes had fallen back to 2017 levels.

Analyst estimated 0.9% annual growth for Vietnam’s life insurance market in 2025 and projected acceleration to 3.8% in 2026, as distribution channels adapt and banks re-engage on improved terms. The recovery is unfolding on structurally altered terms, however. One of the most significant post-crisis shifts has been Vietnamese banks moving from distributors toward becoming insurance owners and competitors.

Techcom Life, launched in 2025, was the first greenfield domestic life insurer established outside the traditional joint-venture model since 1996. Backed by Techcombank and Vingroup, the insurer has adopted a focused bancassurance model. The shift creates a potential competitive challenge for international insurers that have historically relied on exclusive bancassurance arrangements, as banks increasingly have the option of controlling their own insurance manufacturing and distribution.

Vietnam’s life insurance market remains highly competitive as new-business rankings shift. Bao Viet Life held an 18.3% share of new-business premium revenue in the first two months of 2026, followed by Generali at 11.5%, while Dai-ichi Life and AIA each held around 11% to 12%. Techcom Life, launched in 2025, reached 8.3% by February, entering the top five and surpassing several established foreign insurers. By total life insurance premium revenue, however, Bao Viet Life remained the leader at 23.5%, followed by Manulife at 17.4%, Dai-ichi at 11.8%, AIA at 11.6%, and Prudential at 11.4%.

Non-insurance subsidiaries provide the larger earnings contribution
The more structurally significant element of Hanwha Life’s H1 results is the contribution from its non-insurance entities. US-based Velocity Clearing, LLC and Indonesia’s Nobu Bank together recorded a combined net profit of KRW 58 billion (approximately US$40.9 million) – exceeding the Vietnam insurance unit’s individual contribution. 

Velocity Clearing is a self-clearing broker-dealer registered with the SEC and FINRA, with registrations and memberships across major US exchanges and self-regulatory organizations, including the New York Stock Exchange, Cboe Exchange, Nasdaq BX, and Nasdaq PHLX. Its services include execution, clearing and custody, stock-locate services, securities lending, and financing. Hanwha Life acquired a 75% stake in the firm in a transaction completed July 30, 2025. As of the end of 2024, Velocity held approximately US$1.2 billion in total assets, while revenue had grown at a 25% CAGR from 2022 to 2024. The firm recorded KRW 29 billion in net profit in H1 2026.

On the banking side, Hanwha Life secured a 40% controlling stake in Indonesia’s Nobu Bank from Lippo Group in June 2025, becoming the first Korean insurer to enter the overseas banking sector. As of 2024, Nobu Bank held total assets of approximately US$2.2 billion, while net profit more than doubled from KRW 12 billion in 2023 to KRW 27.9 billion in 2024. Nobu Bank’s H1 2026 net profit reached KRW 29 billion, already exceeding its full-year 2024 result, with recent growth supported by mortgage lending and its position in Indonesia’s QR-payment market.

A pattern across the Korean insurance sector
Hanwha Life’s model reflects a sector-wide response to domestic constraints. South Korea’s Financial Supervisory Service (FSS) reported that the overseas operations of 12 Korean insurers generated a combined net profit of US$197 million in 2025, up 23.8% year-on-year across 46 entities in 11 markets. Profit from overseas insurance businesses, however, fell by US$22.1 million year-on-year to US$128.6 million – with the gap filled by Hanwha Life’s newly consolidated banking and securities businesses.

For brokers and independent distributors operating in Vietnam and Indonesia, the strategic shift is significant. Korean insurers are expanding beyond underwriting into banking, securities, and distribution, giving them greater control over customer access and bancassurance channels. The ASEAN bancassurance market was valued at US$35.82 billion in 2025 and is forecast to reach US$69.71 billion by 2031, representing an 11.08% compound annual growth rate, according to Mordor Intelligence. As insurers pursue that growth through exclusive or preferential bank partnerships, brokers could face greater competition for customers and distribution access, particularly where banks give partner insurers preferential access to their customer bases.

