Jakarta. Indonesia’s Financial Services Authority (OJK) is reviewing existing restrictions on foreign ownership in the reinsurance sector, in 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.

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

“We’re working with relevant ministries to explore regulatory relaxation that would allow multinational reinsurance companies to open branches in Indonesia,” Ogi said during a press conference on Friday.

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

Higher Capital Requirements Introduced
OJK is also gradually increasing minimum capital requirements for insurers and reinsurers to strengthen the industry’s financial resilience:

Reinsurers:
By 2026: Minimum equity will rise from Rp 300 billion to Rp 500 billion

By 2028:

• Tier 1 (KPPE-1): Rp 1 trillion
• Tier 2 (KPPE-2): Rp 2 trillion

Conventional Insurers:
By 2026: Rp 250 billion (from Rp 150 billion)

By 2028:

• KPPE-1: Rp 500 billion
• KPPE-2: Rp 1 trillion

Sharia Insurers:
By 2026: Rp 100 billion

By 2028:

• KPPE-1: Rp 200 billion
• KPPE-2: Rp 500 billion

Out of 144 insurance and reinsurance firms operating in Indonesia, 109 have met the new capital requirements, Ogi added.

As of March 2025, the Indonesian insurance industry reported Rp 1,145.63 trillion ($69.4 billion) in total assets.

The industry’s Risk-Based Capital (RBC) ratios remain strong, with life insurers at 467.73 percent and general insurers and reinsurers at 316.96 percent, well above the regulatory threshold, indicating a robust financial position.