Financial Services Authority Regulation Number 35/POJK.05/2016 Regarding Procedures for Issuing Written Orders in the Insurance Sector

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 35/POJK.05/2016
REGARDING
PROCEDURES FOR ISSUING WRITTEN ORDERS
IN THE INSURANCE SECTOR
BY THE GRACE OF THE ALMIGHTY GOD
THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that in order to carry out the regulatory and supervisory tasks regarding activities in the financial services sector as referred to in Article 8 letter f and Article 9 letter d of Law Number 21 of 2011 concerning the Financial Services Authority, the Financial Services Authority has the authority to establish regulations regarding procedures for issuing written orders to financial service institutions and/or specific parties; b. that in order to protect the interests of consumers, the public, and the financial services sector, the Financial Services Authority has the authority to take necessary actions, including issuing written orders in the insurance sector;
c. that based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation regarding Procedures for Issuing Written Orders in the Insurance Sector;

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);

DECIDES:
Establish: FINANCIAL SERVICES AUTHORITY REGULATION REGARDING PROCEDURES FOR ISSUING WRITTEN ORDERS IN THE INSURANCE SECTOR.

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

1. Written Order is a written order as referred to in Law Number 21 of 2011 concerning the Financial Services Authority and Law Number 40 of 2014 concerning Insurance.
2. Executive Head of Insurance Supervision, Pension Funds, Financing Institutions, and Other Financial Service Institutions, hereinafter referred to as Executive Head, is a member of the Board of Commissioners of the Financial Services Authority who has supervisory duties regarding financial service activities in the insurance, pension fund, financing institution, and other financial service institutions sectors.
3. Insurance Company is an insurance company, sharia insurance company, reinsurance company, sharia reinsurance company, insurance broker company, reinsurance broker company, and insurance loss assessor company as referred to in Law Number 40 of 2014 concerning Insurance.
4. Controller is a party that directly or indirectly has the ability to determine the Board of Directors, Board of Commissioners, or equivalents thereof in legal entities in the form of cooperatives or joint ventures and/or influences the actions of the Board of Directors, Board of Commissioners, or equivalents thereof in legal entities in the form of cooperatives or joint ventures as referred to in Law Number 40 of 2014 concerning Insurance.
5. Statutory Manager is a statutory manager as referred to in Law Number 21 of 2011 concerning the Financial Services Authority and Law Number 40 of 2014 concerning Insurance.
6. Specific Party is an individual or business entity in the form of a legal entity or non-legal entity, association, or organized group.
7. Board of Directors is the Board of Directors as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for Insurance Companies in the form of a limited liability company or equivalents to the Board of Directors in legal entities in the form of cooperatives or joint ventures.
8. Board of Commissioners is the Board of Commissioners as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for Insurance Companies in the form of a limited liability company or equivalents to the Board of Commissioners in legal entities in the form of cooperatives or joint ventures.
9. Sharia Supervisory Board is a part of the organ of the Insurance Company that conducts business activities based on sharia principles, which performs supervisory functions over the implementation of insurance business to ensure compliance with sharia principles.
10. Financial Services Authority, hereinafter abbreviated as OJK, is the Financial Services Authority as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.

CHAPTER II
AUTHORITY TO ISSUE WRITTEN ORDERS
Article 2
(1) The OJK has the authority to issue Written Orders.
(2) The Written Order as referred to in paragraph (1) is issued by the Executive Head.
(3) The Written Order as referred to in paragraph (1) is given to Insurance Companies, Controllers, Statutory Managers, and/or Specific Parties.

Article 3
Insurance Companies, Controllers, Statutory Managers, and/or Specific Parties are obligated to comply with the Written Order as referred to in Article 2.

Article 4
The Written Order is considered terminated when the Insurance Company, Controller, Statutory Manager, and/or Specific Party as referred to in Article 3 has executed the Written Order.

CHAPTER III
SANCTIONS
Article 5
Without prejudice to criminal provisions as regulated in Article 53 and Article 54 of Law Number 21 of 2011 concerning the Financial Services Authority, the OJK has the authority to impose administrative sanctions on parties violating the provisions of Article 3 of this OJK Regulation, consisting of:
a. written warning; b. restriction of business activities, for part or all of business activities;
c. prohibition on marketing insurance products or sharia insurance products for specific business lines;
d. revocation of business licenses; e. cancellation of registration statements for insurance brokers, reinsurance brokers, insurance agents, actuary consultants, public accountants, assessors, or other parties providing services to Insurance Companies; f. cancellation of approvals for mediation institutions or associations; and/or g. prohibition from becoming shareholders, Controllers, Directors, Board of Commissioners, Sharia Supervisory Board, or holding executive positions below the Board of Directors for a maximum of 10 (ten) years in Insurance Companies.

CHAPTER IV
CLOSING PROVISIONS
Article 6
This OJK Regulation takes effect upon being enacted.

In order that everyone knows it, ordering the enactment of this OJK Regulation by placing it in the State Gazette of the Republic of Indonesia.
Established in Jakarta on October 19, 2016
CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY, signed
MULIAMAN D. HADAD

Enacted in Jakarta on October 25, 2016
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 203 Copy in accordance with the original Executive Analyst as Acting Director of Law Department of Law signed Mislan

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 35/POJK.05/2016
REGARDING
PROCEDURES FOR ISSUING WRITTEN ORDERS
IN THE INSURANCE SECTOR

I. GENERAL
Law Number 21 of 2011 concerning the Financial Services Authority mandates that the supervisory and regulatory functions regarding all activities within the financial services sector operating in Indonesia are carried out by the OJK. The OJK was established with the objective that all financial service activities are conducted in an orderly, fair, transparent, and accountable manner, capable of realizing a financial system that grows sustainably and stably, and capable of protecting consumer and public interests. In order to provide protection to consumers, the public, and the financial services sector, the OJK has the authority to take necessary actions, including issuing Written Orders in the Insurance Sector. Written Orders are issued when Insurance Companies are assessed to have the potential to harm the interests of consumers, the public, and the financial services sector, thus requiring the issuance of Written Orders by the OJK to Insurance Companies, Controllers, Statutory Managers, and/or Specific Parties. In principle, this OJK Regulation regulates among other things the procedures for issuing Written Orders, parties to whom Written Orders may be issued, and the obligation to comply with Written Orders. In order for the authority to issue Written Orders to be carried out with good governance, the issuance of Written Orders needs to be compiled in one OJK Regulation.

II. ARTICLE BY ARTICLE
Article 1
Sufficiently clear.
Article 2
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Written Orders to Insurance Companies are issued to the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board.
What is meant by "Controller" is the Controller of insurance companies, sharia insurance companies, reinsurance companies, or sharia reinsurance companies.
What is meant by "Specific Parties" includes:
a. employees of Insurance Companies; b. actuary consultants, public accountants, assessors, mediation institutions, and custodians; and
c. controllers of insurance broker companies, controllers of reinsurance broker companies, and controllers of loss assessor companies.
Article 3
Sufficiently clear.
Article 4
Sufficiently clear.
Article 5
Sufficiently clear.
Article 6
Sufficiently clear.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5938