Financial Services Authority Regulation Number 2/POJK.05/2015 on Maintenance and Reporting of Insurance Risk Data and Application of Premium and Contribution Rates for Property Insurance and Motor Vehicle Insurance Business Lines

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 2/POJK.05/2015
CONCERNING
THE MAINTENANCE AND REPORTING OF INSURANCE RISK DATA AND THE APPLICATION OF PREMIUM AND CONTRIBUTION RATES FOR THE PROPERTY INSURANCE AND MOTOR VEHICLE INSURANCE BUSINESS LINES BY THE GRACE OF GOD THE ALMIGHTY THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that in order to encourage sound insurance business practices and provide better protection to the insured, it is necessary to have premium or contribution levels that are sufficient, not excessive, and non-discriminatory; b. that in order to obtain premium or contribution levels as referred to in letter a, reliable and accountable insurance risk data is required;
c. that based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning the Maintenance and Reporting of Insurance Risk Data and the Application of Premium and Contribution Rates for the Property Insurance and Motor Vehicle Insurance Business Lines;
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);
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. Government Regulation Number 73 of 1992 concerning the Conduct of Insurance Business (State Gazette of the Republic of Indonesia Year 1992 Number 120, Supplement to the State Gazette of the Republic of Indonesia Number 3506) as amended several times, lastly with Government Regulation Number 81 of 2008 (State Gazette of the Republic of Indonesia Year 2008 Number 212, Supplement to the State Gazette of the Republic of Indonesia Number 4954);
   DECIDING:
   Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE MAINTENANCE AND REPORTING OF INSURANCE RISK DATA AND THE APPLICATION OF PREMIUM AND CONTRIBUTION RATES FOR THE PROPERTY INSURANCE AND MOTOR VEHICLE INSURANCE BUSINESS LINES.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined as:

1. Company means a company conducting general insurance business and/or Sharia general insurance business as referred to in the Insurance Law.
2. Insurance Risk Data means insurance transaction data, including risk profile data, insurance losses, administrative costs, and other general costs.
3. Property Insurance means insurance that covers property against risks of fire, lightning, explosion, aircraft impact or objects falling from aircraft, and smoke (FLEXAS - Fire, Lightning, Explosion, Aircraft Impact and Smoke) as covered in the Indonesia Standard Fire Insurance Policy (PSAKI) issued by the Indonesia General Insurance Association (AAUI), including but not limited to Industrial All Risks (IAR) Munich Re wording, Property All Risks (PAR) Munich Re wording, Commercial All Risks, manuscript wording, Association of British Insurers (ABI) wording, Mark IV/V, including Comprehensive Machinery Insurance, Electronic Equipment Insurance, and other property policies that cover FLEXAS risks.
4. Motor Vehicle Insurance means insurance that protects the insured from potential losses arising from the ownership and use of motor vehicles.
5. Data Responsible Officer means a Company official tasked as the Person in-charge (PIC) in the process of submitting Insurance Risk Data to the Financial Services Authority.
6. Financial Services Authority, hereinafter abbreviated as OJK, is an independent institution free from the interference of other parties that has the function, duties, and authority for regulation, supervision, examination, and investigation, as referred to in the law concerning the Financial Services Authority.

CHAPTER II
MAINTENANCE AND REPORTING OF INSURANCE RISK DATA
Article 2
(1) Companies marketing products in the Property Insurance business line and/or the Motor Vehicle Insurance business line must have an information system capable of processing and maintaining Insurance Risk Data. (2) Companies marketing products in the Property Insurance business line and/or the Motor Vehicle Insurance business line must maintain Insurance Risk Data for at least the last 5 (five) years.

