Abstract & Overview
Indonesia’s insurance sector faces governance challenges, including low market penetration, financial instability, and declining public trust. This study examines the impact of Good Corporate Governance (GCG) mechanisms, including the Independent Board of Commissioners, Board of Directors, Audit Committee, and Institutional Ownership, along with Firm Size, on profitability, measured by Return on Equity (ROE). Using multiple linear regression, the study analyzes 240 financial reports from 15 publicly listed Indonesian insurance firms (2020–2023). The findings indicate that most governance mechanisms, including the Independent Board of Commissioners, Audit Committee, and Institutional Ownership, do not significantly affect profitability. However, the Board of Directors negatively influences business performance, suggesting potential inefficiencies or governance constraints. Conversely, Firm Size positively affects profitability, highlighting the advantage of economies of scale. This suggests that structural governance alone is insufficient for profitability without accompanying firm-level strategic advantages. These outcomes imply that Indonesian insurance firms may be over-relying on compliance-based governance without leveraging it for performance gains. Strengthening the strategic capabilities of governance actors could turn oversight mechanisms into profitability drivers. AcknowledgmentsThe research team would like to thank Universitas Multimedia Nusantara for supporting this study.