PSAK 117: A New Way to Read Insurance Performance

For years, one of the easiest numbers to use when assessing an insurance business has been premium volume.

How much premium was written?

Did it rise or fall from the previous year?

How did growth compare with peers?

Those questions still matter.

But since PSAK 117 became effective in Indonesia on 1 January 2025, premium growth alone no longer tells the full financial story.[1]

PSAK 117 refers to IFRS 17 Insurance Contracts and changes how insurance contracts are measured, presented and interpreted.[1][2]

For a non-accounting reader, perhaps the most useful principle is this:

premium received is not necessarily the same as insurance-service revenue recognised in the same period.

Premium and insurance revenue answer different questions

Premium reflects contractual amounts paid or payable by policyholders.

Under PSAK 117's IFRS 17-based framework, insurance revenue is designed to reflect insurance services provided during the reporting period.

Specified investment components are also excluded from insurance revenue because those amounts do not represent consideration for insurance services.[2]

That distinction matters when comparing regulatory industry statistics with individual company financial statements.

OJK reported accumulated commercial-insurance premium income of Rp170.98 trillion through June 2026, up 2.84% year on year. Life premiums rose 8.40%, while general insurance and reinsurance premiums contracted 3.33%.[3]

Those numbers provide useful information about premium activity.

They should not automatically be treated as equivalent to PSAK 117 insurance revenue.

Profit does not necessarily appear when a contract is signed

Another important concept is the Contractual Service Margin, or CSM.

Under IFRS 17, the CSM represents unearned profit associated with a group of insurance contracts. That profit is recognised as the relevant insurance-contract services are provided rather than being recognised entirely when the contract is first recorded.[2]

That changes how growth should be interpreted.

An insurer may write a significant amount of new business in a particular year.

Commercially, that can be positive.

But the financial statements do not necessarily say that all expected profit from those contracts belongs to that year's earnings.

Part of the economics still relates to services and risks extending into future periods.

Readers therefore need to connect new business, services delivered, remaining obligations and expected future profitability.

Insurance obligations become more visible

PSAK 117 also puts greater emphasis on measuring groups of insurance contracts using expected future cash flows, timing, uncertainty and the services that remain to be provided.[2]

For management, this means reporting is not only about what has already happened.

It also contains information about future obligations.

How much does the insurer expect to pay in claims and benefits?

What expenses are associated with those contracts?

How do changes in assumptions affect liabilities?

How much profit remains linked to future service?

For investors and business partners, that can make insurance reporting more informative—but also more demanding to interpret.

One number should not carry the whole story

OJK reported total insurance-industry assets of Rp1,184.72 trillion in June 2026, up 1.86% year on year.[3] Aggregate RBC stood at 461.94% for life insurance and 318.52% for general insurance and reinsurance, both above the regulatory threshold of 120%.[3]

These numbers measure different things.

Assets are not revenue.

Premiums are not profit.

RBC is not a sales-growth metric.

And lower premium growth does not automatically mean an insurer is loss-making.

PSAK 117 makes the case for reading several layers together.

Why is implementation still receiving attention in 2026?

PSAK 117 became effective at the beginning of 2025, but implementing a large accounting change does not end on its effective date.

IAI continued addressing implementation issues during 2025, including credit risk on premium receivables and other technical matters.[4]

In August 2026, OJK extended the deadline for insurers and reinsurers to submit their first-half business-plan realisation reports to 31 August 2026, specifically to allow additional time for data alignment during PSAK 117 implementation.[3]

That does not mean the industry started from zero.

OJK had previously reported that more than 95% of insurers and reinsurers submitted PSAK 117 parallel-run reports for the first three quarters of 2024.[5]

What it illustrates is the nature of a system-wide reporting change.

Actuarial models, finance, policy administration, investment data and reporting systems need to speak a consistent language.

Five questions when reading an insurer

As a GATICORP editorial framework, readers can approach an insurer through five questions.

1. Business volume

How are premiums, new contracts, renewals and product mix developing?

2. Insurance service

What revenue and results are being generated from insurance services provided during the period?

3. Obligation

What insurance-contract obligations remain?

4. Future profit

How is profit associated with future service developing?

5. Financial resilience

How do investments, risk, solvency, liquidity and capital support those obligations?

This is not an official PSAK 117 framework.

It is a way of preventing a single number from becoming the entire story.

Reading insurance has changed

PSAK 117 does not make premium volume irrelevant.

Premium remains useful for understanding commercial momentum and market scale.

But the new reporting framework encourages a more mature set of questions.

Not only:

how much business was written?

But also:

how much service has been delivered, what obligations remain, what risks are being carried, and when is the profit from those contracts actually earned?

The biggest change may therefore be larger than an accounting line item.

PSAK 117 changes how the insurance story is read.