The Financial Services Authority (FSA) requires life insurance and general insurance firms to allocate funds to purchase Government Securities (SBN). Chief Executive of the Non-Bank Financial Industry Supervision at FSA Firdaus Djaelani said the rule will help the absorption of the Government Securities.
Firdaus said the government issued a number of government bonds to cover the deficit in the State Budget (APBN). "Most of deficit is to pay for infrastructure projects," said Firdaus in Jakarta, Tuesday (3/14/2017)
Firdaus said life insurance firms are obliged to invest 30 percent of total investment in the Government Securities. Meanwhile, general insurance and reinsurance companies are required to invest at least 20 percent of total investment in the Government Securities.
Firdaus said that the rule is stipulated in FSA Regulation (POJK) No. 1/POJK.05/2016. POJK oversees investments of non-bank financial service institutions in the Government Securities.
In addition to life and general insurance firms, other institutions are Indonesia Deposit Insurance Corporation (LPS), Worker Social Security Provider Agency (BPJS) and Health Social Security Provider Agency.
POJK was first published last year. At that time, general insurance companies should meet minimum investment in the Government Securities by 10 percent by the end of 2016. This portion should be increased to 20 percent by the end of 2017.
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