Group-level results
On a consolidated basis, Hanwha Life reported a 96% year-on-year increase in net profit to KRW 904.5 billion (approximately US$638.4 million) for H1 2026, with standalone net profit rising 183.9% to KRW 510.2 billion (approximately US$360.1 million). New business contractual service margin reached KRW 1.3001 trillion (approximately US$917.6 million), which the company said was its highest first-half figure since adopting IFRS 17, with new business profitability rising 11-fold. 

Kyobo Acquires AXA General

Kyobo Life Insurance is pursuing the acquisition of AXA General Insurance, a subsidiary of France's AXA Group, in a move to complete the final puzzle piece of its transition into a financial holding company. The insurer has sent out requests for proposals to global investment banks and accounting firms to select an acquisition advisor, with due diligence expected to begin as early as the end of this month. 

The transaction is being structured as a private deal directly with AXA Group, and AXA General Insurance's enterprise value is estimated at ₩200 billion to ₩300 billion (approximately $141.8 million to $212.7 million). AXA General Insurance was originally acquired by Kyobo Life in 2001 and sold to AXA in 2007 — meaning this deal would bring the company back into the fold after roughly two decades. 

Kyobo Life has been moving aggressively this year, having already acquired SBI Savings Bank and Kyobo AXA Asset Management in succession, rapidly building a comprehensive financial portfolio spanning life insurance, non-life insurance, securities, asset management, and savings banking. The company is also simultaneously advancing plans to relaunch its initial public offering.

Japan Rising Interest Rate

Meiji Yasuda Life Insurance, one of Japan's top five insurers, is considering the implications of an industry-wide increase in policy cancellations, as policyholders are being encouraged by higher interest rates to consider alternative financial products.

Japan’s life insurers are facing a surge in policy cancellations as rising interest rates make alternative investments more attractive. During the first five months of 2026, insurers paid out more than JPY6tn ($37.7bn) to customers who terminated their policies, roughly 40% more than in the same period a year earlier. The figure is the highest recorded in data from the Life Insurance Association of Japan dating back to 2020.

The trend is particularly significant in Japan, where life insurance products often combine death protection with savings or investment features. As the Bank of Japan has moved away from its long-standing negative interest rate policy and raised rates to 1%, investors have increasingly sought opportunities offering higher returns.

The changing investment environment is putting pressure on insurers, with some policyholders choosing to surrender existing policies and redirect their money towards higher-yielding assets.

Indonesia Life Insurance 1st Quarter 2026

Indonesia's life insurance industry recorded booked new business premiums of $1.5b (Rp27.90t) in January to March 2026 (Q1 2026), up 5.0% from a year earlier.

Indonesian Life Insurance Association, or AAJI, said 56 life insurers insured 118.28 million people during Q1 2026, which rose 20.9% year-on-year.

AAJI said the figures showed the industry continued to provide financial protection to the public despite economic pressures. The industry’s total income reached $2.6b (Rp47.63t) in Q1 2026. During the same period, insurers paid $2.1b (Rp38.73t) in claims and benefits, up 1.5% year on year.

Total unweighted premium income was relatively stable at $2.6b (Rp47.27t). Traditional life insurance remained the largest product contributor, generating $1.7b (Rp30.10t) in premiums in Q1 2026. AAJI said this showed that basic protection remained a key part of household financial planning.

By distribution channel, bancassurance remained the largest contributor, with $1.0b (Rp18.54t) in premium income.

Alternative distribution channels generated $0.8b (Rp14.44t), whilst the agency channel grew 1.2% to $0.8b (Rp14.29t) during Q1 2026.

Children Insurance Fraud

A court in the central city of Danang on Thursday sentenced a 45-year-old woman to life imprisonment for murdering her five-year-old son and fraudulently claiming more than VND4.1 billion (around US$150,000) in life insurance payouts after staging the death as an accidental drowning.

The Danang People's Court found To Thi Ty Na, from Thang Binh Commune, guilty of murder and insurance business fraud. She was sentenced to life imprisonment for murder and six years in prison for insurance fraud, which combined into a life sentence under Vietnamese law.

According to the indictment, police initially received a report on January 3, 2023, that Na's son, identified as N.V.H., born in 2017, had been found dead in a bathroom bucket at the family's home the previous night.

However, the boy's paternal aunt, Nguyen Thi Bich Tam, reported her suspicions to authorities on the same day.

