{
    "success": true,
    "data": {
        "id": 1811888,
        "msgid": "ojk-prepares-new-insurance-rbc-regulation-what-will-change-1781851887",
        "date": "2026-06-19 12:40:00",
        "title": "OJK Prepares New Insurance RBC Regulation: What Will Change?",
        "author": "",
        "source": "CNBC",
        "tags": "",
        "topic": "Regulation",
        "summary": "Indonesia's Financial Services Authority (OJK) is drafting a landmark regulation to overhaul the capital framework for the insurance industry, moving from a traditional Risk-Based Capital (RBC) model to a more comprehensive, forward-looking regime. The new rule introduces a minimum solvency ratio of 100% with a mandatory 120% internal target buffer, classifies capital into Tier 1 and Tier 2, and imposes a capital surcharge on systemically important insurers. The changes aim to align Indonesia's standards with international frameworks like Solvency II and the Insurance Capital Standard (ICS) amid increasing market volatility and the implementation of IFRS 17.",
        "content": "<p>Jakarta, CNBC Indonesia - The Financial Services Authority (OJK) is\npreparing a new regulatory regime for the capital requirements of the\ninsurance industry through a Draft OJK Regulation (RPOJK) concerning the\nSolvency Calculation for Insurance Companies and Reinsurance Companies.\nThe regulation, currently in the rule-making process, is touted as the\nbiggest change in the insurance industry\u2019s supervisory framework since\nthe implementation of Risk-Based Capital (RBC) in Indonesia. The\nenactment of this RPOJK will simultaneously revoke two provisions in\nPOJK Number 26\/2025 regarding the solvency level (Article 3 and Article\n4) and subordinated loans (Article 32 and Article 33). While the current\nRBC framework focuses more on measuring capital adequacy against\nspecific risks, the new regime, often referred to as New RBC, will adopt\na more comprehensive, risk-sensitive, and forward-looking approach. In\nother words, the insurance industry is moving from a traditional RBC\nregime towards a capital framework closer to the Solvency II framework\nin Europe and the Insurance Capital Standard (ICS) developed by the\nInternational Association of Insurance Supervisors (IAIS). OJK considers\nthis change necessary due to increasing financial market volatility, the\nimplementation of the new accounting standard IFRS 17 (PSAK 117), and\nthe need for alignment with international standards. According to OJK,\nthe current provisions on the financial health of insurers do not yet\nfully reflect capital adequacy in anticipating risks comprehensively.\nBased on a comparative analysis between the RPOJK New RBC and three\nprevious POJKs\u2014namely POJK No.\u00a071\/2016, POJK No.\u00a05\/2023, and POJK\nNo.\u00a026\/2025\u2014there are at least eight key points regulated in this RPOJK:\n1. RBC Determination Approach: For years, industry players have been\nsynonymous with a minimum RBC requirement of 120%. In the latest RPOJK,\nthis approach changes. Companies are required to meet a minimum Solvency\nRatio of 100%, but at the same time must set an internal solvency target\nof at least 120% as a buffer based on each company\u2019s risk profile. OJK\ncan even request a higher target if it assesses that the company\u2019s risk\nprofile has increased. This means companies no longer focus solely on\nmeeting regulatory requirements but must also build capital buffers\naccording to their own business conditions and risks. 2. Capital\nSurcharge for Systemic Companies: One of the biggest innovations in this\nRPOJK is the additional capital requirement for companies categorised as\nsystemically important institutions or \u2018PPDP Utama\u2019. This group of\ncompanies is required to have an internal Solvency Ratio target between\n135% and 150%. This concept is similar to the capital surcharge applied\nto systemic banks. The aim is to ensure that large companies with a\nsignificant impact on the industry have stronger capital buffers to\nwithstand crisis conditions. 3. Introduction of Tier 1 and Tier 2\nCapital: Whereas previously RBC only recognised a general concept of\ncapital, New RBC introduces a more detailed capital classification.\nCompany capital is divided into two classifications: Tier 1 (Tier 1\nunlimited and Tier 1 limited) and Tier 2. The Tier 1 unlimited category\nis the highest quality capital that can fully absorb losses, such as\npaid-up capital, share premium (discount), retained earnings, capital\ncontribution funds, general reserves, and other comprehensive income.\nMeanwhile, the Tier 1 limited category consists of capital instruments\nwith specific characteristics, such as perpetual subordinated debt,\nnon-cumulative preference shares, share premium (discount), hybrid\ninstruments, and other capital instruments. The Tier 2 category is\nsupplementary capital, which can originate from cumulative subordinated\ndebt, cumulative preference shares, share premium (discount), and other\ncapital instruments. This change in capital classification opens\nopportunities for insurance and reinsurance companies to obtain\nadditional capital without necessarily having to conduct rights issues\nor shareholder capital injections. 4. Goodwill and Deferred Tax as\nCapital Deductions: The RPOJK also tightens the quality of capital that\ncan be counted in solvency calculations. Several components must become\ncapital deductions, including: goodwill, intangible assets, deferred tax\nassets, reciprocal cross-holdings between companies and related\nentities, buybacks of core capital (Tier 1), reinsurance assets from\nunqualified reinsurers, and company assets that do not meet investment\nrequirements. All assets falling into these capital deduction factors\nare not counted in the Minimum Risk-Based Capital (MMBR) calculation.\nThis provision has the potential to cause some companies to experience\nan administrative decline in their RBC ratio even if their business\nconditions remain unchanged. 5. More Comprehensive Risk Calculation:\nUnder New RBC, the calculation of Minimum Risk-Based Capital (MMBR) no\nlonger focuses only on specific risks. Companies are required to\ncalculate capital requirements based on five main risk types: Credit\nRisk, Market Risk, Insurance Risk, Liquidity Risk, and Operational Risk.\nIf an insurance company markets PAYDI (unit-linked products), the MMBR\ncalculation must be increased by a certain percentage of the investment\nfunds sourced from sub-funds. This calculation is a far more\ncomprehensive approach compared to the current RBC regime framework. In\nparticular, liquidity risk and operational risk now receive a more\nexplicit portion in the capital adequacy calculation. 6. Rupiah and\nInterest Rates Enter the Solvency Formula: Another important change is\nthe increased attention to market risk. The RPOJK states that the market\nrisk calculation must account for changes in asset prices, exchange rate\nfluctuations, and changes in interest rates. Consequently, turmoil in\nthe Rupiah exchange rate or spikes in government bond yields will\ndirectly impact the solvency calculation of insurance companies.<\/p>",
        "url": "https:\/\/jawawa.id\/newsitem\/ojk-prepares-new-insurance-rbc-regulation-what-will-change-1781851887",
        "image": ""
    },
    "sponsor": "Okusi Associates",
    "sponsor_url": "https:\/\/okusiassociates.com"
}