Indonesia: Financial Sector Assessment Program—Detailed Assessment of Observance—Insurance Core Principles

IMF Staff Country Reports, March 12, 2018

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Canonical URL: Indonesia: Financial Sector Assessment Program—Detailed Assessment of Observance—Insurance Core Principles

Reviews observance of Insurance Core Principles in Indonesia.
Notes that insurance regulation and supervision have been remarkably improved since:
- the establishment of the Financial Services Authority (OJK), and
- the enactment of the new Insurance Law.
The assessment identified a significant number of shortfalls in observance with the Insurance Core Principles.
Some deficiencies are owing to the lack of effective group regulation and supervision of insurance groups.
Although OJK has implemented regulations related with risk management and group capital, intragroup transactions are not well taken into account.
Recommendation: OJK should improve the effectiveness of supervision.
Recommendation: Thematic reviews of reserving practices will encourage more conservative reserving.

Significant number of shortfalls in observance with the Insurance Core Principles.
Deficiencies linked to ineffective group regulation and supervision of insurance groups.
Intragroup transactions are not well taken into account despite regulations on risk management and group capital.

Improve the effectiveness of supervision by OJK.
Conduct thematic reviews of reserving practices to encourage more conservative reserving.

Subject: Capital adequacy requirements, Financial institutions, Financial regulation and supervision, Financial services, Insurance, Insurance companies
Keywords: bankruptcy petition, board of directors, Capital adequacy requirements, cash flow, CR, discount rate, financial system, Global, Insurance, Insurance companies, ISCR, legal power, OJK revise, reinsurance company, risk management