Tam told investigators she had reviewed the home's security camera footage and discovered that Na had deliberately redirected one of the cameras before the incident. Tam also recalled that another of Na's children had died in similar circumstances in 2021 after drowning in a bucket in the bathroom, following which Na received more than VND2 billion in insurance compensation.

The similarities between the two deaths prompted police to launch a full investigation. Prosecutors said there was no evidence that the child could have accidentally drowned in the position in which he was discovered.

Although the boy had no injuries before the incident, the post-mortem examination found multiple bruises and marks on his forehead, groin and leg, indicating he had struggled against external force before his death.

Court documents showed that Na had previously served a 40-month prison sentence for theft before returning home, marrying and raising four children. After her husband died in 2020, she struggled financially. Prosecutors said she had sold the family home for VND1.2 billion to cover living expenses and later exhausted the proceeds.

Na subsequently purchased seven life insurance policies covering her four children, paying annual premiums exceeding VND100 million ($3,800). She named herself as the beneficiary of all the policies. Her youngest son alone was covered by two separate life insurance contracts with different insurers.

Following his death, Na falsely declared that he had accidentally drowned, enabling her to claim insurance benefits. Based on the fraudulent documentation, the two insurance companies paid her more than VND4.1 billion, all of which prosecutors said was spent on personal expenses.

During the trial, Tam reiterated that the altered camera angle had first raised her suspicions, while the child's teacher testified that the boy had been healthy and showed no signs of injury before his death. In her final statement before the court, Na continued to deny the charges and asked the judges to allow her to return to her family.

After reviewing the evidence and arguments presented during the trial, the court ruled that prosecutors had proved beyond doubt that Na murdered her son in order to obtain insurance money and handed the woman a life sentence.

China Subject Offshore Insurance Income To Domestic

China's State Taxation Administration said offshore insurance income was subject to domestic tax, local news outlet the Paper reported, citing an official on Friday.

China will treat all residents' overseas income equally, regardless of whether it is overseas insurance income or other investment income, all income must be declared and taxed according to law.

The clarification came after reports emerged that local tax authorities were stepping up cross-border tax compliance efforts and reviewing tax residents' unreported foreign income.

Beijing and Hangzhou authorities have started to apply personal income tax rates of 20% on returns from Hong Kong insurance policies. Mainland Chinese authorities have escalated scrutiny of offshore investments in recent months, which analysts say could weigh on money flows to Hong Kong.

Taxing offshore-sourced income derived by Chinese tax residents, including returns on overseas insurance policies, is a common international practice and has been consistently upheld since the implementation of China's Personal Income Tax Law, the official said.

South Korea Life Insurers Faces Declining Sales

South Korean life insurers are facing declining sales, as demand for new policies fell amidst a shrinking population and an aging society. According to statistics from the Korea Life Insurance Association (KLIA), the number of new life insurance contracts in the first half of 2026 totalled 4,112,902, down 12.9% from the first half of last year. New contract premiums also fell 6.8% over the same period to KRW744.37bn ($519m).

The KLIA statistics reveal that the overall decline in new contracts was largely driven by weak sales of protection-type insurance products. In the first half 2026, new protection-type insurance contracts totalled 3,869,319, down 13.4% from a year earlier, far exceeding the decline in savings-type insurance (-3.6%). New contract premiums also fell 5.9% to KRW632.07bn.

On the other hand, the base for new subscriptions shrank due to population decline from low birthrates and aging, while new demand itself fell as insurance subscription rates had already reached high levels.

Protection-type insurance sales also contracted on a first-year premium basis. From January to April 2026, first-year premiums for individual protection-type insurance totalled KRW489.2bn, down 22.0% from KRW627.2bn a year earlier. First-year premiums for whole life insurance, the flagship product, fell 11.3% from KRW264.5bn won to KRW234.6bn, while disease insurance fell 20.4% from KRW97.8bn won to KRW77.9bn.

The slump in the core business has also affected earnings. In the first half of 2026, net profit in the insurance divisions of the five major financial holding companies totalled KRW1.118 tr, shrinking 21.0% from a year earlier.

4 Main Reasons Insurer/Takaful Rejected Claim

While every contract is unique, most claim rejections stem from a handful of recurring issues.

