JAKARTA (Reuters) – Indonesia has raised the minimum equity for insurance firms to hold to at least 250 billion rupiah ($16.06 million) by 2026, 67% higher than the previous minimum level, the regulator said on Wednesday, following policy defaults in the past few years.
Under the previous rules, the minimum paid up capital for insurance firms was 150 billion rupiah.
The Financial Services Authority (OJK) will increase the minimum to between 500 billion rupiah and 1 trillion rupiah by 2028, it said.
“Limited capital capacity is one of the main issues that has potential to disrupt the sector’s resiliency and stability in anticipating potential economic crises,” OJK said on Wednesday.
A number of insurance firms, including state-owned Asuransi Jiwasraya, an insurer for military officers Asabri and one of the country’s oldest insurers, Bumiputera, got into financial difficulty after a wave of unpaid claims.
The new regulation also called for new investors to put in at least 1 trillion rupiah to start a new insurance business.
For reinsurance firms, the minimum capital requirement was raised to 500 billion rupiah in 2026, and set to go up to 2 trillion rupiah at end-2028, OJK said, compared with 300 billion rupiah under previous rules.
($1 = 15,565.0000 rupiah)
(Reporting by Stefanno Sulaiman, Editing by Louise Heavens)