Govt to freeze more insurance firms

The government warned on Tuesday that more insurance companies would have their business licenses suspended this year due to their failure to meet the requirement of 100 percent Risk Base Capital (RBC) by the end of this year.

"We have to freeze their business licenses because their RBC is in a bad way. But we have not yet revoked their licenses," director of insurance at the Ministry of Finance, Firdaus Djaelani, told reporters on the sidelines of a seminar on money laundering.

The RBC is the ratio between capital and risk exposure.

However, Firdaus failed to give any details on the number of insurance companies whose licenses risk being revoked this year,

Last year, there were 170 general and life insurance companies in the country. But, the Ministry of Finance closed down nine of them due to their poor financial state.

The government has increased the RBC ratio in a bid to clean up the country's messy insurance industry and to bring about consolidation in an over-crowded market.

The minimum RBC requirement for this year has been increased to 100 percent from 75 percent last year. It will be further raised to 125 percent in 2004. -- JP