The Indonesian Financial Services Authority (OJK) is developing a new risk-based capital (RBC) framework that is intended to be more aligned with International Financial Reporting Standards 17 (IFRS 17). This framework is expected to be finalised in 2026, with phased implementation in 2027. The first phase is expected to apply to insurance and reinsurance companies with assets exceeding IDR 5 trillion. This new RBC framework is expected to replace the existing minimum risk-based capital regime.
As part of this process, the OJK has already taken initial steps by conducting a quantitative impact study. This exercise is intended to assess the potential impact of the proposed framework on insurers and to provide an early indication of how the new capital requirements may apply in practice. News reports also indicate that OJK is continuing to refine and finalise the new RBC framework through discussions with independent consultants, benchmarking against international practices, and coordination with key industry stakeholders. This suggests that the development of the new regime remains ongoing, with further calibration and consultation before the framework is finalised and implemented.
Highlights
- Key changes communicated by the OJK: Available capital, capital tiers, insurance risk, interest rate risk, market risk, operational risk, minimum RBC ratio, and additional stress testing.
- Comparison across the region: Capital regimes, liability valuation basis, and key features of RBC regimes.
- Next steps: Potential implications for the product and investment landscape in Indonesia.