OJK to Introduce Minimum Pricing for Guarantee Services to Stabilize Industry

Regulatory Move to Prevent Unhealthy Competition

The Financial Services Authority (OJK) is set to implement a minimum pricing floor for guarantee services, a move supported by the Association of Indonesian Guarantee Companies (Asippindo). This regulatory step aims to maintain a healthy and competitive business environment in Indonesia's guarantee industry.

Industry Concerns and Regulatory Response

Asippindo Secretary General Agus Supriadi stated that setting a minimum pricing floor would help prevent unhealthy rate wars and enhance service quality. The association believes this measure will stabilize the industry by preventing practices that could lead to reduced revenues and increased risk for guarantee companies.

Implementation Considerations

While the specific formula for determining the minimum pricing has not been discussed in detail, OJK is expected to consider various factors including operational costs, risk assessment, and market requirements. Asippindo has expressed its willingness to work with OJK to ensure that the new regulation does not hinder industry growth.

Background and Industry Context

Ogi Prastomiyono, Head of Insurance, Guarantee, and Pension Fund Supervision at OJK, previously mentioned that OJK and industry associations would collaborate to establish the minimum pricing floor. This development comes as some guarantee companies, particularly smaller ones, have not utilized actuarial services due to cost considerations, while larger companies have already adopted such practices.