Tugure Sharing Session Highlights Pricing Discipline Amid Soft Market Conditions

Melbourne, August 21, 2026 – PT Tugu Reasuransi Indonesia (Tugure) held the Tugure Sharing Session: Reinsurance Pricing Assessment as part of the Tugure Academy program, a knowledge-sharing forum with business partners focusing on the dynamics of the reinsurance industry, developments in reinsurance pricing, and challenges amid soft market conditions—a period when abundant market capacity drives downward pricing and more flexible terms and conditions.

The session was opened by Tugure’s Director of Operations, Erwin Basri, who shared that the retrocession market has generally remained relatively stable to date. Nevertheless, industry dynamics continue to require close attention, particularly in light of catastrophe (CAT) risks such as earthquakes and the ongoing softening of market conditions.

“Through this session, we hope that you will have the opportunity to engage directly with us and discuss various issues currently facing the industry. Amid earthquake risks and a softening market, we need to closely monitor developments together to ensure that business conditions remain healthy,” said Erwin.

The sharing session continued with Andriansyah, Technical Analytic & Development Group Head at Tugure, who discussed developments in reinsurance pricing, market cycles, and lessons learned from various events in the global insurance industry.

One of the case studies presented was HIH Insurance, an Australian insurance company that collapsed in 2001 and became one of the largest corporate failures in Australian history. The collapse was influenced by several factors, including aggressive expansion, acquisitions of other insurance companies, soft market conditions, under-pricing, and under-reserving.

The case serves as a reminder that aggressive business growth during a soft market, when not supported by pricing discipline, adequate reserves, and strong governance, can increase a company’s vulnerability when the market cycle turns.

“This serves as a reminder that pricing is one of the key aspects that all industry players need to pay attention to. Current market conditions make this challenge even greater. When the market sets prices below technical pricing, the industry is essentially accumulating higher risks for the future,” explained Andriansyah.

According to Andriansyah, current soft market conditions are also influenced by the relatively strong performance of the global insurance and reinsurance industry, including in Europe, which has intensified competition and placed pressure on pricing as well as terms and conditions. This period needs to be carefully monitored, as declining prices and more flexible terms may result in portfolios carrying higher levels of risk when the market eventually returns to a hard market phase.

Several recurring failure patterns in the industry were also highlighted, including aggressive growth during a soft market, under-reserving, weak governance, and concentration of risk at cycle turns. Therefore, pricing discipline and portfolio quality are critical factors in navigating changes in the market cycle.

In this context, Tugure applies technical pricing integrity as a key reference in its pricing decisions. All pricing decisions are based on technical pricing, while any deviation from this benchmark can only be made with the approval of the Underwriting Committee, supported by documented technical justification to ensure that risks remain properly managed. The implementation of IFRS 17 (PSAK 117) also encourages greater discipline in reserving and in managing the adequacy of technical reserves.

“The companies that will be able to withstand soft market conditions are those that remain disciplined in pricing, maintain strong governance over pricing and technical reserves, and continue preparing themselves for the next cycle,” said Andriansyah.

Tugure also continues to strengthen its pricing function through the Underwriting Committee, improve data quality and portfolio modeling, and promote the development of talent and culture, as well as greater involvement of actuaries in the underwriting process.

During the discussion session, participants also explored predictions regarding the bottom of the cycle amid ongoing soft market conditions. Andriansyah explained that, based on historical experience, shifts in market direction are generally influenced by the occurrence of several large-scale catastrophic events (CAT).

The discussion also highlighted CAT conditions in Indonesia. Although several significant CAT events occurred in 2025, their impact on domestic reinsurance market pricing has remained relatively limited, as the global reinsurance market continues to be in a soft market phase with abundant capacity. This condition has kept the Combined Operating Ratio (COR) at a level that does not yet fully reflect the risk exposures being assumed—potentially increasing the market’s vulnerability when the cycle turns.

Through the Tugure Sharing Session: Reinsurance Pricing Assessment, Tugure and its business partners are expected to develop a shared understanding of market dynamics, the importance of pricing discipline, as well as risk management and technical reserve adequacy. The forum also serves as a platform for Tugure to strengthen communication and collaboration with its business partners in navigating developments throughout the reinsurance industry cycle.