Strengthen The Banking And Insurance Industry, OJK Releases A Pair Of New Regulations

JAKARTA – The Financial Services Authority (OJK) has just released two new Financial Services Authority Regulations (POJK), namely POJK Number 27 of 2022 concerning banking and POJK Number 28 of 2022 concerning insurance.

OJK Public Relations Director Darmansyah said POJK 27/2022 was issued to make adjustments to the calculation of banking capital which is more sensitive to risk by strengthening it from a risk management perspective which is in line with Basel III international standards.

"Some of the changes are regarding technical adjustments to the calculation of risk-weighted assets (RWA) which are further regulated in the relevant OJK Circular Letter. Meanwhile, the components of the bank's core capital and supplementary capital have not changed", he said in a written statement on Wednesday, January 11.

According to Darmansyah, to support financial market deepening by optimizing the functions and roles of central counterparty institutions, banks are also required to apply international standards for capital requirements for bank exposures to central counterparties and margin requirements for non-centrally cleared derivatives.

"The intended standard aims to reduce systemic risks that arise in financial markets so that banks are encouraged to be able to conduct transactions through a central counterparty institution", he said.

Meanwhile, POJK 28/2022 is aimed at following the business practices of insurance brokerage companies which continue to develop in line with changes in the business environment and community needs.

Darmansyah explained, accelerating the use of digital technology in insurance services has the potential to improve quality and have a positive impact on the industry and consumers. However, on the other hand, it also poses risks that require further regulation and supervision while still providing room for innovation.

"POJK 28/2022 made adjustments to several provisions related to the frequency of submission of periodic reports, the imposition of sanctions on insurance brokerage companies, reinsurance brokerage companies, and insurance loss assessment companies", he said.

Meanwhile, the main provisions in POJK 28/2022 include, first, arrangements regarding digital insurance broker services. Second, the insurance company's obligation is to ensure that experts carry out their duties and responsibilities.

Third, cooperation between insurance/reinsurance brokerage companies (co-broking). Fourth, the obligation to submit quarterly financial reports. And the fifth is regulatory adjustments regarding administrative sanctions, including administrative fines.

"Issuance of POJK 28/2022 is expected to optimize the role of insurance brokerage companies, reinsurance brokerage companies, and insurance loss appraisal companies as supporters of increasing national economic growth", concluded Darmansyah.