Amendment to Financial Services Authority Regulation Number 14/POJK.05/2015 on Self-Retention and Domestic Reinsurance Support

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 19 /POJK.05/2019
CONCERNING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY
REGULATION NUMBER 14/POJK.05/2015 CONCERNING SELF-RETENTION AND DOMESTIC REINSURANCE SUPPORT BY THE GRACE OF GOD THE ALMIGHTY THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that in order to provide greater legal certainty for insurance industry players in obtaining domestic reinsurance support, it is necessary to clarify the business line boundaries for simple risks; b. that based on the considerations as referred to in letter a, it is necessary to establish a Financial Services Authority Regulation concerning Amendment to Financial Services Authority Regulation Number 14/POJK.05/2015 concerning Self-Retention and Domestic Reinsurance Support; Recalling:

1. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);

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2. Law Number 40 of 2014 concerning Insurance (State Gazette of the Republic of Indonesia Year 2014 Number 337, Supplement to the State Gazette of the Republic of Indonesia Number 5618);
3. Financial Services Authority Regulation Number 14/POJK.05/2015 concerning Self-Retention and Domestic Reinsurance Support (State Gazette of the Republic of Indonesia Year 2015 Number 265, Supplement to the State Gazette of the Republic of Indonesia Number 5754);
   DECIDING:
   Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 14/POJK.05/2015 CONCERNING SELF-RETENTION AND DOMESTIC REINSURANCE SUPPORT.

Article I
The provisions in Financial Services Authority Regulation Number 14/POJK.05/2015 concerning Self-Retention and Domestic Reinsurance Support (State Gazette of the Republic of Indonesia Year 2015 Number 265, Supplement to the State Gazette of the Republic of Indonesia Number 5754) are amended as follows:
The provisions of Article 7 remain unchanged, the explanation of Article 7 is amended, so that its wording is contained in the Article-by-Article explanation in this Financial Services Authority Regulation.

Article II
This Financial Services Authority Regulation shall come into force on the date of its promulgation.

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  This copy is in accordance with the original
  Director of Law 1
  Legal Department signed
  Yuliana
  To ensure that everyone knows it, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.
  Established in Jakarta on August 27, 2019
  CHAIRMAN OF THE COMMISSIONERS COUNCIL
  FINANCIAL SERVICES AUTHORITY
  REPUBLIC OF INDONESIA, signed
  WIMBOH SANTOSO
  Promulgated in Jakarta on August 30, 2019
  MINISTER OF LAW AND HUMAN RIGHTS
  REPUBLIC OF INDONESIA, signed
  YASONNA H. LAOLY
  STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2019 NUMBER 152

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 19 /POJK.05/2019
CONCERNING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 14/POJK.05/2015 CONCERNING SELF-RETENTION AND DOMESTIC REINSURANCE SUPPORT

I. GENERAL
Law Number 21 of 2011 concerning the Financial Services Authority mandates that the supervisory and regulatory functions over all activities in the financial services sector operating in Indonesia are carried out by the OJK, and the purpose of establishing the OJK is so that all financial services activities are conducted in an orderly, fair, transparent, and accountable manner, and are able to realize a financial system that grows sustainably and stably and is able to protect the interests of consumers and the public. In line with the OJK's objectives, the establishment of Law Number 40 of 2014 concerning Insurance aims to create a healthier, more reliable, trustworthy, and generally competitive insurance industry, achieved through both the establishment of new provisions and the refinement of existing provisions. These efforts are carried out, among others, by refining provisions regarding financial health. Furthermore, based on the mandate of Article 36 and Article 37 of Law Number 40 of 2014 concerning Insurance, the OJK can provide support to insurance and reinsurance industry players in Indonesia to optimize the utilization of domestic insurance, sharia insurance, reinsurance, and/or sharia reinsurance capacity, which has hitherto been felt to be suboptimal. In order to achieve these objectives, the OJK has been mandated to regulate self-retention and domestic reinsurance support. Therefore, this Financial Services Authority Regulation is expected to provide guidelines for Insurance Companies, Sharia Insurance Companies, Reinsurance Companies, and Sharia Reinsurance Companies in implementing self-retention and domestic reinsurance support strategies in order to optimize the utilization of insurance, sharia insurance, reinsurance, and/or sharia reinsurance capacity.

II. ARTICLE-BY-ARTICLE
Article I
Article 7
What is meant by "100% (one hundred percent) domestic reinsurance support from domestic reinsurers" in these provisions is the full placement of automatic and/or facultative reinsurance support on domestic reinsurers. Simple risks in these provisions are motor vehicle insurance, health insurance, personal accident insurance, credit insurance, death insurance, suretyship, and liability insurance implemented based on Law Number 34 of 1964 concerning the Mandatory Road Traffic Accident Compensation Fund. In addition to the business lines mentioned above, the following are not included as simple risks: property insurance, cargo insurance, hull insurance for ships, hull insurance for aircraft, satellite insurance, onshore energy insurance, offshore energy insurance, engineering insurance, liability insurance, and miscellaneous insurance, provided that the indemnity value exceeds the provisions regarding the minimum domestic reinsurance support threshold.

Article II
Clearly sufficient.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6376