OJK establishes four regulations to strengthen insurance and pension system

These regulations hope to address capital capacity limitations in the insurance industry.

The Indonesia Financial Services Authority (OJK) issued four regulations (POJK) at the end of 2023 to strengthen the regulation of the insurance and pension fund industry, aiming to accelerate the transformation of these sectors into sound, strong, and sustainable entities contributing significantly to national economic growth.

The regulations include:

• POJK Number 20 of 2023 on Insurance Products related to Sharia Credit and Financing, and Suretyship Products or Sharia Suretyship.
• POJK Number 23 of 2023 on Licensing of Insurance Business and Company, Sharia Insurance Company, Reassurance Company, and Sharia Reassurance Company.
• POJK Number 24 of 2023 on Licensing of Insurance Broker Business and Company, Reassurance Broker Company, and Insurance Loss Assessor Company.
• POJK Number 27 of 2023 on Implementation of Pension Fund Business.

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One of the main focuses is addressing capital capacity limitations in the insurance industry, aiming to enhance the sector's resilience and stability to anticipate potential economic crises. 

The regulations also address issues related to the COVID-19 pandemic, including non-prudent practices in managing insurance product portfolios related to Sharia credit or financing.

For the pension fund sector, the regulations in POJK Number 27 of 2023 aim to strengthen governance in pension fund investment, including competence requirements for pension fund managers and prerequisites for investments with high-risk tendencies.

In 2024, the OJK plans to refine regulations related to insurance products and their distribution, with a focus on simplifying agreements and insurance product recording mechanisms. 

Additionally, the OJK will establish the guarantee industry as part of measures to strengthen and develop the guarantee industry sector, playing a strategic role in financing the MSME segment.