Comparison of the Accuracy of the Risk-Based Capital and Early Warning System Method in Assessing the Financial Performance of Sharia Life Insurance

Abstract

The purpose of this study is to compare the accuracy of the Risk-Based Capital (RBC) and Early Warning System (EWS) methods in measuring the financial performance of sharia insurance. The study's subjects were Islamic life insurance companies registered with the Financial Services Authority (OJK) in 2018. Measurement of financial performance with Risk-Based Capital (RBC) used solvency ratios, and Early Warning System (EWS) employed solvency ratios, liquidity ratios, rentability ratios, and technical ratio. The analysis technique utilized a paired sample test. The results showed that the EWS method had a greater deviation than RBC. It means that the RBC method is more accurate than the EWS method.