The Indonesian Life Insurance Association (AAJI) does not rule out the possibility that there could be mergers and acquisitions in the sector to meet capital requirements over the longer term.
At present, most of the 56 members of the Indonesian Life Insurance Association (AAJI) already have equity of more than IDR500bn ($33.4m), according to the chairman of the industry body, Mr Budi Tampubolon.
"Maybe there are some that have IDR250bn-IDR500bn and some others have between IDR100bn-IDR250bn. It seems that only one has just above IDR100bn, meaning it is not healthy.”
Mr Budi was commenting on the proposal of the Indonesian financial regulator (OJK) to raise minimum paid-up capital requirements for insurers at a media briefing on 24 May 2023 on the 1Q performance of the life insurance market.
The OJK is proposing to raise the minimum paid-up capital for conventional insurers and reinsurers, and Shariah-compliant insurance and reinsurance companies. The regulator proposes to increase the minimum required capital in two stages with 2026 and 2028 deadlines. "We have to see how the minimum equity limit will be,” he said.
AAJI understands that the required minimum capital must be increased, but says that the issue must be discussed carefully regarding the amount and timeframe.
|
Minimum capital (IDR bn)
|
Current
|
2026
proposed
|
2028
proposed
|
|
Conventional insurer
|
150
|
500
|
1,000
|
|
Conventional reinsurer
|
300
|
1,000
|
2,000
|
|
Takaful company
|
50
|
250
|
500
|
|
Retakaful company
|
100
|
500
|
1,000
|