Insurance and Reinsurance Minimum Capital Requirements Delayed Until 2010

The Government has issued Regulation No. 81 of 2008 and this constitutes the third amendment of Government Regulation No. 73 of 1992. The basic premise of the Regulation is to recognize developments in the insurance and reinsurance industry and to address the issues related to the ongoing global financial crisis.

The previous amendment of the Regulation, No. 39 of 2008, set out a series of stages that were to see insurance and reinsurance companies comply with specific minimum capital requirements. The Regulation called for compliance to these stages starting on 31 December 2008. However, the most recent amendments have seen these dates pushed back to 2010.

For insurance companies the relevant capital requirements and dates are:

IDR 40 billion by 31 December 2010;

IDR 70 billion by 31 December 2012; and

IDR 100 billion by 31 December 2014.

For reinsurance companies the relevant capital requirements and dates are:

IDR 100 billion by 31 December 2010;

IDR 150 billion by 31 December 2012; and

IDR 200 billion by 31 December 2014.

Regulation No. 39 of 2008 is subject to a petition for judicial review. The application for judicial review has been lodged with the Supreme Court by the Indonesian General Insurance Association. The issue of Regulation 81 of 2008 is not likely to result in the petition being withdrawn.

The Regulation has been in force since 31 December 2008.