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Insurers worry about OJK plan to increase capital requirements
Improving governance and best practices of insurance companies is more urgent than raising the minimum capital requirements, an expert believes.
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A resident walks past the Papua office of the Financial Services Authority (OJK) in Jayapura in October 2021. (Antara/Indrayadi TH)
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nsurance firms have raised concerns about the Financial Services Authority’s (OJK) plan to raise the minimum capital requirements for 2026 and again for 2028.
The firms are lobbying the government for leeway to make the increase more gradual, as doubts exist whether the firms could even meet the proposed new rules.
The OJK’s plan, revealed in May, is to hike the minimum capital requirement for insurance companies from the current Rp 100 billion to Rp 500 billion in 2026 and Rp 1 trillion in 2028.
For reinsurance firms, meanwhile, the bar would be raised from the current Rp 200 billion to Rp 1 trillion in 2026 and Rp 2 trillion in 2028.
Sharia insurance and reinsurance companies, which are currently required to have half of the capital of their conventional peers, would see a proportional hike.
The Indonesian General Insurance Association (AAUI), which also counts reinsurance firms among its members, said 10 to 15 insurance companies currently had less than Rp 150 billion in equity.
Thus, it proposed that the minimum capital requirements be raised more modestly, namely to Rp 250 billion for insurance companies and Rp 500 billion for reinsurance companies by the end of 2026.
