The Effects of ESG and Financial Ratios on Risk-Based Capital: The Moderating Role of Board Size in Indonesian Life Insurance Companies
DOI:
https://doi.org/10.38035/dijefa.v7i3.7180Keywords:
board size, combined ratio, environmental, social, and governance, Life Insurance, risk-based capitalAbstract
This study analyzes the effects of environmental, social, and governance (ESG) disclosure and financial ratios on the solvency of life insurance companies in Indonesia, with board size as a moderating variable. Previous studies have primarily associated ESG with overall financial performance, while its relationship with risk-based capital (RBC), together with underwriting, liquidity, profitability, and governance factors, remains underexplored. This quantitative study employs panel data from 25 conventional life insurance companies registered with the Indonesian Financial Services Authority during the 2021–2024 period, resulting in 100 firm-year observations. Secondary data obtained from annual reports, financial statements, and sustainability reports were analyzed using random-effects regression and moderated regression analysis with EViews 12. The results indicate that ESG disclosure and the combined ratio have no significant effect on RBC, whereas liquidity and profitability have positive and significant effects. Board size does not moderate the effects of ESG disclosure and liquidity on RBC but significantly weakens the effects of the combined ratio and profitability on RBC. These findings indicate that financial fundamentals, particularly liquidity and profitability, are more directly associated with capital adequacy than ESG disclosure. Furthermore, board size does not necessarily strengthen the relationship between financial performance and corporate solvency.
References
Al Hosani, N. H., Nobanee, H., & Ellili, N. O. D. (2025). The impact of board gender diversity on financial performance of non-financial companies of the UAE: the moderating role of environmental, social, and governance (ESG) disclosure. Corporate Governance: The International Journal of Business in Society, 25(8), 176-194. https://doi.org/10.1108/CG-06-2023-0228
Anggraini, P. W., & Sari, T. D. R. (2024). Pengaruh Environment Social Governance (ESG) Score Terhadap Kinerja Keuangan Perusahaan Yang Terindeks IDX ESG Leader Tahun 2020-2023. Journal of Accounting and Finance Management, 5(5), 975-982. https://doi.org/10.38035/jafm.v5i5
Anggraini, A. U., & Aminah, I. (2023). Pengaruh Profitabilitas, Likuiditas, dan Beban Klaim Terhadap RBC Perusahaan Asuransi Yang Terdaftar Di BEI Periode 2018-2022. In Seminar Nasional Akuntansi dan Manajemen PNJ (Vol. 4, No. 2).
Annisawanti et al. (2024). Pengaruh Environmental, Social dan Governance (ESG) Terhadap Kinerja Keuangan Perusahaan . (2024). Jurnal Proaksi, 11(2), 399-415. https://doi.org/10.32534/jpk.v11i2.5702
Asosiasi Asuransi Jiwa Indonesia. (2023). Laporan Industri Asuransi Jiwa Indonesia. https://www.aaji.or.id
Bani, P., & Robidi, R. (2025). Dampak ESG terhadap Model Underwriting Asuransi Umum: Tinjauan Literatur atas Perubahan Regulasi dan Praktik Industri. Jurnal Ekonomi Manajemen Akuntansi, 31(1), 236-250. https://doi.org/10.59725/ema.v31i1.222
Belgacem, I. (2025). ESG Integration in Saudi Insurance: Financial Performance, Regulatory Reform, and Stakeholder Insights. Sustainability, 17(15), 6821. https://doi.org/10.3390/su17156821
Bressan, S. (2023). Effects from ESG scores on P&C insurance companies. Sustainability, 15(16), 12644. https://doi.org/10.3390/su151612644
Chawarura, W. I., Sibanda, M., & Mamvura, K. (2025). The Impact of ESG on the Financial Performance of Johannesburg Stock Exchange-Listed Companies. Risks, 13(6), 114. https://doi.org/10.3390/risks13060114
Chebbi, K., & Ammer, M. A. (2022). Board composition and ESG disclosure in Saudi Arabia: The moderating role of corporate governance reforms. Sustainability, 14(19), 12173. https://doi.org/10.3390/su141912173
Chiaramonte, L., Dreassi, A., Paltrinieri, A., & Piserà, S. (2020). Sustainability practices and stability in the insurance industry. Sustainability, 12(14), 5530. https://doi.org/10.3390/su12145530.
Dorothy, P., & Endri, E. (2024). Environmental, social and governance disclosure and firm value in the energy sector: The moderating role of profitability. Problems and Perspectives in Management, 22(4), 588.
Fataqun, H. F., & Dewayanto, T. (2025). PENGARUH PROFITABILITAS, UKURAN PERUSAHAAN, DAN BOARD SIZE TERHADAP KECEPATAN PENYESUAIAN STRUKTUR MODAL: A SYSTEMATIC LITERATURE REVIEW. Diponegoro Journal of Accounting, 14(3).