Policy Exclusions and Limitations
Claimants often assume their coverage is all-encompassing, but it rarely covers everything. Rejections often happen because the specific treatment or condition is explicitly excluded in the policy, such as certain cosmetic procedures or “experimental” treatments.

One of the more common areas of dispute concerns the interpretation of what constitutes “medically necessary” treatment. While a procedure may be recommended by a treating doctor, the insurer may decline the claim if its medical assessors determine that the treatment falls outside the policy’s definition of medical necessity, such as where it is considered optional, cosmetic, or non-essential.

Certain pre-existing illnesses or hospital admissions are primarily for investigation or diagnostic check-ups rather than active treatment. Not every treatment recommended by your doctor will be covered under your policy.

Non-conformance with Terms and Conditions (Breach of Conditions)
Many insured believe that once they have paid their insurance premiums, any loss or medical expense will automatically be covered. However, insurance policies operate within a framework of terms and conditions that policyholders should understand. Claims can be declined where those requirements are not met.

For example, a motor accident claim may be declined if the vehicle was driven by an unauthorized or unlicensed driver, while a medical claim for a non-emergency elective procedure may not be covered if prior approval or a Guarantee Letter (GL) was required but not obtained.

Similarly, a burglary or water damage claim may be declined if the property remained unoccupied for a period exceeding the period allowed under the policy and the insurer was not notified as required under the policy terms. These seemingly small oversights can result in a rejected claim, even when the loss is genuine.

The same applies to reporting timelines. If your policy says you must report an incident within 14 days, waiting two months to do so can give the insurer grounds to reject your claim because they can no longer conduct a proper investigation.

An insurance policy is a two-way contract; if you fail to fulfil your part of the agreement, the insurer is not obligated to pay out.

Non-disclosure and Misrepresentation
Insurance is based on the principle of “utmost good faith.” Put simply, it means that insurers rely on consumers to provide complete and accurate information when applying for coverage.

By signing the application form, you are confirming that you have disclosed all material facts, including any information that may affect the insurer’s assessment of the risk and its decision to offer coverage.

Policyholders frequently do not disclose certain symptoms because they consider them insignificant or unrelated to their insurance application. A person may dismiss a recurring cough or a previous episode of back pain as minor issues, particularly if no formal diagnosis was made. However, such information may still be material to the insurer’s risk assessment and should be disclosed when required.

When you make a medical claim, insurers will review the information you provided when you first bought your policy. If a pre-existing condition was not disclosed, even by mistake, it could affect your claim and your coverage.

In more serious cases, non-disclosure may affect the validity of the policy or impact a person’s ability to obtain insurance coverage in the future. This underscores the importance of providing a complete and accurate medical history at the outset.

Failure to take reasonable precautions in safeguarding the vehicle
We often hear the phrase “just for a while”. Whether you are going to a 7-Eleven or waiting at an ATM, leaving your car engine running with the keys inside is a recipe for trouble.

This is often classified as a “failure to take reasonable precautions.” While it may feel like a minor lapse in judgment, your insurance contract specifically requires you to take all reasonable steps to protect your vehicle from loss or damage.

If you leave your car unlocked, the engine running, or the keys in the ignition, you are making it too easy for a thief. In such scenarios, the insurer is well within their rights to reject the claim, as the theft was not an unavoidable accident, but a direct result of the policyholder’s own negligence.

Similarly, most travel policies require you to take “reasonable precautions” with your belongings. If you leave your luggage unattended in a café or airport lobby and it is stolen, your insurer may reject the claim because you failed to keep your belongings under your supervision, breaching the policy’s duty of care clause.

The “safeguarding” clause is there for a reason, and insurers expect you to treat your vehicle and belongings with the same caution you would expect of any owner.

Takaful Policy - Void On Deliberate Fraud

The High Court in Ipoh has ruled that Zurich Takaful Malaysia Bhd was entitled to void a family takaful policy after finding it was obtained through deliberate fraud, despite failures by the insurer’s own agent to follow basic underwriting procedures.

Agent Negligence - It was revealed in court that the agent admitted that he had never met the insured, witnessed the signing of the proposal form, or verified the information submitted before the policy was issued. However, the judge said these failures did not invalidate the contract as Zurich Takaful had accepted the proposal, issued the certificate and collected RM3,000 in contributions. 

