Key Changes to the Regulation on Actuaries

On December 30, 2020, the Minister of Finance issued Regulation No. 227/PMK.01/2020 of 2020 on Actuaries (“MOF Reg. 227”). MOF Reg. 227 revoked the previous regulation on actuaries, namely the Ministry of Finance Regulation No. 137/PMK.01/2016 of 2016 dated September 20, 2016 (“MOF Reg. 137”).

We set out below a summary on the key changes between the provisions under MOF Reg. 137 and MOF Reg. 227.

  • Types of Actuaries

Under the previous regime, MOF Reg. 137 only provided definitions of Registered Actuary, Registered Actuary Adjunct and Public Actuary. While now MOF Reg. 227 expands the definitions of actuaries as well as those who are qualified to provide actuarial services as follows:

    • Actuary: an individual who has obtained a certification from FSAI (Fellow of the Society of Actuaries of Indonesia) or other equivalent and recognized certification;
    • Actuary Adjunct: an individual who has obtained a certification from ASAI (Associate of the Society of Actuaries of Indonesia) or other equivalent and recognized certification;
    • Registered Actuary: Actuary who is registered to provide actuarial services in accordance with MOF Reg. 227;
    • Registered Actuary Adjunct: Actuary Adjunct who is registered to provide actuarial services in accordance with MOF Reg. 227;
    • Public Actuary: individuals who have obtained a license from the Ministry of Finance to provide actuarial services to the public.

Please note that a Registered Actuary Adjunct and Registered Actuary may assist a Public Actuary in providing actuarial services to companies and/or an Actuarial Consulting Office (“ACO”). However, please note that a Registered Actuary Adjunct and a Registered Actuary are prohibited from signing-off an Actuarial Services Report (as we elaborate below). Notwithstanding the above definitions of actuaries, we note that the general concept on who will be qualified to provide actuarial services is still similar.

  • Definition of Actuaries Report

MOF Reg. 227 now provides more detailed definition of an “Actuarial Service Report” as follows:

written documents consisting of an analysis, opinion, and/or recommendation on actuarial services that is signed by a public actuary, including other documents deemed as actuaries report in accordance with the applicable laws and regulations.

Previously, MOF Reg. 137 only defined “Actuaries Report” as follows:

written document consisting of an analysis and recommendation on actuarial services that is signed by public actuary.

  • Scope of Actuarial Services

MOF Reg. 227 now stipulates a broader scope of actuarial services compared to the existing scope of actuarial services that were regulated under MOF Reg. 137. Please refer to the below.

    • Actuarial statement in relation to insurance products, including premium rates and profitability of products. Previously, MOF Reg.137 did not include premium rates and profitability of products as part of the scope;
    • Determination of financial soundness and capital adequacy for insurance companies and other financial industries, such as pension fund;
    • Liability determination on reserve fund of insurance companies, pension fund, social security, and other company that requires actuarial calculation technique. We note that this scope was also stipulated under MOF Reg. 137;
    • Estimation of margin of risks and planning of possible benefit payments in the future for the insurance sector and other financial industries, such as pension fund;
    • Valuation of actuarial aspects and providing consultation or advice that requires actuarial calculation technique; and
    • Other actuarial services or other services that are required to be signed off by a public actuary in accordance with the applicable laws and regulations. We note that MOF Reg. 137 also stipulated a similar scope.
  • Whether or Not Companies Can Provide Actuarial Services

Under the MOF Reg. 227, it is now stipulated that every company that has a unit that provides actuarial services is required to hire, at the minimum, a registered actuary adjunct or a registered actuary. Please note that MOF Reg. 137 was silent on this requirement.

  • Whether or Not Public Actuary Can be Hired by a Company

In relation to the actuary services provided by a public actuary, MOF Reg. 227 stipulates that a public actuary in providing actuarial services is required to provide such services through:

    • Insurance company or other company, in accordance with the applicable laws and regulations, as an actuary of the company; and/or
    • ACO as an actuarial consultant.

Furthermore, a public actuary may hold multiple positions, namely as an actuary consultant and an actuary of a company, as long as there is no conflict of interests.

Please note that MOF Reg. 137 was silent on the above provisions.

  • Contents of an Actuaries Report

Similar to the existing provisions Under MOF Reg. 137, MOF Reg. 227 now reiterates that an actuaries report must:

    • be made in Bahasa Indonesia;
    • be made based on the agreement or task given by the task assignor;
    • be signed off by a public actuary who has signed such agreement or received such task by the task assignor, and list their license number;
    • list the report number;
    • list the names and register numbers of registered actuary adjunct and/or registered actuary, if they are involved in the preparation of the actuarial service report.

In addition to that, a public actuary must prepare and maintain a working documentation (kertas kerja) with respect to the relevant actuaries report that will be published.

  • Transitional Provisions

We set out below the transitional provisions of MOF Reg. 227 regarding license of ACO, certificates of registered actuary adjunct and registered actuary, license of public actuary, and prohibition of providing actuarial services.

    • License of ACO that was issued in accordance with the previous regulation, namely Ministry of Finance Decree No. 425/KMK.06/2003 on Licensing and Administration of Supporting Business Activities of Insurance will still be valid until September 20, 2021. Subsequently, such license will be declared invalid and such ACO must apply for a license based on the provisions under MOF Reg. 227.
    • Certificates of registered actuary adjunct and registered actuary, license of public actuary, and license of ACO that was made in accordance with MOF. Reg 137 is still valid. On the other hand, applications for such certificates and licenses that were already submitted, but has not been given a license or approval, must be resubmitted based on the provisions under MOF Reg. 227
    • With the enactment of MOF Reg. 227, all parties are prohibited from providing actuarial service (please see section on “Scope of Actuarial Service” in point 3 above) if such party does not fulfill the requirements under MOF Reg. 227. We note that MOF Reg. 137 also stipulated a similar provision.

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April 8, 2021

Please contact for Abadi Abi Tisnadisastra (atisnadisastra@aksetlaw.com), Adhitya Ramadhan (aramadhan@aksetlaw.com), or Satria Kasmaliputra (mkasmaliputra@aksetlaw.com) for further information.

 

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