OJK Drafts Insurance Solvency Regulation

The Financial Services Authority (“OJK”) is currently drafting a OJK Regulation (“RPOJK”) concerning the Solvency Calculation of Insurance Companies and Reinsurance Companies. The Chief Executive of Insurance, Guarantee, and Pension Fund Supervision (“PPDP”) of OJK, Ogi Prastomiyono, explained that the strengthening of regulations and the implementation of new accounting standards are aligned with the evolving risk dynamics within the insurance industry. 

“The changing risk profile, particularly those arising from market risk, requires a recalibration of the parameters used in measuring capital adequacy,” Ogi told Hukumonline. 

Based on the draft RPOJK on Insurance Solvency obtained by Hukumonline, OJK will require insurance and reinsurance companies to maintain a minimum internal Solvency Ratio target of 120% as a buffer against risk profile calculations. The regulation stipulates that the implementation of the new Solvency Ratio calculation will become fully effective starting from the submission of the first quarter 2027 financial statements.