The judge said an insurer could not rely on its agent’s negligence to escape contractual liability. However, the judge found that the policy had been obtained through deliberate and coordinated misrepresentations by the nominee, allowing Zurich Takaful to void the contract under Schedule 9 of the Islamic Financial Services Act 2013.

Zurich Takaful filed the suit after rejecting a claim following the death of the insured in a bicycle accident in April 2018, about six months after the policy was issued. The insurer alleged that the proposal form contained false declarations regarding the deceased’s marital status, occupation, income, address, literacy, alcohol consumption and relationship with the nominee. 

The nominee denied the allegations and filed a counterclaim for the policy proceeds. In his 39-page judgment, the judge said evidence, including another takaful policy with similar fabricated family relationships, pointed to a fraudulent scheme rather than innocent mistakes.

The judge found it highly unlikely that the insured, who remained married and supported his wife and five children, would have excluded them and nominated a distant relative to receive more than RM800,000 in takaful benefits.

The judge concluded that the proposal form was likely completed by the nominee to ensure the policy proceeds would be paid to him.

Fraudulent Application - Although Zurich Takaful also questioned the circumstances surrounding the insured's death, the judge declined to find that the nominee had committed any criminal offence, noting that police had classified it as an accidental death. The judge said that the claim failed because of the fraud committed when the policy was obtained.

The court also rejected allegations that Zurich Takaful’s former solicitors conspired with the insured’s widow to fabricate evidence, saying there was no proof despite concerns over how confidential policy documents came into her possession.

Allowing Zurich Takaful’s claim, the judge declared the policy validly voided, dismissed Yathavan’s counterclaim and ordered the insurer to refund the RM3,000 contribution to insured’s lawful widow. He made no order as to costs, saying the case should never have reached court because the insurer’s own agent had abandoned basic underwriting safeguards in pursuit of a quick commission.

Indonesia Medical Cost Inflation Year 2025 -13.5%

Indonesia's health insurance sector is under sustained pressure from medical inflation running well above general price increases, a trend that is reshaping underwriting economics and drawing direct regulatory intervention.

Medical cost inflation in Indonesia reached an estimated 13.6% in 2025, the highest rate in Asia, according to the Global Asia Insurance Partnership (GAIP). Mercer Marsh Benefits, meanwhile, put the country's projected medical trend rate at 19% for 2025, the year-on-year increase in claims costs per insured person. Asia-Pacific has recorded double-digit medical trend rates for six consecutive years, with analyst projecting a 12.5% average rate across the region in 2026.

Product exits signal unsustainable claims ratios - The gap between claims costs and premiums has already forced product exits. Around five to six non-life insurance companies stopped selling health products by early 2026, according to the Indonesian General Insurance Association (AAUI). Claims ratios had consistently exceeded 90% across parts of the market, a level that Indonesia's Financial Services Authority (OJK) acknowledged was unsustainable.

The structural drivers are well established. Rising utilization, an ageing population, and the growing burden of non-communicable diseases such as diabetes and hypertension are all contributing to cost escalation. The devaluation of the Indonesian rupiah (IDR) compounds pricing pressure, as most pharmaceutical raw materials and medical devices are sourced from abroad.

Anaalyst projects gross claims in the personal accident and health (PA&H) segment to grow from IDR8.6 trillion (US$535.9 million) in 2025 to IDR13.1 trillion (US$816.3 million) by 2029. That represents a compound annual growth rate of 10.9%.

Reinsurers carry share of deteriorating books - For reinsurers, the deteriorating claims environment creates direct exposure through quota share and excess-of-loss arrangements on health books. As cedants face pressure on guaranteed-premium products, where in-force policies cannot be repriced without regulatory constraints, reinsurers absorb a proportional share of the adverse experience.

Asia's health protection gap reached US$258 billion in premium-equivalent terms in 2024. That was up 21% from 2017, with chronic conditions and critical illnesses contributing almost equally to household financial stress.

OJK introduces co-payments and repricing limits - The OJK moved to address the imbalance in late 2025. Its POJK No. 36 of 2025, effective January 2026, introduced mandatory co-payments of at least 10% of each claim. The cap is IDR300,000 for outpatient care and IDR3 million for inpatient treatment.