Article 3
(1) Companies marketing products in the Property Insurance business line and/or the Motor Vehicle Insurance business line must annually submit to the OJK a report on Insurance Risk Data presented based on the underwriting year, for the period:
a. 5 (five) years for Companies that have marketed products in the Property Insurance business line and/or the Motor Vehicle Insurance business line for 5 (five) years or more; or b. less than 5 (five) years, namely since the Company marketed products in the Property Insurance business line and/or the Motor Vehicle Insurance business line, for Companies that have marketed products in the Property Insurance business line and/or the Motor Vehicle Insurance business line for less than 5 (five) years. (2) The last underwriting year of the 5 (five) year period as referred to in paragraph (1) letter a or less than 5 (five) years as referred to in paragraph (1) letter b is 2 (two) years prior to the reporting year. (3) The Insurance Risk Data report as referred to in paragraph (1) must meet the following provisions:
a. signed by the Board of Directors or equivalent and the actuary or Company expert; and b. submitted no later than April 30.
(4) If the deadline for submitting the report as referred to in paragraph (3) letter b falls on a holiday, the deadline for submitting the report is the next working day.
(5) Submission of the Insurance Risk Data report as referred to in paragraph (1) is done online through the OJK data communication network system.
(6) In the event that the OJK data communication network system as referred to in paragraph (5) is not yet available or a technical disturbance occurs at the time of the deadline for submitting the Insurance Risk Data report, the Company must submit the Insurance Risk Data report offline in electronic data form via compact disc (CD) or other electronic data storage media. (7) In the event of a technical disturbance at the time of the deadline for submitting the Insurance Risk Data report as referred to in paragraph (6), the Company must submit the Insurance Risk Data report no later than the next working day after the technical disturbance occurred. (8) In the event that the technical disturbance as referred to in paragraph (6) is experienced by the OJK, the OJK announces in writing to the Company on the same day after the technical disturbance occurred. (9) Further provisions regarding the form, structure, and procedures for submitting the Insurance Risk Data report as referred to in paragraph (1) are regulated in an OJK Circular Letter.

Article 4
(1) Companies marketing products in the Property Insurance business line and/or the Motor Vehicle Insurance business line must appoint a Data Responsible Officer.
(2) The appointment, replacement, and/or dismissal of the Data Responsible Officer must be reported in writing to the OJK no later than 10 (ten) working days from the appointment, replacement, and/or dismissal. (3) In the event that the appointment, replacement, and/or dismissal of the Data Responsible Officer is done within less than 10 (ten) working days before the Insurance Risk Data reporting date to the OJK, the Company must report the appointment, replacement, and/or dismissal of the Data Responsible Officer no later than 1 (one) working day before the Insurance Risk Data reporting date to the OJK.

CHAPTER III
APPLICATION OF PREMIUM OR CONTRIBUTION RATES
Article 5
(1) Companies marketing products in the Property Insurance business line and/or the Motor Vehicle Insurance business line must apply premium or contribution rates.
(2) The premium or contribution rates as referred to in paragraph (1) include pure premium or contribution, administrative and other general costs, acquisition costs, and profit.
(3) The premium or contribution rates as referred to in paragraph (2) are premium or contribution rates established by the OJK.
(4) In establishing premium or contribution rates, the OJK uses Insurance Risk Data references for at least the last 5 (five) years.
(5) Further provisions regarding the premium or contribution rates established by the OJK as referred to in paragraph (3) are regulated in an OJK Circular Letter.

CHAPTER IV
ADMINISTRATIVE SANCTIONS
Article 6
(1) Violations of Article 2, Article 3 paragraph (1), Article 3 paragraph (3), Article 3 paragraph (6), Article 3 paragraph (7), Article 4, and Article 5 paragraph (1) of this OJK Regulation are subject to administrative sanctions in the form of:
a. written warning; b. restriction of business activities; and/or
c. revocation of business license.
(2) Administrative sanctions in the form of written warnings are imposed for a maximum of 3 (three) consecutive times with a maximum duration of 1 (one) month each, namely:
a. first written warning; b. second written warning; and
c. third written warning.
(3) In the event that the Company has been subjected to the administrative sanction of the third written warning and has not fulfilled the provisions in this OJK Regulation and/or its implementing regulations, or within a period of 3 (three) months from the establishment of the third written warning, it is proven again to have committed one or more violations, the OJK may require members of the Board of Directors and/or Board of Commissioners, or equivalent in the Company, to undergo a re-assessment of competence and propriety. (4) The OJK may announce the imposition of administrative sanctions as referred to in paragraph (1) to the public.

