Locally-incorporated reinsurance players must step up to increase support for the development of the insurance industry in Indonesia and to reduce the deficit in the insurance sector's balance of payments.
Speaking at the recent Indonesia Re International Conference (ICC) 2024 in Jakarta, Financial Services Authority (OJK) chief executive of insurance, guarantee and pension fund supervision Ogi Prastomiyono said, “OJK assesses that the role of domestic reinsurance needs to be further optimised to support the growth and development of the national insurance industry sector."
He also said that data on premiums and the balance of payments of the insurance industry indicated that the role of domestic reinsurance players was currently not optima, reported Antara News Agency.
He said that the proportion of overseas reinsurance premiums to total insurance premiums in 2022 stood at 34.8%. The proportion increased to 38.1% in 2023.
He said that the balance of payments in the insurance sector was still negative due to large reinsurance transactions abroad compared to reinsurance transactions entering the country.
The balance of payments of the insurance sector last year recorded a deficit of IDR10.2tn ($655m), or an increase of 28.2% compared to 2022 when the deficit was IDR7.95tn.
Mr Ogi said that the “Roadmap for the Development and Strengthening of the Indonesian Insurance Industry 2023-2027” released by the OJK listed several strategic measures to improve reinsurance operations, including strengthening capital, increasing capacity, improving risk management capability and encouraging mergers and consolidation.
In addition, the OJK would strengthen regulations to improve the performance of the insurance industry.