Firdaus, M., & Endri, E. (2025). The Impact of Financial Factors on Financial Distress in Life Insurance Companies: The Moderating Role of ESG. International Journal of Economics and Financial Issues, 15(6), 514. https://doi.org/10.32479/ijefi.21387
Ghozali, I. (2016). Aplikasi Analisis Multivariate dengan Program IBM SPSS. Semarang: Badan Penerbit Universitas Diponegoro
Ghozali, I. (2018). Ekonometrika: Teori, Konsep, dan Aplikasi dengan IBM SPSS. Semarang: Badan Penerbit Universitas Diponegoro
Global Reporting Initiative. (2016). GRI Standards. https://www.globalreporting.org
Harun, R., & Jeandry, J. (2018). Manajemen Keuangan dan Profitabilitas.
Hery. (2019). Analisis Laporan Keuangan. Jakarta: Grasindo.
Huang, J., Hu, P., Wang, D. D., & Wang, Y. (2025). The Double Signal of ESG Reports: Readability, Growth, and Institutional Influence on Firm Value. Sustainability, 17(6), 2514. https://doi.org/10.3390/su17062514
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.
Juca, M. N., Muren, P. D., Valentinčič, A., & Ichev, R. (2024). The impact of ESG controversies on the financial performance of firms: An analysis of industry and country clusters. Borsa Istanbul Review, 24(6), 1305-1315. https://doi.org/10.1016/j.bir.2024.08.001
Kasmir. (2016). Analisis Laporan Keuangan. Jakarta: Raja Grafindo Persada.
Kiptoo, I. K., Kariuki, S. N., & Ocharo, K. N. (2021). Risk management and financial performance of insurance firms in Kenya. Cogent Business & Management, 8(1), 1997246.
Krache, H., Leftaha, S., & Chougui, T. (2024). Assessment of factors affecting the solvency of property-liability insurance companies. Journal of Innovations and Sustainability, 8(1), 09-09. https://doi.org/10.51599/is.2024.08.01.09.
Kusnadi, Y. (2005). Board Size and firm performance: Evidence from Asia. Corporate Governance Review, 13(2), 89–102.
Labini, S. S., di Biase, P., & D'Apolito, E. (2025). Sustainability strategy and financial performance in the insurance company. International Review of Economics & Finance, 98, 103924. https://doi.org/10.1016/j.iref.2025.103924
Mahendra, B., & Siswanti, I. (2025). The Effect of ESG, Operational Capacity, Claim Ratio, and Liquidity on Financial Distress of Insurance Companies Moderated by Risk-Based Capital. International Journal of Social and Management Studies, 6(5), 12-18.
Meeprom, S., Boonyanet, W., & Tongkong, S. (2024). Relationship of ESG scores on firm performance: Moderating roles of Board Size and CEO duality. Journal of Infrastructure, Policy and Development, 8(7), 4403. https://doi.org/10.24294/jipd.v8i7.4403
Meral, H., Ersoy, B., & Dogan, M. (2025). Enhancing Sustainability: The Impact of ESG Factors in Global Insurance Performance. Borsa Istanbul Review. https://doi.org/10.1016/j.bir.2025.10.030
Munawir, S. (2016). Analisis Laporan Keuangan. Edisi Empat. Cetakan Ketujuhbelas. Liberty. Yogyakarta
Nareswari, N., Tarczyńska-Łuniewska, M., & Al Hashfi, R. U. (2023). Analysis of environmental, social, and governance performance in Indonesia: Role of ESG on corporate performance. Procedia Computer Science, 225, 1748-1756. https://doi.org/10.1016/j.procs.2023.10.164
Otoritas Jasa Keuangan. (2017). Peraturan OJK No. 51/POJK.03/2017 tentang Penerapan Keuangan Berkelanjutan bagi LJK, Emiten, dan Perusahaan Publik. https://www.ojk.go.id
Otoritas Jasa Keuangan. (2022). Siaran Pers: Pencabutan izin usaha PT Asuransi Jiwa Adisarana Wanaartha. https://www.ojk.go.id
Otoritas Jasa Keuangan. (2023). POJK Nomor 5 Tahun 2023 tentang Perubahan Kedua atas POJK 71/POJK.05/2016 Kesehatan Keuangan Perusahaan Asuransi dan Perusahaan Reasuransi. https://www.ojk.go.id
Otoritas Jasa Keuangan. (2023). Siaran Pers: Perkembangan penanganan AJKB 1912 dan Kresna Life. https://www.ojk.go.id
Renaldo, A., Purwohedi, U., & Ahmad, G. N. (2021). Determinants of the risk-based capital of insurance companies in Indonesia. Oblik i finansi, 93, 72-77. https://doi.org/10.33146/2307-9878-2021-3(93)-72-77
Rossi, M., Chouaibi, J., Chouaibi, S., Jilani, W., & Chouaibi, Y. (2021). Does a Board Characteristic Moderate the Relationship between CSR Practices and Financial Performance? Evidence from European ESG Firms. Journal of Risk and Financial Management, 14(8), 354. https://doi.org/10.3390/jrfm14080354
Shakil, M. H. (2021). Environmental, social and governance performance and financial risk: Moderating role of ESG controversies and board gender diversity. Resources Policy, 72, 102144. https://doi.org/10.1016/j.resourpol.2021.102144
Sharawi, H. (2024). The moderating effect of board characteristics in the relationship between ESG disclosure and financial performance: Evidence from KSA. Kurdish Studies, 12(2), 1460–1472. https://doi.org/10.53555/kuey.v30i7.6944
Sihombing, P., & Zakchona, E. (2024). Determinants of profitability, liquidity, solvency, and activity ratios on the stock price with dividend payout as moderating variable. Jurnal Ekonomi dan Bisnis, 27(2), 1-24.
Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374.
Sukmarini, S. A., & Soedaryono, B. (2023). The effect of profitability, underwriting risk, and reinsurance on the solvency of life insurance company. Jurnal Ekonomi Trisakti, 3(1), 229-240. http://dx.doi.org/10.25105/jet.v3i1.14865
Sugiyono. (2018). Metode Penelitian Kuantitatif, Kualitatif, dan R&D. Bandung: Alfabeta.
Sugiyono. (2022). Statistika Untuk Penelitian. Bandung: Alfabeta.
Sutanto, S., Lesmana, I., & Sitardja, M. (2023). The Impact of Claim Expenses, Underwriting Risk, Profitability, Company Size and Retention Ratio on Solvency of Insurance Industry. Indonesian Journal of Accounting and Governance, 7(2), 84-96. https://doi.org/10.36766/ijag.v7i2.401
Syahwildan, M. (2022). Ratio of early warning system and risk based capital in insurance companies registered at OJK 2016-2020. Journal of Economics and Business Letters, 2(2), 7-14. https://doi.org/10.55942/jebl.v2i2.151
Tanujaya, S. P., & Rochdianingrum, W. A. (2023). Pengaruh Solvabilitas, Premi, Dan Beban Klaim Terhadap Profitabilitas Perusahaan Asuransi Yang Terdaftar Di Bei. Jurnal Ilmiah Manajemen dan Bisnis (JIMBis), 2(1), 89-106.
Tarigan, A. P. K., & Mahfud, M. K. (2015). Analisis pengaruh kemampuan membayar klaim, profitabilitas, risiko underwriting, dan reasuransi terhadap solvabilitas perusahaan asuransi (Studi Pada Perusahaan Asuransi Yang Terdaftar Di Bursa Efek Indonesia Periode 2008-2013) (Doctoral dissertation, Fakultas Ekonomika dan Bisnis).
Tobar, R. (2025). Nonlinear nexus between ESG scores and corporate performance of insurance companies in the MENAT region: Moderating the effect of institutional quality. Risks, 13(4), 68. https://doi.org/10.3390/risks13040068
Upadhyaya, Y. M., Ghimire, R., & Ghimire, S. R. (2023). Determinants of financial performance in Nepalese nonlife insurance companies: A panel data analysis. Insurance Markets and Companies, 14(1), 99-109. http://dx.doi.org/10.21511/ins.14(1).2023.09
Utami, R. S., & Sufina, L. (2024). PENGARUH TATA KELOLA PERUSAHAAN TERHADAP FINANCIAL DISTRESS (STUDI EMPIRIS PADA PERUSAHAAN ASURANSI UMUM DI BURSA EFEK INDONESIA PERIODE 2014-2022). Journal of Accounting, Management and Islamic Economics, 2(2), 379-392.
Wulandari, S., & Alfifto, A. (2025). Pengaruh Analisis Rasio Keuangan terhadap Kinerja Keuangan pada Perusahaan Asuransi yang Go Public di BEI: Studi Kasus PT Asuransi Jasa Tania Periode 2019-2023. Jurnal Bisnis Mahasiswa, 5(2), 604-614.
Zeng, M., Zhu, X., Deng, X., & Du, J. (2024). ESG rating uncertainty and institutional investment—Evidence from China. Borsa Istanbul Review, 24(6), 1166-1178.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Ganjar Permana, Endri
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish their manuscripts in this journal agree to the following conditions:
- The copyright on each article belongs to the author(s).
- The author acknowledges that the Dinasti International Journal of Economics, Finance & Accounting (DIJEFA) has the right to be the first to publish with a Creative Commons Attribution 4.0 International license (Attribution 4.0 International (CC BY 4.0).
- Authors can submit articles separately, arrange for the non-exclusive distribution of manuscripts that have been published in this journal into other versions (e.g., sent to the author's institutional repository, publication into books, etc.), by acknowledging that the manuscript has been published for the first time in the Dinasti International Journal of Economics, Finance & Accounting (DIJEFA).
