Financial Services Authority Regulation Number 73/POJK.05/2016 on Good Corporate Governance for Insurance Companies

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 73 /POJK.05/2016
ON
GOOD CORPORATE GOVERNANCE FOR INSURANCE COMPANIES BY THE GRACE OF THE ALMIGHTY GOD THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
that in order to implement the provisions of Article 11 paragraph (2) of Law Number 40 of 2014 concerning Insurance, it is necessary to establish a Financial Services Authority Regulation concerning Good Corporate Governance for Insurance Companies;

Considering:

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);

DECIDING:
To establish:
FINANCIAL SERVICES AUTHORITY REGULATION ON GOOD CORPORATE GOVERNANCE FOR INSURANCE COMPANIES.

COPY

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation:

1. Insurance Company means an insurance company, sharia insurance company, reinsurance company, sharia reinsurance company, insurance brokerage company, reinsurance brokerage company, and insurance loss assessor company as referred to in Law Number 40 of 2014 concerning Insurance.
2. Insurance is an agreement between two parties, namely the insurance company and the policyholder, which serves as the basis for the insurance company's receipt of premiums in exchange for:
   a. providing compensation to the insured or policyholder for losses, damages, costs incurred, loss of profits, or legal liability to third parties that may be suffered by the insured or policyholder due to the occurrence of an uncertain event; or b. providing payments based on the death of the insured or payments based on the life of the insured with benefits whose amount has been determined and/or based on the results of fund management, as referred to in Law Number 40 of 2014 concerning Insurance.
3. Sharia Insurance is a collection of agreements, consisting of agreements between the sharia insurance company and the policyholder and agreements among the policyholders, in the context of managing contributions based on sharia principles for mutual assistance and protection by:
   a. providing compensation to participants or policyholders for losses, damages, costs incurred, loss of profits, or legal liability to third parties that may be suffered by participants or policyholders due to the occurrence of an uncertain event; or b. providing payments based on the death of participants or payments based on the life of participants with benefits whose amount has been determined and/or based on the results of fund management, as referred to in Law Number 40 of 2014 concerning Insurance.
4. Sharia Principles are Islamic legal principles in insurance activities based on fatwas issued by institutions having authority in issuing fatwas in the sharia field as referred to in Law Number 40 of 2014 concerning Insurance.
5. Insurance Business is all businesses concerning risk coverage services or risk management, risk reinsurance, marketing and distribution of insurance products or sharia insurance products, insurance and sharia insurance consulting and brokerage, insurance, sharia insurance, reinsurance, or sharia reinsurance, or insurance or sharia insurance loss assessment, as referred to in Law Number 40 of 2014 concerning Insurance.
6. General Insurance Business is risk coverage service business that provides compensation to the insured or policyholder for losses, damages, costs incurred, loss of profits, or legal liability to third parties that may be suffered by the insured or policyholder due to the occurrence of an uncertain event, as referred to in Law Number 40 of 2014 concerning Insurance.
7. Life Insurance Business is business that provides risk mitigation services by making payments to the policyholder, insured, or other entitled parties in the event of the insured's death or continued life, or other payments to the policyholder, insured, or other entitled parties at specific times as regulated in the agreement, whose amount has been determined and/or based on the results of fund management, as referred to in Law Number 40 of 2014 concerning Insurance.
8. Reinsurance Business is risk coverage service business for risks faced by insurance companies, guarantee companies, or other reinsurance companies, as referred to in Law Number 40 of 2014 concerning Insurance.
9. Sharia General Insurance Business is risk management business based on Sharia Principles for mutual assistance and protection by providing compensation to participants or policyholders for losses, damages, costs incurred, loss of profits, or legal liability to third parties that may be suffered by participants or policyholders due to the occurrence of an uncertain event, as referred to in Law Number 40 of 2014 concerning Insurance.
10. Sharia Life Insurance Business is risk management business based on Sharia Principles for mutual assistance and protection by providing payments based on the death or life of participants, or other payments to participants or other entitled parties at specific times as regulated in the agreement, whose amount has been determined and/or based on the results of fund management, as referred to in Law Number 40 of 2014 concerning Insurance.
11. Sharia Reinsurance Business is risk management business based on Sharia Principles for risks faced by sharia insurance companies, sharia guarantee companies, or other sharia reinsurance companies, as referred to in Law Number 40 of 2014 concerning Insurance.
12. General Insurance Company is a company conducting General Insurance Business.
13. Life Insurance Company is a company conducting Life Insurance Business.
14. Reinsurance Company is a company conducting Reinsurance Business.
