IDX Plummets, OJK Chief Monitors Impact on Insurance and Pension Funds

The Financial Services Authority (OJK) is strengthening its oversight regarding the investment practices of insurance companies and pension funds. This includes assessing the impact of the decline in the Jakarta Composite Index (IHSG) and the MSCI index rebalancing on insurance investment portfolios.

Ogi Prastomiyono, OJK Executive Head of Insurance, Guarantee, and Pension Fund Supervision, stated that supervision of the insurance industry has previously focused heavily on product aspects, policy sales, and claim payments. However, in-depth supervision of the investment activities of insurance companies has not yet been sufficiently conducted.

According to Omitted, evaluation results indicate the existence of investment practices involving companies within the same group. These transactions are often conducted through negotiated market mechanisms rather than the regular market, limiting transparency regarding counterparties and the prices used.

He explained that the prices formed in these transactions are subsequently used as the basis for the valuation of the overall investment portfolio. This condition is a primary focus for OJK’s improvements, as investment oversight is deemed a vital component of insurance industry supervision.

“The failures of insurance companies that have occurred were actually caused by improper investments. This is especially critical now, given the significant decline in the IHSG,” Ogi said during his presentation in Jakarta on Tuesday.

Currently, OJK is conducting further studies to map out insurance companies affected by the market weakness, including those holding shares that were removed from the MSCI index.

“We are assessing who is affected, who holds the stocks removed from the MSCI index, and the total value involved,” said Ogi.

As a reference, the CEO of PT Sucor Sekuritas, Bernadus Wijaya, noted that the MSCI rebalancing sentiment through late May 2026 was a driver for foreign net selling, which pressured the IHSG to levels around 6,000.

The Jakarta Composite Index plummeted during Wednesday’s trading. By the end of the first session, the IHSG had dropped by nearly 5%, losing 306 points in a single trading session. Specifically, the IHSG fell 4.94% to the level of 5,889.48.

This decline brought the IHSG to its lowest level in five years. The last time the IHSG closed lower than today’s trading was in May 2021, during the market rebound following the 2020 pandemic-induced crash.