OJK Intensifies Monitoring of PSAK 117 Implementation Amid Industry Adjustments

Impact on Financial Reporting and Risk Management

The Financial Services Authority (OJK) is closely monitoring the implementation of PSAK 117, a new financial accounting standard that has significant implications for Indonesia's insurance industry. The regulation, which affects how insurance companies report their financial performance, has brought about changes in revenue recognition and expense management. Ogi Prastomiyono, Head of OJK's Insurance, Pension Fund, and Guarantee Oversight, noted that the new standard makes it challenging to directly compare financial reports with previous years due to the changes in accounting practices.

Industry Responses to the New Standard

Insurance companies are responding differently to the implementation of PSAK 117. Zurich Indonesia, for instance, has fully complied with the new standard since last year and views it as a positive development that enhances risk management discipline. Edhi Tjahja Negara, Country Manager of Zurich Indonesia, stated that the most impacted products are life insurance policies due to their long-term nature. In contrast, PT Asuransi Cakrawala Proteksi Indonesia (ACPI) is still studying strategic steps related to product design changes, particularly for multi-year motor vehicle insurance policies. Nicolaus Prawiro, ACPI's Vice President Director, highlighted that the new standard could lead to more complex liability calculations and changes in profit recognition timing.

Challenges and Strategic Adjustments

Asuransi Asei Indonesia has identified several challenges in implementing PSAK 117, including increased complexity in measurement models, the need for comprehensive historical data, and potential volatility in financial reporting. Dody Achmad Sudiyar Dalimunthe, CEO of Asuransi Asei, emphasized the importance of strengthening risk management, optimizing reinsurance structures, and enhancing data and technology capabilities. The company is also focusing on improving actuarial, financial, and IT capacities to effectively implement the new standard.

Regulatory Oversight and Industry Collaboration

The OJK is working closely with the Ministry of Finance through the PSAK 117 Steering Committee to monitor the ongoing implementation. Yulius Bhayangkara, Chairman of the Indonesian Insurance Council, noted that while the new regulation presents challenges, especially for companies with limited resources, it ultimately benefits consumers by ensuring compliance and industry discipline. The insurance industry is proactively adapting to these changes, with companies taking various strategic measures to maintain business sustainability and regulatory compliance.