Minimum Solvency Levels for Insurance Companies

Head of the Capital Market Supervisory Agency and Financial Institutions (Bapepam-LK) has issued Regulation No. PER-09/BL/2011 on Guidelines For Calculating Minimum Solvency Levels For Insurance And Reinsurance Companies (“Regulation”). In essence, the purpose of the Regulation is to improve the financial resiliance of insurance and reinsurance companies and protect them from the dynamics of global finance. Ultimately, the Regulation is a guide to adjust risk factors used to calculate minimum solvency thresholds.

Pursuant to Article 3, the minimum solvability level calculation (Batas Tingkat Solvabilitas Minimum - BTSM) for Sharia and Conventional Insurance and Reinsurance companies will be regulated by different regulations. In other words, the Regulation does not apply to companies/business units that base their businesses on Sharia principles - the Regulation only applies to Conventional Insurance and Reinsurance companies.