This setting takes effect only when the text wrap completely interrupts lines of text so that each line is divided into two or more parts. This indicates that the path of the shape has changed. Selecting a type on a path object with the black arrow Selection tool reveals standard text object structures like in- and out-ports.
Increase the Inset here, to 7 mm to push the text to fit neatly within the shape.
The object that text wraps around is called the wrap object. Graphic Frame Generates the boundary from the container frame. The resulting horizontal distortion is useful for text that appears to follow waves or go around a cylinder, as on a beverage can label.
If you have a square or rectangular shape you can choose Wrap Around Bounding Box from the options at the top of the panel.