15. Sharia General Insurance Company is a company conducting Sharia General Insurance Business.
16. Sharia Life Insurance Company is a company conducting Sharia Life Insurance Business.
17. Sharia Reinsurance Company is a company conducting Sharia Reinsurance Business.
18. Insurance Company means General Insurance Company and Life Insurance Company as referred to in Law Number 40 of 2014 concerning Insurance.
19. Sharia Insurance Company means Sharia General Insurance Company and Sharia Life Insurance Company as referred to in Law Number 40 of 2014 concerning Insurance.
20. Insurance Brokerage Company is a company conducting consulting and/or brokerage services in closing insurance or sharia insurance contracts and handling claim settlements, acting on behalf of and for the benefit of policyholders, insured, or participants.
21. Reinsurance Brokerage Company is a company conducting consulting and/or brokerage services in placing reinsurance or sharia reinsurance and handling claim settlements, acting on behalf of and for the benefit of insurance companies, sharia insurance companies, guarantee companies, sharia guarantee companies, reinsurance companies, or sharia reinsurance companies that place reinsurance or sharia reinsurance.
22. Insurance Loss Assessor Company is a company conducting claim assessment services and/or consulting services regarding insurance objects.
23. Company means Insurance Company, Sharia Insurance Company, Reinsurance Company, and Sharia Reinsurance Company.
24. Insurance Agent is an individual who works independently or works for a business entity, acting on behalf of and for the benefit of the Insurance Company or Sharia Insurance Company and meeting the requirements to represent the Insurance Company or Sharia Insurance Company in marketing insurance products or sharia insurance products, as referred to in Law Number 40 of 2014 concerning Insurance.
25. Good Corporate Governance for Insurance Companies, hereinafter referred to as Good Corporate Governance, is the structure and process used and applied by the organs of the Insurance Company to improve the achievement of business results and optimize the value of the Insurance Company for all stakeholders, particularly policyholders, insured, participants, and/or entitled parties, in an accountable manner and based on laws and regulations as well as ethical values.
26. Organ of the Insurance Company means the General Meeting of Shareholders, Board of Directors, Board of Commissioners, and Sharia Supervisory Board for Insurance Companies in the form of a limited liability company or equivalent, or the General Meeting of Shareholders, Board of Directors, and Board of Commissioners for Insurance Companies in the form of a cooperative legal entity.
27. Stakeholder means a party having an interest in the Insurance Company, directly or indirectly, including policyholders, insured, participants, entitled parties, shareholders or equivalents, employees, creditors, service providers, and/or the government.
28. General Meeting of Shareholders, hereinafter abbreviated as GMS, means the General Meeting of Shareholders 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 equivalent to the GMS for Insurance Companies in the form of a cooperative legal entity.
29. Board of Directors means 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 equivalent to the Board of Directors for Insurance Companies in the form of a cooperative legal entity.
30. Board of Commissioners means 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 equivalent to the Board of Commissioners for Insurance Companies in the form of a cooperative legal entity.
31. Independent Commissioner means a member of the Board of Commissioners who is not affiliated with shareholders or equivalents, members of the Board of Directors, other members of the Board of Commissioners and/or members of the Sharia Supervisory Board, i.e., having no financial, managerial, shareholding, and/or family relationships with shareholders or equivalents, members of the Board of Directors, other members of the Board of Commissioners and/or members of the Sharia Supervisory Board, or other relationships that may affect their ability to act independently.
32. Sharia Supervisory Board, hereinafter abbreviated as SSAB, is a part of the Company's organ that has the duty and function of supervising the implementation of the Company's business activities to ensure compliance with Sharia Principles.
33. Affiliation means a relationship between an individual or legal entity with one or more individuals or other legal entities, such that one of them can influence the management or policies of the other individual or legal entity or vice versa, as referred to in Law Number 40 of 2014 concerning Insurance.
34. Conflict of Interest is a state where there is a conflict between the economic interests of the Insurance Company and the personal economic interests of shareholders or equivalents, members of the Board of Directors, members of the Board of Commissioners, members of the SSAB, and/or employees of the Insurance Company.
35. Financial Services Authority, hereinafter abbreviated as OJK, is an independent institution having the functions, duties, and authorities for regulation, supervision, examination, and investigation, as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.
36. Executive Head of Insurance, Pension Funds, Financing Institutions, and Other Financial Service Institutions, hereinafter referred to as Executive Head, is a member of the Board of Commissioners of OJK responsible for leading the supervision of non-bank financial service institution activities.

