OJK: Ailing Insurance Firms Will Not Automatically Enter Policy Guarantee Programme, Effective by Early 2028 at the Latest

The Financial Services Authority (OJK) has emphasised that insurance companies which have not yet met the required level of financial health will not be directly admitted into the Policy Guarantee Programme (PPP). The programme is planned to come into effect no later than 2028.

Ogi Prastomiyono, Chief Executive of Insurance, Guarantee and Pension Fund Supervision at OJK, said that under the scheme currently being prepared, insurance companies must meet a number of requirements to be able to participate in the policy guarantee programme. One of the key indicators is a solvency level or Risk Based Capital (RBC) of at least 120 percent, in accordance with OJK regulations.

“So they will be rehabilitated outside the policy guarantee programme, in this case under the OJK. If they do not meet the requirements when the policy guarantee takes effect, it means they must be rehabilitated outside the system, because it could have an impact on the others,” Ogi said during a media discussion in Lombok, West Nusa Tenggara, on Thursday, 27 August 2026.

He said this is considered important to prevent unhealthy companies from entering the guarantee scheme. If troubled companies were to enter the policy guarantee programme directly, there would be a risk of moral hazard as well as an impact on other insurance companies.

Ogi said there are currently eight insurance companies under special supervision. The condition of these companies is one of the concerns in preparing for the implementation of the policy guarantee programme.

The Policy Guarantee Programme is targeted to take effect in 2028 in accordance with the mandate of the Financial Sector Development and Strengthening Law (UU P2SK). The scheme will be managed by the Indonesia Deposit Insurance Corporation (LPS), with mechanisms including the payment of initial contributions and periodic contributions from participating insurance companies.

Under the scheme, insurance companies participating in the Policy Guarantee Programme are still required to establish a Guarantee Fund. This fund serves as one of the instruments in the implementation of the guarantee programme to provide protection to policyholders if an insurance company experiences problems that prevent it from meeting its obligations.