Indonesia explores relaxing regulations to allow reinsurers to establish domestic branches

In a press conference covered by the Jakarta Globe, Indonesia’s Financial Services Authority (OJK) confirmed that the country is planning to explore relaxing regulations to promote multinational reinsurance companies to open branches in Indonesia.

This follows response to a widening deficit in the country’s reinsurance balance of payments. Indonesia recorded a Rp 12.1 trillion ($732.9 million) deficit in reinsurance transactions last year, marking a continued increase in recent years.

Under Government Regulation No. 3/2020, foreign ownership in Indonesian reinsurance companies is currently capped at 80%.

Ogi Prastomiyono, OJK’s Executive Chairman for Insurance, Guarantee, and Pension Fund Supervision, explained that the growing deficit reflects the domestic industry’s dependence on foreign reinsurers operating outside Indonesia.

Ogi said during the press conference, “We’re working with relevant ministries to explore regulatory relaxation that would allow multinational reinsurance companies to open branches in Indonesia. Out of 144 insurance and reinsurance firms operating in Indonesia, 109 have met the new capital requirements.”

As of March 2025, the Indonesian insurance industry reported Rp 1,145.63 trillion ($69.4 billion) in total assets. Along with this, the industry’s Risk-Based Capital (RBC) ratios remain strong, with life insurers at 467.73% and general insurers and reinsurers at 316.96%, well above the regulatory threshold.

Additionally, the OJK is also gradually increasing minimum capital requirements for insurers and reinsurers to strengthen the industry’s financial resilience.

For Reinsurers, by 2026, minimum equity will rise from Rp 300 billion to Rp 500 billion and by 2028, Tier 1 (KPPE-1) will be Rp 1 trillion, and Tier 2 (KPPE-2) will be Rp 2 trillion.

For Conventional Insurers, by 2026, it will be Rp 250 billion (from Rp 150 billion), and by 2028, KPPE-1: Rp 500 billion and KPPE-2 at Rp 1 trillion.

Lastly, for Sharia Insurers, by 2026 at Rp 100 billion, and by 2028 for KPPE-1 to Rp 200 billion and KPPE-2 to Rp 500 billion.

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