CHAPTER II
IMPLEMENTATION OF GOOD CORPORATE GOVERNANCE
Article 2
(1) Insurance Companies are required to implement Good Corporate Governance principles in all their business activities at all levels or tiers of the organization.
(2) The Good Corporate Governance principles as referred to in paragraph (1) include:
a. transparency, namely openness in the decision-making process and openness in the disclosure and provision of relevant information regarding the Insurance Company, which is easily accessible by Stakeholders in accordance with laws and regulations in the insurance field as well as standards, principles, and practices for conducting healthy Insurance Business; b. accountability, namely the clarity of functions and the implementation of responsibility of the Organ of the Insurance Company so that the performance of the Insurance Company can run transparently, fairly, effectively, and efficiently;
c. responsibility, namely the conformity of the management of the Insurance Company with laws and regulations in the insurance field and ethical values as well as standards, principles, and practices for conducting healthy Insurance Business;
d. independence, namely the state of the Insurance Company being managed independently and professionally and free from Conflicts of Interest and influences or pressures from any party that are not in accordance with laws and regulations in the insurance field and ethical values as well as standards, principles, and practices for conducting healthy Insurance Business; and e. fairness and equity, namely equality, balance, and justice in fulfilling the rights of Stakeholders arising from agreements, laws and regulations in the insurance field, and ethical values as well as standards, principles, and practices for conducting healthy Insurance Business.

Article 3
The implementation of Good Corporate Governance aims to:
a. optimize the value of the Insurance Company for Stakeholders, particularly policyholders, insured, participants, and/or entitled parties; b. improve the management of the Insurance Company in a professional, effective, and efficient manner;
c. increase the compliance of the Organ of the Insurance Company and the SSAB and the levels below them so that in making decisions and taking actions, they are based on high ethics, compliance with laws and regulations, and awareness of the social responsibility of the Insurance Company towards Stakeholders and environmental sustainability;
d. realize a healthier, reliable, trustworthy, and competitive Insurance Company; and e. increase the contribution of the Insurance Company to the national economy.

Article 4
The implementation of Good Corporate Governance principles as referred to in Article 2 paragraph (2) must be formulated in a guideline that must at least be manifested in:
a. the implementation of duties and responsibilities of the Board of Directors, Board of Commissioners, and SSAB; b. the implementation of duties of work units and committees that carry out the internal control functions of the Insurance Company;
c. the implementation of compliance functions, internal auditors, and external auditors;
d. the implementation of risk management, including internal control systems and the implementation of information technology governance; e. the implementation of remuneration policies; f. the strategic plan of the Insurance Company; and g. the transparency of the financial and non-financial conditions of the Insurance Company.

CHAPTER III
GENERAL MEETING OF SHAREHOLDERS
Article 5
(1) The GMS of Insurance Companies must be held in accordance with laws and regulations and the Articles of Association of the Insurance Company, transparently and accountably.
(2) In making decisions, the GMS must strive to maintain the balance of interests of all parties, particularly the interests of policyholders, insured, participants, entitled parties, and the interests of minority shareholders. (3) Every GMS must produce minutes of the GMS containing at least the time, agenda, participants, opinions developed in the GMS, and GMS decisions.

