DIGIVESTASI - The Financial Services Agency (OJK) is working with the Korea Deposit Insurance Corporation (KDIC) and the Korea Insurance Development Institute (KIDI) to expand international cooperation in insurance development, including strengthening financial infrastructure by developing a financial safety net framework. The MoU also includes the development of a database of risk assessment techniques and the determination of insurance premiums.  

OJK's memorandum of understanding with KDIC was signed by OJK General Manager of Pension, Guarantee and Insurance Fund Supervision Ogi Prastomiyono and KDIC President/Chairman Jaehoon Yo in Seoul, South Korea, Thursday (June 12). 
Meanwhile, OJK's memorandum of understanding with KIDI was signed by Ogi Prastomiyono and KIDI President and CEO Chang-Eon Heo in Seoul on Wednesday (June 12). 

The scope of cooperation between OJK and KDIC includes information exchange, cooperation on cross-border issues, staff exchange, human resource capacity building and other areas of cooperation that may be agreed upon by the parties. 
The memorandum of understanding with KDIC is effective from December 7, 2023 for a period of three years until December 2026.

"OJK's cooperation with KDIC in accordance with OJK's policy framework is divided into two main work streams, which aim to accelerate the resolution of insurance company problems while preparing various policies to encourage development and strengthen national strength in the insurance sector. This will be a "strong, healthy industry that is able to grow sustainably," Ogi explained in his remarks through a press release, Saturday (12/9). 

It was emphasized that OJK is fully committed to supporting the implementation of the mandate of Law No. Resolution No. 4 of 2023 on developing and strengthening the financial sector responsible for implementing the policy guarantee program within five years of the law being enacted. 

For this reason, during the transition period until the implementation of the guarantee contract program in 2028, OJK must prepare everything related to strengthening the financial safety net elements in the insurance sector, including the handling and recovery of assets carried out by insurance companies. 

"The presence of a policy guarantee program is expected to provide certainty of payment of insurance benefits/claims, thus protecting policyholders from the risk of bankruptcy of insurance companies." The country's insurance industry, as well as encouraging public interest in using insurance products and services," Ogi explained.

Developing the insurance industry 

Ogi further stated that the signing of the agreement outlined in this MoU is a form of strategic cooperation between OJK and KIDI which aims to strengthen cooperation, especially in the development of a database for recording the determination of risk and premium rates, general research and capacity.

insurance sector, exchange of data and information, and other cooperation related to the development of the insurance industry. He further explained: "OJK believes that the synergy established between OJK and KIDI will make a positive contribution in strengthening the insurance sector in Indonesia and Korea." 

He added that one of the biggest problems in Indonesia's insurance sector is unfair market competition, which encourages insurance companies to offer premiums that are inadequate for the payment of insurance benefits.  
Therefore, in accordance with international practice, OJK deems it necessary to immediately establish an independent organization that sets insurance premiums, specifically responsible for the development and management of the Indonesian insurance industry's risk profile database.

"Through the cooperation between OJK and KIDI, OJK hopes to enrich the understanding of Korea's best practices as a country that has successfully established an independent organization that plays a role in encouraging the development of the health sector. "This is especially true in terms of database management and premium rate determination," Ogi explained.  The memorandum of understanding with KIDI is valid from January 1, 2024 for a period of two years and is automatically extended for another year if the parties agree.