JAKARTA (IFT) - The Capital Market and Financial Institution Supervisory Board (Bapepam-LK), urged insurers with Islamic business units, or Islamic insurers, to separate their reports on Risk-Based Capital (RBC) to ensure transparency on their financial health, said Isa Rachmatawarta, Head of Insurances of Bapepam-LK. (full story - Indonesia Finance Today)
To date, many insurers mix their data on their conventional and Islamic businesses, making the Authority and the public unable to observe the status of each of the businesses clearly.
RBC calculation for Islamic Insurance is detailed in the Regulation of the Minister of Finance No 11/2011 concerning Financial Health of Islamic Insurers and Reinsurers Based on Islamic Principles, reinforced with Regulation 06/2011 concerning Form and Arrangement of Islamic Insurers and Reinsurers based on Islamic Principles, and Regulation No 07/2011 concerning Guidelines to Calculate Fund Requirement to Anticipate Risk of Losses.
Hendrisma Rahim, Head of the Indonesian Life Insurers Association, said that RBC calculation needs to be separated to clearly see an insurer’s health. The separation, however, is not the only way to observe health.
The separation is easier if insurers separate their capital and financial statements. "If capital and financial statements are merged into a single report, merged RBC calculation is actually not a problem. As long as in one company, it is understandable," he said.
Shaifie Zein, Head of the Islamic Insurance Association, said that the separation is an absolute factor as it is determined by regulations. He also said that contacts (akad) in Islamic and conventional insurances are different so their calculations are different too.
"Conventional and Islamic insurance management is very different. Their investment and calculation are clearly different. The RBC report, therefore, must be separated," he said.(*)
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