CHAPTER IV
BOARD OF DIRECTORS
Article 6
(1) The Company must have at least 3 (three) members of the Board of Directors.
(2) At least half of the number of Board of Directors members of the Company must have knowledge and experience in risk management according to the business field of the Company.
(3) Insurance Brokerage Companies and Reinsurance Brokerage Companies must have at least 2 (two) members of the Board of Directors.
(4) All members of the Board of Directors of Insurance Companies must have knowledge relevant to the company's business field corresponding to their positions.
(5) Insurance Companies whose entire owners are Indonesian citizens and/or Indonesian legal entities whose entire or majority owners are Indonesian citizens, all members of the Board of Directors must be Indonesian citizens. (6) Members of the Board of Directors of Insurance Companies that include direct participation by foreign parties must be Indonesian citizens and foreign citizens, or all Indonesian citizens.

Article 7
(1) The Company must have a Compliance Director at the latest 3 (three) years after this Financial Services Authority Regulation is enacted.
(2) The Compliance Director of the Company as referred to in paragraph (1) is prohibited from holding other concurrent functions.

Article 8
(1) In the event that the Company does not yet have a Compliance Director as referred to in Article 7 paragraph (1), the Company must appoint a member of the Board of Directors who oversees the compliance function. (2) The member of the Board of Directors overseeing the compliance function as referred to in paragraph (1) cannot be concurrently held by a member of the Board of Directors overseeing the insurance technical function, financial function, or marketing function.

Article 9
(1) The Company must have a work unit or employee who carries out the compliance function.
(2) The work unit or employee as referred to in paragraph (1) is tasked with assisting the Board of Directors in ensuring compliance with laws and regulations in the field of Insurance Business and other laws and regulations. (3) The work unit or employee as referred to in paragraph (1) is responsible to the Compliance Director/member of the Board of Directors overseeing the compliance function.

Article 10
Members of the Board of Directors of Insurance Companies must meet the following criteria:
a. have received approval from OJK; b. reside in Indonesia;
c. be capable of acting with good faith, honesty, and professionalism;
d. be capable of acting in the interests of the Insurance Company and policyholders, insured, participants, and/or entitled parties; e. prioritize the interests of the Insurance Company and policyholders, insured, participants, and/or entitled parties over personal interests; f. be capable of making decisions based on independent and objective assessments for the interests of the Insurance Company and policyholders, insured, participants, and/or entitled parties; and g. be capable of avoiding the abuse of authority to obtain undue personal benefits or cause losses to the Insurance Company.

Article 11
The Board of Directors of Insurance Companies must:
a. ensure effective, precise, and rapid decision-making and be able to act independently, without interests that can interfere with their ability to carry out tasks independently and critically. b. comply with laws and regulations, the Articles of Association, and other internal regulations of the Insurance Company in carrying out their duties;
c. manage the Insurance Company according to their authority and responsibilities;
d. ensure the implementation and application of Good Corporate Governance; e. account for the implementation of their duties to the GMS; f. ensure that the Insurance Company considers the interests of all parties, particularly the interests of policyholders, insured, participants, and/or entitled parties; g. ensure that information regarding the Insurance Company is provided to the Board of Commissioners and SSAB accurately and completely in a timely manner; and h. assist in meeting the needs of the SSAB in using investment committee members, Company employees, and professional experts whose organizational structure is under the Board of Directors.

Article 12
(1) Members of the Board of Directors of Insurance Companies are prohibited from holding concurrent positions in other companies except as members of the Board of Commissioners in 1 (one) other Insurance Company with a different business field. (2) Concurrent positions as referred to in paragraph (1) do not include cases where members of the Board of Directors, other than the main director responsible for supervision over participation in subsidiary companies, perform functional duties as members of the Board of Commissioners in subsidiary companies controlled by the Insurance Company, provided that such concurrent positions do not cause the individual to neglect the implementation of duties and authorities as a member of the Board of Directors of the Insurance Company. (3) The main director of the Insurance Company is prohibited from holding concurrent positions as a member of the Board of Commissioners in subsidiary companies controlled by the respective Insurance Company.

Article 13
(1) Insurance Companies are prohibited from appointing members of the Board of Directors who are employees or active officials of OJK.
(2) Insurance Companies are prohibited from appointing members of the Board of Directors who are former employees or officials of OJK if the individual ceased working from OJK less than 1 (one) year ago.

