Investment Optimization in Insurance Portfolios: A Quantitative Analysis of Financial Services Authority of Indonesia Regulations

Abstract This study examines investment optimization strategies for insurance company portfolios in Indonesia, focusing on the quantitative impacts of Financial Services Authority (OJK) Regulation No. 5 of 2023. The research evaluates how this regulation influences insurers’ asset allocation decisions and portfolio construction. Through financial modeling and statistical analysis, the study assesses changes in allowable assets, investment limits, and risk management requirements introduced by the regulation. Key areas of analysis include modifications to permitted investments, adjustments to maximum allocation limits, new requirements for investments in corporate bonds and medium-term notes, and revised affiliated party investment rules. The research aims to identify optimal portfolio compositions that maximize returns while adhering to the regulatory framework. Findings provide insights into effective investment strategies for Indonesian insurance companies operating under the current regulatory environment, with recommendations for optimizing portfolios to balance risk and return in compliance with OJK regulations. This paper is among the first to incorporate the latest OJK regulatory limits into a CVaR-based optimization framework, offering a practical approach for compliance-oriented asset management in the Indonesian insurance sector.