Regulatory AlertsMechanism and Procedures for Separation of Sharia Units of Insurance and Reinsurance Companies
The Financial Services Authority (OJK) issued Circular Letter No. 10/SEOJK.05/2024 to establish the detailed mechanisms and procedures for separating Sharia units of insurance and reinsurance companies, implementing POJK No. 11 of 2023. The regulation defines two separation models: establishing a new Sharia insurance or reinsurance company with portfolio transfer, or transferring portfolios to an existing licensed Sharia entity. It mandates specific procedural steps, including preparation, licensing, capital adequacy adjustments, and the formal closure of the original Sharia unit, while imposing strict notification and investment compliance requirements.
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