Article 14
Insurance Companies are prohibited from appointing members of the Board of Directors who have previously been members of the Board of Directors, members of the Board of Commissioners, or members of the SSAB who have been declared guilty or negligent causing:
a. an Insurance Company to be subject to business activity restriction sanctions within the last 3 (three) years prior to their appointment; b. a company in the financial service field to have its business license revoked due to violations within the last 3 (three) years prior to their appointment; and/or
c. a company in the financial service field or non-financial service field declared bankrupt based on a final and binding court decision within the last 5 (five) years prior to their appointment.

Article 15
(1) The Board of Directors of an Insurance Company is required to hold Board of Directors meetings periodically at least once (1) in one (1) month.
(2) The results of the Board of Directors meeting as referred to in paragraph (1) must be recorded in the minutes of the Board of Directors meeting and documented properly.
(3) Differences of opinion (dissenting opinions) that occur in the decisions of the Board of Directors meeting must be clearly stated in the minutes of the Board of Directors meeting, accompanied by the reasons for such differences of opinion (dissenting opinions). (4) Members of the Board of Directors of an Insurance Company who are present or absent from the Board of Directors meeting are entitled to receive a copy of the minutes of the Board of Directors meeting. (5) The number of Board of Directors meetings held and the attendance of each member of the Board of Directors of an Insurance Company must be included in the report on the implementation of Good Corporate Governance.

Article 16
Members of the Board of Directors of an Insurance Company are required to disclose regarding:
a. their share ownership reaching 5% (five percent) or more in the Insurance Company where the said Board of Directors member serves and/or in other companies located within and outside the country; and b. financial relationships and family relationships with other Board of Directors members, members of the Board of Commissioners, members of the DPS, and/or shareholders or equivalents of the Insurance Company where the said Board of Directors member serves, to the Insurance Company where the said Board of Directors member serves and included in the report on the implementation of Good Corporate Governance.

Article 17
Members of the Board of Directors of an Insurance Company are prohibited from:
a. conducting transactions that have a Conflict of Interest with the activities of the Insurance Company where the said Board of Directors member serves; b. utilizing their position in the Insurance Company where the said Board of Directors member serves for personal, family, and/or other parties' interests that can harm or reduce the profits of the Insurance Company where the said Board of Directors member serves;
c. taking and/or receiving personal benefits from the Insurance Company where the said Board of Directors member serves, other than remuneration and facilities established based on the GMS decision; and
d. fulfilling requests from shareholders related to the operational activities of the Insurance Company where the said Board of Directors member serves, other than those established in the GMS.

Article 18
The Board of Directors is required to ensure that the assets, business locations, and facilities of the Insurance Company meet the provisions of legislation in the field of environmental conservation, health, and occupational safety.

CHAPTER V
BOARD OF COMMISSIONERS

Article 19
(1) The Company is required to have at least 3 (three) members of the Board of Commissioners.
(2) At least half of the number of members of the Board of Commissioners of Insurance Companies and Sharia Insurance Companies as referred to in paragraph (1) must be Independent Commissioners.

(3) Insurance Brokerage Companies and Reinsurance Brokerage Companies are required to have at least 2 (two) members of the Board of Commissioners.
(4) The appointment of Independent Commissioners of Insurance Companies and Sharia Insurance Companies is carried out by the GMS and must be clearly stated in a notarial deed containing the GMS decision regarding such appointment. (5) Insurance Companies whose entire owners are Indonesian citizens and/or Indonesian legal entities whose entire or majority owners are Indonesian citizens, all members of the Board of Commissioners must be Indonesian citizens. (6) Members of the Board of Commissioners of an Insurance Company that includes direct participation by foreign parties must be Indonesian citizens and foreign citizens, or all Indonesian citizens.

