Gold ETFs Seen as Emerging Diversification Option for Indonesia’s Insurance Industry
The Indonesian General Insurance Association (AAUI) has highlighted gold-based instruments as a promising diversification option for the insurance sector, particularly amid ongoing global financial market volatility.
According to AAUI Chairman Budi Herawan, the recent regulation introduced by the Financial Services Authority (OJK) on gold-backed Exchange Traded Funds (ETFs) in February 2026 could open the door to more structured investment alternatives.
The regulation, outlined in OJK Regulation (POJK) No. 2 of 2026, officially enables the issuance of gold-based ETF products in Indonesia’s capital market—marking a significant step toward expanding investment choices for institutional investors.
However, AAUI emphasized that any increase in gold allocation within insurance portfolios is likely to be gradual and selective rather than a major shift in the near term. For general insurers, gold is expected to serve as a complementary diversification tool rather than a core investment asset.
This cautious approach is driven by the need for insurance companies to align their investment strategies with claim obligations and liquidity requirements, ensuring quick access to funds when needed.
Currently, the investment portfolios of Indonesia’s general insurance industry remain dominated by highly liquid and relatively stable instruments. These include government bonds (SBN), time deposits, mutual funds, corporate bonds, and equities. In 2025, total industry investments reached IDR 131.44 trillion, with portfolio composition largely unchanged.
Data from OJK also shows that gold investments still represent a very small portion of the industry’s total assets. As of January 2026, gold holdings stood at approximately IDR 3.4 billion, accounting for just 0.0005% of total insurance investments.
Despite the low allocation, OJK’s Chief Executive of Insurance, Guarantee, and Pension Fund Supervision, Ogi Prastomiyono, stated that gold-based instruments—particularly ETFs—could become a viable diversification option going forward, provided that insurers continue to prioritize prudential principles and effective risk management.