The regulation also restricts health product repricing to once per year, with mandatory written notice to policyholders at least 30 days in advance. The OJK said the measures were intended to curb overutilization and prevent moral hazard.

Insurers have until December 2026 to adapt existing products to the new requirements. The framework also mandates medical advisory boards and stronger utilization review processes.
The requirements raise the operational bar for smaller carriers already under capital pressure.

Reinsurance role extends beyond risk transfer - Indonesia Re, the state-owned national reinsurer, has described the reinsurance function in this environment as extending beyond risk transfer. It cites claims experience analysis, disease trend monitoring, portfolio profitability assessment, and technical support for rate setting as areas where reinsurers add value.

The private health insurance market remains relatively small against a large state base. By October 2025, 283 million participants held coverage under BPJS Kesehatan, the national scheme, representing 99.3% of the population.

Private products largely serve as supplementary cover for access to private hospital facilities and specialist services. The private market was valued at US$1.63 billion in 2025 and is projected to reach US$2.54 billion by 2031, a 7.5% compound annual growth rate.

The regulatory and structural changes are expected to improve claims ratios over time but introduce near-term complexity for both insurers and reinsurers. Tighter co-payment rules may suppress utilisation. The underlying cost trends driven by chronic disease, medical technology, and currency exposure remain structural rather than cyclical.

The period ahead is likely to involve closer collaboration with cedants on product design, more granular pricing assumptions, and greater scrutiny of claims management governance. Those conditions typically favor reinsurers with strong local data infrastructure and cedant relationships over those writing the line from a distance.

Malaysia MediAsas

The government will launch a pilot program for its Base Medical and Health Insurance and Takaful (MHIT) plan in the Klang Valley by the end of July, with monthly premiums expected to start from around RM60.

Knowns as MediAsas, it will be offered as a standalone medical insurance and takaful protection plan with two product options — MediAsas Teras (a standard plan) and MediAsas Fleksi (a standard-plus plan). The scheme will provide medical coverage for individuals up to the age of 85.

The premiums will be determined based on the latest medical claims experience and healthcare cost inflation trends, with indicative premiums expected to remain within the target monthly range of around RM60 to RM550 for individuals within the entry age of up to 70 years. 

Final pricing will be confirmed before the nationwide implementation in January 2027. The pilot phase will run from end-July until October 2026.

Six insurers and takaful operators will participate in the pilot program togrther with selected hospitals in the Klang Valley. They include AIA Bhd, Allianz Life Insurance Malaysia Bhd, Great Eastern Life Assurance (Malaysia) Bhd, Prudential BSN Takaful Bhd, Etiqa Family Takaful Bhd and Syarikat Takaful Malaysia Keluarga Bhd.

The government said the pilot program will test "operational readiness, including systems integration, customer experience and operational processes" in a controlled environment. Feedback gathered during the pilot phase will be used to refine implementation arrangements before the nationwide rollout.

The Base MHIT initiative forms part of the government's broader Reset strategy, undertaken jointly with Bank Negara Malaysia, to address rising medical inflation and strengthen the long-term sustainability of Malaysia's healthcare system.

The strategy focuses on value based healthcare in improving patient outcomes, optimizing cost-effective healthcare services and enhancing access to quality care.

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The policy covers up to 166 medical conditions across early, intermediate, and late stages. Depending on specific condition limits, policyholders can claim up to a total of 900% of their Sum Insured across all benefits.

Under the core Critical Illness Benefit, customers can make up to six claims totaling 600% of the Sum Insured, with a one-year waiting period between claims.

Early and intermediate stages pay out 100% of the Sum Insured, whilst late-stage diagnoses pay 200%.

For specified late-stage illnesses or recurrences, a Booster Benefit offers an additional 150% of the Sum Insured per claim for up to two claims, subject to a two-year waiting period.

Customers facing late-stage diagnoses can also select the Accelerated Care Option to receive an immediate 75% payout instead of keeping the booster benefit for future recurrences.

Additionally, a two-tier Intensive Care Unit benefit provides payouts up to 120% of the Sum Insured for severe hospital stays, even if the underlying illness is not listed as a critical condition.