Amendment to Financial Services Authority Regulation Number 69/POJK.05/2016 Concerning the Conduct of Business by Insurance Companies, Sharia Insurance Companies, Reinsurance Companies, and Sharia Reinsurance Companies

Financial Services Authority Regulation Number 36 of 2024 Concerning the Amendment to Financial Services Authority Regulation Number 69/POJK.05/2016 Concerning the Conduct of Business by Insurance Companies, Sharia Insurance Companies, Reinsurance Companies, and Sharia Reinsurance Companies

Abstract: That in order to support business development, create a healthy ecosystem, and foster growing public trust in the insurance industry, it is necessary to refine regulations regarding the conduct of business by insurance companies, Sharia insurance companies, reinsurance companies, and Sharia reinsurance companies.

The legal basis for this Financial Services Authority Regulation (POJK) is: Law No. 21 of 2011 as amended by Law No. 4 of 2023; Law No. 40 of 2014 as amended by Law No. 4 of 2023; and POJK No. 69/POJK.05/2016.

The refinements made include, among others, the expansion of the scope of business, insurance agent conduct, claim handling, the conduct of insurance business digitally, the application of Sharia principles, and the mechanism for the transfer of insurance portfolios.

Adjustment of regulations regarding the scope of business:

1. The scope of business must be conducted in accordance with the type of insurance business line that corresponds to the business field and the principles of conducting general insurance or life insurance business.
2. Addition of Sharia financing insurance and Sharia suretyship business activities in the conduct of business lines for Sharia general insurance companies and Sharia units in general insurance companies.
3. Fee-based business activities may be conducted as part of cooperation within a single ownership.

Strengthening rules regarding insurance agent conduct:

1. Insurance companies and Sharia insurance companies are required to ensure that insurance agents comply with the insurance agent code of ethics.
2. In the event that an insurance company, Sharia insurance company, or Sharia unit in an insurance company enters into an agreement with an insurance agent who has moved from another insurance company, Sharia insurance company, or Sharia unit in an insurance company that has a similar business field and the same principles of conducting business, the company is prohibited from terminating insurance products with an insurance period of more than 1 (one) year from the policyholders held by the insurance agent at the previous company for a period of less than 1 (one) year.
3. Companies are required to apply business conduct in accordance with ethical business standards established by the association.

Adjustment of regulations related to claim handling:

1. The obligation of the company to ensure that insurance agents do not engage in the withholding of premiums or contributions.
2. The obligation to settle claim payments in facultative reinsurance support agreements and automatic reinsurance support agreements for reinsurance companies, Sharia reinsurance, and Sharia units in insurance companies.

Addition of regulations regarding the conduct of Digital Insurance Services (LAD):

1. The scope of LAD includes digital product underwriting.
2. Companies may conduct the development of insurance products, underwriting, and claim handling digitally.
3. Prohibition on conducting LAD before obtaining approval from the OJK and registering as an electronic system operator with the competent authority.

Adjustment of regulations regarding Sharia principles:

1. Sharia suretyship policies must contain the kafalah bil ujrah contract.
2. Addition of the kafalah bil ujrah contract to the tijarah contract.
3. The obligation to use contracts must be based on fatwas or statements of Sharia compliance issued by institutions having the authority to issue fatwas in the field of Sharia.

Adjustment of regulations regarding portfolio transfer:

1. Details of application documents that must be fulfilled by the Company in carrying out the transfer of insurance portfolios.
2. The return of rights is carried out in accordance with the provisions of each insurance policy or reinsurance/Sharia reinsurance agreement, or in the event that cancellation or return of rights is not regulated, it is carried out in accordance with prevailing general insurance/Sharia insurance practices.

Notes: This Financial Services Authority Regulation shall take effect 6 (six) months from the date of enactment. This Financial Services Authority Regulation was enacted on December 23, 2024, and was established on December 20, 2024. Companies that have conducted LAD before this POJK takes effect must adjust their obligations and requirements for conducting LAD as regulated in this OJK Regulation no later than 6 (six) months from the date this OJK Regulation takes effect. The expansion of the scope of business involving other business activities for general insurance companies and Sharia general insurance companies based on government assignment may only be conducted until December 31, 2030. The obligation to establish a guarantee business unit must be implemented no later than 6 (six) months from the date this Regulation takes effect.