Article 20
(1) At least half of the number of members of the Board of Commissioners of an Insurance Company must reside in Indonesia.
(2) Members of the Board of Commissioners of an Insurance Company must meet the following criteria:
a. have received approval from OJK; b. possess knowledge relevant to the Company's business field related to their position;
c. be able to act with good faith, honesty, and professionalism;
d. be able to act in the interest of the Insurance Company and policyholders, insureds, participants, and/or parties entitled to benefits; e. prioritize the interests of the Insurance Company and policyholders, insureds, participants, and/or parties entitled to benefits over personal interests;

f. be able to make decisions based on independent and objective assessments for the interest of the Insurance Company and policyholders, insureds, participants, and/or parties entitled to benefits; and g. be able to avoid the abuse of their authority to obtain undue personal benefits or cause losses to the Insurance Company.

Article 21
The Board of Commissioners of an Insurance Company is required to:
a. ensure effective, accurate, and quick decision-making and be able to act independently, without interests that can interfere with their ability to perform tasks independently and critically; b. carry out supervisory tasks and provide advice to the Board of Directors;
c. supervise the Board of Directors in maintaining the balance of interests of all parties, particularly the interests of policyholders, insureds, participants, and/or parties entitled to benefits;
d. prepare a report on the activities of the Board of Commissioners which is part of the report on the implementation of Good Corporate Governance; e. monitor the effectiveness of the implementation of Good Corporate Governance; and f. assist in meeting the needs of the DPS in using committee members whose organizational structure is below the Board of Commissioners.

Article 22
Members of the Board of Commissioners of an Insurance Company are entitled to receive complete and timely information from the Board of Directors regarding the Insurance Company.

Article 23
Members of the Board of Commissioners of an Insurance Company are prohibited from holding concurrent positions as members of the Board of Commissioners, members of the Board of Directors, or members of the DPS on an Insurance Company that has the same business field.

Article 24
(1) Insurance Companies are prohibited from appointing members of the Board of Commissioners who are active employees or officials of OJK.
(2) Insurance Companies are prohibited from appointing members of the Board of Commissioners who are former employees or officials of OJK if the individual ceased working from OJK for less than 6 (six) months.

Article 25
Insurance Companies are prohibited from appointing members of the Board of Commissioners who have previously been members of the Board of Directors, members of the Board of Commissioners, or members of the DPS who were declared guilty or negligent causing:
a. an Insurance Company to be subject to business activity restriction sanctions within the last 3 (three) years before their appointment; b. a company in the financial services sector to have its business license revoked due to violations within the last 3 (three) years before their appointment; and/or
c. a company in the financial services sector or non-financial services sector to be declared bankrupt based on a final and binding court decision within the last 5 (five) years before their appointment.

Article 26
(1) The Board of Commissioners of an Insurance Company is required to hold Board of Commissioners meetings periodically at least once (1) in one (1) month.

(2) Board of Commissioners meetings as referred to in paragraph (1) within a 1 (one) year period are subject to the following provisions:
a. at least 4 (four) meetings, among which are held by inviting the Board of Directors; and b. at least 1 (one) meeting, among which is held by inviting external auditors.
(3) Members of the Board of Commissioners of an Insurance Company are required to attend Board of Commissioners meetings at least 80% (eighty percent) of the total number of Board of Commissioners meetings in a 1 (one) year period. (4) Board of Commissioners meetings as referred to in paragraph (1) must be attended in person by all members of the Board of Commissioners at least 4 (four) times in 1 (one) year. (5) The results of the Board of Commissioners meeting as referred to in paragraph (1) must be recorded in the minutes of the Board of Commissioners meeting and documented properly. (6) Differences of opinion (dissenting opinions) that occur in the decisions of the Board of Commissioners meeting must be clearly stated in the minutes of the Board of Commissioners meeting, accompanied by the reasons for such differences of opinion (dissenting opinions). (7) Members of the Board of Commissioners of an Insurance Company who are present or absent from the Board of Commissioners meeting are entitled to receive a copy of the minutes of the Board of Commissioners meeting. (8) The number of Board of Commissioners meetings held and the attendance of each member of the Board of Commissioners must be included in the report on the implementation of Good Corporate Governance.

