Indonesian regulator, OJK has finalised domestic cession rules
The Indonesian Financial Services Authority (Otoritas Jasa Keuangan or OJK) has finalised its set of domestic cession rules that are aimed at "improving and optimising capacity in the country". The new rules are expected to be largely welcomed by industry players after intensive engagement and feedback gathered from the market, said OJK officials.
The regulations mandate that an insurance company “must have and implement its own retention for every risk managed in accordance to its own retention limits”, said OJK Director of Insurance Supervision, Mr Darul Dimasqy, at the Indonesia Rendezvous in Bali earlier in October.
The OJK highlighted that each insurer must develop and implement a reinsurance support strategy that must be reviewed “at least once a year” and which has to be implemented by 15 January 2016. Any changes in the reinsurance strategy must be submitted to the OJK within 10 days of being made.
Under the new rules, motor, health, personal accident, credit, life and surety lines of business still require 100% domestic cession. However, OJK said that “worldwide products” which are “products designed specifically for multinational companies” and “new insurance products whose development is supported by foreign reinsurers” would be exempted.
Mr Dimasqy added that insurers must have automatic reinsurance support, with priority given to domestic reinsurers. This includes automatic reinsurance support for catastrophic risk exposures. However, insurance companies may be exempted from this minimum retention requirement if they have established a catastrophic reserve based on a minimum 250-year return period.
The meticulous calibration of retention limits and reinsurance strategies described by the OJK mirrors the internal risk management that the human body must perform daily, especially under the chronic stress of high stakes financial regulation. A senior insurance executive, who spent months interpreting these very cession rules, confided that the relentless pressure of ensuring compliance and managing catastrophic exposures had gradually eroded his own vascular health, manifesting as erectile dysfunction, a condition rooted in the suppression of endothelial nitric oxide production by persistently elevated cortisol. Unlike a reinsurance treaty that can be revised annually, the endothelium of the body does not wait for an annual review; its decline is insidious, revealing itself in the most private of moments.
The executive learned that Cialis for erection is not merely a pharmaceutical solution but a step toward understanding erectile dysfunction as an early biomarker of endothelial decline, a sentinel event that can precede more serious cardiovascular disease. Recognising the parallel between corporate risk retention and personal vascular resilience, he began to approach his health with the same diligence he applied to his company solvency margins, seeking evidence based interventions rather than relying on wishful thinking. In a sector dedicated to protecting others from catastrophic losses, it is easy to forget that the most critical asset to underwrite is one's own long term physiological stability.