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Legal Updates | Licensing of Insurance and Reinsurance Providers in Indonesia

Insurance and reinsurance companies doing business in Indonesia must be licensed by the Financial Services Authority (Otoritas Jasa Keuangan or OJK). The OJK must approve or reject the license application no later than 30 days after the complete application is received. Specific procedures to obtain a license from the OJK will be further regulated by an OJK regulation.

Due to the lack of implementing regulations under the new Insurance Law, the procedure for applying for an insurance/reinsurance business license is still subject to the requirements set out in the implementing regulations of the old insurance law:

  • Government Regulation No. 73 of 1992 dated 30th October 1992 regarding the Implementation of the Insurance Business, as amended (GR 73).
  • Minister of Finance Regulation No. 426/KMK.06/2003 dated 30th September 2003 regarding Business Licensing and Institutional Aspects of Insurance and Reinsurance Companies (KMK 426).

Under the Insurance Law, an insurance or reinsurance company that applies for a business license must comply with the following requirements and provide the following information:

  • Articles of association (AOA).
  • Organisation and management structure, including a description of duties and authorities.
  • Issued and paid-up capital.
  • Guarantee fund.
  • Ownership of the insurance company.
  • Fit and proper requirement regarding the shareholders and controlling parties.
  • Fit and proper requirement regarding the members of the board of directors (BOD), board of commissioners (BOC), sharia supervisory board, actuaries and internal auditor.
  • Have experts in relevant field.
  • Feasibility of the business plan.
  • Feasibility of the risk management.
  • Products that will be marketed.
  • Arrangement with affiliated parties (if any) and policy for the transfer of functions for business implementation.
  • Infrastructure for the preparation and submission of reports to the OJK.
  • Confirmation from the supervisory authority of the country of origin of the foreign party, if there is direct participation from a foreign party.
  • Other requirements as required by the OJK.

Every insurance company in Indonesia must be a member of an insurance business association in accordance with its type of business. There are two insurance associations in Indonesia:

  • The Indonesian Life Insurance Association (Asosiasi Asuransi Jiwa Indonesia) (AAJI) for life insurance companies.
  • The Indonesian General Insurance Association (Asosiasi Asuransi Umum Indonesia) (AAUI) for loss insurance companies.

Insurance/reinsurance intermediaries

Insurance brokerage companies and reinsurance brokerage companies must be licensed by the OJK. Any individual broker working at an insurance or reinsurance brokerage company and any insurance agent (either working independently or for a company) must be registered with the OJK.

Due to the lack of implementing regulations under the new Insurance Law, the procedures for obtaining a license and registering with the OJK are still subject to the requirements set out in the implementing regulations of the old insurance law:

  • Government Regulation No. 73 of 1992 dated 30th October 1992 regarding the Implementation of the Insurance Business, as amended (GR 73).
  • Minister of Finance Regulation No. 426/KMK.06/2003 dated 30th September 2003 regarding Business Licensing and Institutional Aspects of Insurance and Reinsurance Companies (KMK 426).

The requirements for applying for a business license for insurance and reinsurance intermediaries are the same as for insurance and reinsurance companies.

An insurance company marketing its insurance products through insurance agents must (OJK Regulation No. 2/POJK.05/2014 regarding Good Corporate Governance for Insurance Companies):

  • Enter into an agency agreement with its insurance agents.
  • Ensure that its agents have obtained certification from the AAUI or AAJI.

Other providers of insurance/reinsurance-related activities

Actuary consultants, public accountants and appraisers providing services related to the insurance business must be registered with the OJK. The specific procedures for registration with the OJK will be further regulated by the OJK.

SSEK - 30th March 2016

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Indonesia Snapshot

Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)