The Financial Services Authority (OJK) has announced that the Policy Guarantee Programme is planned to take effect in 2027.
Insurance companies facing financial difficulties and whose licenses have been revoked will be placed under the programme, in a move aimed at increasing public trust in the insurance industry while strengthening policyholder protection.
The Chief Executive of the Insurance, Guarantee, and Pension Fund Supervisory Agency of the Financial Services Authority (OJK), Mr Ogi Prastomiyono, said that the OJK would continue to supervise financially stricken insurers until the programme takes effect.
Following the establishment of the Policy Guarantee Institution, troubled insurance companies will not be immediately liquidated. Instead, resolution measures will be attempted first, such as finding new investors or transferring portfolios to healthy insurers.
Currently, the OJK is awaiting approval of the revised Law on the Development and Strengthening of the Financial Sector (PPSK Law), which serves as the legal basis for the establishment of the Policyholder Guarantee Institution.
Over the past three years, several insurance companies have been in the process of liquidation, including Wanaartha Life and Kresna Life. To date, the liquidation process for these troubled insurers has not been completed.