OJK Issues Four Rules to Boost Insurance Industry Transformation
- Istimewa
Jakarta – The Financial Service Authority (OJK) issued four OJK regulations (POJK) to encourage the transformation of the insurance and early retirement fund industries.
"The POJK issued includes POJK Number 20 of 2023 concerning Insurance Products associated with Sharia Credit or Financing, and Sharia Guarantee or Suretyship Products," said Head of the OJK Department of Literacy, Financial Inclusion and Communication, Aman Santosa in a statement here on Wednesday.
Then, POJK Number 23 of 2023 concerning Business Licensing and Institutionalization of Insurance Companies, Sharia Insurance Companies, Reinsurance Companies, and Sharia Reinsurance Companies.
After that, the POJK Number 24 of 2023 concerning Business Licensing and Institutionalization of Insurance Brokerage Companies, Reinsurance Brokerage Companies, and Insurance Loss Assessment Companies, as well as POJK Number 27 of 2023 concerning Pension Fund Business Operations.
Gedung Otoritas Jasa Keuangan (OJK).
- VIVA/Andry Daud
The issuance of the POJK is intended to accelerate the transformation process in the insurance and pension fund sectors to become healthy, strong, and able to grow sustainably.
"So, it can make a more significant contribution in supporting national economic growth," Santosa remarked.
He further explained, that in the insurance industry sector, limited capital capacity is one of the main issues that has the potential to disrupt the resilience and stability of the industrial sector.
Therefore, one of the main substances regulated in POJK Number 23 of 2023 and POJK Number 24 of 2023 is the adjustment of the minimum paid-up capital provisions for new business actors (new entry).
As well as an increase in minimum equity for business actors who have obtained a business license.
In addition, based on developments that occurred in crisis conditions due to the COVID-19 pandemic, he said.
One of the main issues that disrupt the level of financial health of insurance companies is the practice of prudent management of insurance product portfolios associated with Sharia credit or financing.
Therefore, the issuance of POJK Number 20 of 2023 aims to encourage insurance companies to carry out a more optimal mitigation mechanism against the risk exposure borne by insurance companies from marketing these types of insurance products.
Meanwhile, for the pension fund industry sector, POJK Number 27 of 2023 concerning the Implementation of Pension Fund Business contains implementing provisions of several regulatory mandates of Law Number 4 of 2023 concerning Financial Sector Development and Strengthening.
In terms of investment, the POJK contains provisions that aim to encourage the strengthening of pension fund investment governance so that it is organized more prudently.
This is done through competency requirements for pension fund administrators, as well as additional requirements related to investment placements that tend to be high-risk.
In terms of early retirement benefit payments, the POJK also contains provisions regarding the payment of periodic pension benefits that can be paid directly by the early retirement fund, or by purchasing annuity products that provide a minimum of 10 years of earlu retirement benefit payments.
"For 2024 one of OJK's priority programs for the insurance industry sector is the improvement of regulations related to insurance products and insurance product channels," Aman concluded.
