JAKARTA (Yosefardi) – Fitch Ratings expects growth in the insurance sector in Indonesia to stabilize in 2016 as economic growth is likely to recover.
The agency estimates that Indonesian real GDP growth will improve to 5.3% in 2016 and 5.5% in 2017 from 4.8% in 2015. This follows the recent wave of reforms introduced by the government to improve business sentiment and strengthen the country’s financial fundamentals.
The rating outlook for Indonesia’s life and non-life insurance sectors in 2016 is Stable, underpinned by steady demand, manageable investment risks among insurers, and adequate buffers against catastrophe losses through reinsurance coverage.
Fitch believes that several initiatives taken by the regulator to optimize local reinsurers’ capacity could widen the sector’s operating scale and raise the level of competitiveness among domestic players.