CHAPTER V
CLOSING PROVISIONS
Article 7
With the enactment of this OJK Regulation:
a. the maintenance and reporting of Insurance Risk Data for the Property Insurance business line and/or the Motor Vehicle Insurance business line must follow this regulation. b. legislation regulating premiums or contributions remains in force as long as it does not conflict with this OJK Regulation.

Article 8
This OJK Regulation takes effect 3 (three) months from the date of promulgation.
In order that everyone may know it, it is ordered to announce this OJK Regulation by placing it in the State Gazette of the Republic of Indonesia.
Established in Jakarta on March 31, 2015
CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY,
Signed,
MULIAMAN D. HADAD
Promulgated in Jakarta on March 31, 2015
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,
Signed,
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 71 Copy in accordance with the original Director of Legal Affairs I Ministry of Law, Signed, Sudarmaji

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 2/POJK.05/2015
CONCERNING
THE MAINTENANCE AND REPORTING OF INSURANCE RISK DATA AND THE APPLICATION OF PREMIUM AND CONTRIBUTION RATES FOR THE PROPERTY INSURANCE AND MOTOR VEHICLE INSURANCE BUSINESS LINES

I. GENERAL
Competition in marketing products in the Property Insurance business line and/or the Motor Vehicle Insurance business line is increasingly intense, so that many Companies disregard sound and prudent underwriting principles by setting premium or contribution levels that are sufficiently low in order to compete in the market to obtain business. This is not in accordance with the principles of sound insurance business, where premium or contribution levels are established to be sufficient, not excessive, and non-discriminatory. In order to obtain premium or contribution levels that are sufficient, not excessive, and non-discriminatory, reliable and accountable Insurance Risk Data is required. Such Insurance Risk Data will only be obtained if the Company has an adequate system for collecting, processing, and maintaining Insurance Risk Data. This OJK Regulation regulates the Company's obligation to have and maintain Insurance Risk Data needed to establish ideal premiums or contributions. Thus, it is hoped that the interests of the public/insured and the health of the Company can be protected.

II. ARTICLE BY ARTICLE EXPLANATION
Article 1
Clearly stated.

Article 2
Clearly stated.

Article 3
Paragraph (1)
What is meant by marketing in this paragraph is that the Company has reported its products and still has a license to market products, and its marketing activities have not been stopped based on an OJK order, or a decision by the Board of Directors or equivalent.

Paragraph (2)
What is meant by the period in this paragraph is the time frame of the reported Insurance Risk Data, calculated from the underwriting year 2 (two) years prior to the reporting year.
Example: for the 2015 Insurance Risk Data report, it covers Insurance Risk Data for the underwriting year period 2009 to 2013 for Companies that have marketed products in the Property Insurance business line and/or the Motor Vehicle Insurance business line for 5 (five) years or more.

Paragraph (3)
If the Company already has an actuary, then the Insurance Risk Data report is signed by the Board of Directors or equivalent and the actuary. If the Company does not yet have an actuary, then it is signed by the Board of Directors or equivalent and an expert. Provisions regarding the Board of Directors or equivalent signing the Insurance Risk Data report refer to the provisions in the Company. Experts in this provision are Company experts as regulated in insurance legislation.

Paragraph (4)
Clearly stated.

Paragraph (5)
Clearly stated.

Paragraph (6)
Technical disturbances as referred to in this paragraph are technical disturbances that cause the Company to be unable to submit the Insurance Risk Data report online and/or the OJK to be unable to receive the Insurance Risk Data report online.

Paragraph (7)
Clearly stated.

Paragraph (8)
The OJK will notify the Company regarding technical disturbances experienced by the OJK, among others, through announcements on the OJK website.

Paragraph (9)
Clearly stated.

Article 4
Clearly stated.

Article 5
Clearly stated.

Article 6
Paragraph (1)
Clearly stated.

Paragraph (2)
Clearly stated.

Paragraph (3)
The competence and propriety assessment to be undergone by the Board of Directors and/or Board of Commissioners, or equivalent in the Company, is a re-assessment of competence and propriety after becoming Board of Directors and/or Board of Commissioners, or equivalent in the Company, as a sanction for violations committed by the Company against the provisions of this OJK Regulation.

Paragraph (4)
Clearly stated.

Article 7
Clearly stated.

Article 8
Clearly stated.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5684