News for Insurance Company in Indonesia – In a significant move to fortify Indonesia’s insurance industry and ensure financial stability, the Financial Services Authority (OJK) has announced a major increase in the minimum capital requirement for establishing insurance companies. Under the newly enacted regulation, the required capital has been set at IDR 1 trillion. This strategic decision is designed to enhance the quality of insurance firms, boost consumer protection, and strengthen the national insurance sector. If you’re considering starting an insurance company in Indonesia, here’s what you need to know!

The Indonesian insurance industry is poised for growth, driven by the country’s robust economic performance. Recent data reveals that Indonesia’s economy expanded by 5.05% year-on-year in 2024. The government is optimistic about achieving a 5.2% growth rate by the year’s end, with domestic consumption projected to remain a key driver of GDP.

As the population grows and the economy stabilizes, the demand for insurance products—ranging from life and health insurance to vehicle coverage—is on the rise. Increased public awareness about the need for insurance protection is making this sector an attractive opportunity for investment and development.

For investors looking to enter the insurance market in Indonesia, understanding the new regulations and requirements is essential. The OJK has introduced several new rules to ensure that insurance companies meet high standards of quality and stability. One of the key changes is the substantial increase in the minimum capital requirement for setting up an insurance company, now set at IDR 1 trillion.

Updated Capital Requirements for Insurance Company in Indonesia

The OJK’s latest regulation, POJK Number 23 of 2023, outlines the revised capital requirements for various types of insurance companies:

• Insurance Companies: IDR 1 trillion
• Reinsurance Companies: IDR 2 trillion
• Sharia Insurance Companies: IDR 500 billion
• Sharia Reinsurance Companies: IDR 1 trillion

Ogi Prastomiyono, Head of the OJK’s Insurance, Guarantee, and Pension Fund Supervisory Department, explained that this increase in capital requirements is intended to strengthen the insurance industry’s capacity, improve institutional stability, and provide legal certainty through a more efficient licensing process.

Equity Requirements for Existing Insurance Company in Indonesia

For insurance companies that already have operating licenses, the new regulations establish two key stages for meeting updated equity requirements:

• First Stage: Companies have until December 30, 2026, to comply with the following minimum equity requirements:
• Insurance Companies: IDR 290 billion
• Reinsurance Companies: IDR 500 billion
• Sharia Insurance Companies: IDR 100 billion
• Sharia Reinsurance Companies: IDR 200 billion
• Second Stage: By December 30, 2028, companies must meet the following requirements based on their category:
• KPPE 1:
  • Insurance Companies: IDR 500 billion
  • Reinsurance Companies: IDR 1 trillion
  • Sharia Insurance Companies: IDR 200 billion
  • Sharia Reinsurance Companies: IDR 400 billion
• KPPE 2:
  • Insurance Companies: IDR 1 trillion
  • Reinsurance Companies: IDR 2 trillion
  • Sharia Insurance Companies: IDR 500 billion
  • Sharia Reinsurance Companies: IDR 1 trillion

KPPE 1 companies are limited to offering simpler insurance products and activities, while KPPE 2 companies can engage in a broader range of insurance activities.

Additionally, companies applying for a business license must maintain a guarantee fund equivalent to at least 20% of the minimum capital requirement. This guarantee fund must be placed in time deposits or government securities with a minimum remaining term of one year.

The OJK’s decision to raise the capital requirements is a pivotal step in reinforcing the insurance sector in Indonesia. For those interested in establishing an insurance company, comprehending and adhering to these new requirements is crucial for ensuring regulatory compliance and operational success. With increased capital and strategic planning, insurance companies will be better equipped to navigate industry challenges and contribute to national economic growth.

If you need assistance with setting up an insurance company and meeting regulatory requirements, Bizindo is here to help. We offer comprehensive consulting and establishment services to ensure all documentation and procedures are handled efficiently. With our expertise, Bizindo will guide you through every step, from initial planning to operational launch. Contact us to embark on your journey toward success in Indonesia’s insurance industry.