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OJK Circular No. 9/SEOJK.05/2024 on Quality Assessment of Subrogation Claims, Guarantee Activities, and Suretyship
The Financial Services Authority (OJK) issued Circular No. 9/SEOJK.05/2024 to establish legal bases for reporting subrogation claim quality, guarantee activities, and suretyship to the Financial Services Information System. The regulation defines specific quality criteria for these financial instruments, classifying them as 'performing', 'less performing', or 'non-performing' based on payment status and contractual compliance. It mandates that insurance and guarantee companies apply these assessment methods and report historical subrogation claims dating back at least five years prior to the circular's effective date.
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Regulation / Regulation Search / Quality Assessment of Subrogation Claims, Guarantee Activities, and Suretyship


Sector: General Insurance
Sub-Sector: Other Regulations
Regulation Type: OJK Circular
Regulation Number: 9/SEOJK.05/2024
Effective Date: 9/27/2024


Appendix 1
SEOJK 9-SEOJK.05-2024 Quality Assessment of Subrogation Claims, Guarantee Activities, and Suretyship.pdf
Abstract SEOJK 9-SEOJK.05-2024 Quality Assessment of Subrogation Claims, Guarantee Activities, and Suretyship.pdf
FAQ SEOJK 9-SEOJK.05-2024 Quality Assessment of Subrogation Claims, Guarantee Activities, and Suretyship.pdf


Page Content
OJK Circular Number 9/SEOJK.05/2024 concerning Quality Assessment of Subrogation Claims, Guarantee Activities, and Suretyship


Abstract:
To implement reporting into the Financial Services Information System, a legal basis is required regarding the quality assessment of subrogation claims, guarantee activities, and suretyship for general insurance companies, Islamic general insurance companies, guarantee companies, and Islamic guarantee companies, which are currently designated as reporters in the Financial Services Information System.
The legal basis for this OJK Circular is POJK No. 11 of 2024.
This OJK Circular regulates the criteria for assessing the quality of subrogation claims, including recording time in reporting and actions required after a claim, as well as the criteria for assessing the quality of guarantees and suretyship, including their recording methods and the quality assessment of subrogation claims arising from guarantee and suretyship activities.


Note:
This OJK Circular takes effect on the date of establishment, which is September 27, 2024.


Subrogation claims related to credit insurance, Islamic financing insurance, credit guarantees, and Islamic financing guarantees:


    

  1. Subrogation claims are recorded at the amount of risk covered or guaranteed on the credit balance, financing, or Islamic financing.
    2. 

  2. The quality of subrogation claims is determined as:
a. Performing, if there is a payment of 100% (one hundred percent) of the total claim; or
b. Non-performing, if no payment is made at all or if 100% (one hundred percent) of the total claim is not settled.
    3. 



Guarantee and suretyship activities by general insurance companies, Islamic general insurance companies, guarantee companies, and Islamic guarantee companies:


    

  1. The quality assessment of guarantees and suretyship towards the guaranteed party (principal) is determined based on performance assessment factors of the guaranteed party or principal, which include assessing the guaranteed party's or principal's ability to fulfill their obligations.
    2. 

  2. The assessment of the guaranteed party's or principal's ability to fulfill their obligations is determined as:
a. Performing, if obligations are fulfilled according to agreed targets;
b. Less Performing, if obligations are fulfilled but do not reach 100% (one hundred percent) of the agreed targets; or
c. Non-performing, if obligations are fulfilled but do not reach 100% (one hundred percent) of the agreed targets and there is a declaration of default from the beneficiary or obligee.
    3. 



Subrogation claims related to guarantee and suretyship activities by general insurance companies, Islamic general insurance companies, guarantee companies, and Islamic guarantee companies:


    

  1. The quality assessment of subrogation claims for guarantees and suretyship is determined based on the payment ability of the guaranteed party or principal regarding the subrogation claims.
    2. 

  2. The quality of subrogation claims for guarantees and suretyship is determined as:
a. Performing, if subrogation claims are paid at 100% (one hundred percent) of the total claims; or
b. Non-performing, if no payment can be made at all or if subrogation claims are paid but 100% (one hundred percent) of the total claims cannot be settled.
    3. 



Reporting of subrogation claims for the first time in the Financial Services Information System is required for subrogation claims arising at least 5 (five) years prior to the establishment of this OJK Circular.
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