Article 27
Members of the Board of Commissioners of an Insurance Company are required to disclose regarding:
a. their share ownership reaching 5% (five percent) or more in the Insurance Company where the said Board of Commissioners member serves and/or in other companies located within and outside the country; and b. financial relationships and family relationships with other Board of Commissioners members, members of the Board of Directors, members of the DPS, and/or shareholders or equivalents of the Insurance Company where the said Board of Commissioners member serves, to the Insurance Company where the said Board of Commissioners member serves and included in the report on the implementation of Good Corporate Governance.

Article 28
Members of the Board of Commissioners of an Insurance Company are prohibited from:
a. conducting transactions that have a Conflict of Interest with the activities of the Insurance Company where the said Board of Commissioners member serves; b. utilizing their position in the Insurance Company where the said Board of Commissioners member serves for personal, family, and/or other parties' interests that can harm or reduce the profits of the Insurance Company where the said Board of Commissioners member serves;
c. taking and/or receiving personal benefits from the Insurance Company where the said Board of Commissioners member serves, other than remuneration and facilities established based on the GMS decision; and
d. interfering in the operational activities of the Insurance Company that are the responsibility of the Board of Directors.

Article 29
Independent Commissioners have the main task of performing supervisory functions to voice the interests of policyholders, insureds, participants, and/or parties entitled to benefits.

Article 30
Insurance Companies and Sharia Insurance Companies are prohibited from dismissing Independent Commissioners due to the actions of Independent Commissioners in performing their duties as referred to in Article 29.

Article 31
Independent Commissioners of Insurance Companies and Sharia Insurance Companies as referred to in Article 19 paragraph (2) must meet the following requirements:
a. do not have an Affiliation relationship with members of the Board of Directors, other members of the Board of Commissioners, members of the DPS, or shareholders or equivalents in the same Insurance Company and Sharia Insurance Company; b. have not previously been members of the Board of Directors, members of the Board of Commissioners, members of the DPS, or held a position 1 (one) level below the Board of Directors in the same Insurance Company and Sharia Insurance Company or other companies having an Affiliation relationship with the said Insurance Company and Sharia Insurance Company within the last 6 (six) months;
c. understand legislation in the field of insurance and other relevant legislation;
d. have good knowledge regarding the financial condition of the Insurance Company and Sharia Insurance Company where the said Independent Commissioner serves; e. have good knowledge regarding the interests of policyholders, insureds, participants, and/or parties entitled to benefits; f. be Indonesian citizens; and g. reside in Indonesia.

Article 32
(1) In the event that an Independent Commissioner assesses that there is a policy or action by Board of Directors members that harms or potentially harms the interests of policyholders, insureds, participants, and/or parties entitled to benefits, the Independent Commissioner is required to propose the holding of a Board of Commissioners meeting. (2) The Board of Commissioners meeting as referred to in paragraph (1) is held to discuss the results of the Independent Commissioner's assessment of the policy or action by Board of Directors members that harms or potentially harms the interests of policyholders, insureds, participants, and/or parties entitled to benefits. (3) In the event that other members of the Board of Commissioners are unwilling to accept the proposal to hold a Board of Commissioners meeting as referred to in paragraph (1), the Independent Commissioner is required to report completely and comprehensively to the Executive Head and copy the Board of Directors within at most 7 (seven) working days since other members of the Board of Commissioners were unwilling to accept the proposal to hold a Board of Commissioners meeting. (4) In the event that the decision results of the Board of Commissioners meeting as referred to in paragraph (1) reject or do not agree with the results of the Independent Commissioner's assessment of the policy or action by Board of Directors members that harms or potentially harms the interests of policyholders, insureds, participants, and/or parties entitled to benefits, the Independent Commissioner is required to report completely and comprehensively to the Executive Head and copy the Board of Directors within at most 7 (seven) working days since the decision results of the Board of Commissioners meeting.

Article 33
Independent Commissioners are prohibited from holding concurrent positions as Independent Commissioners on Insurance Companies and Sharia Insurance Companies that have the same business field.

Article 34
(1) Independent Commissioners are required to make an annual report regarding the implementation of their duties related to the protection of the interests of policyholders, insureds, participants, and/or parties entitled to benefits, including services and claim settlements, including reports on disputes currently being resolved at mediation bodies, arbitration bodies, or judicial bodies. (2) The annual report as referred to in paragraph (1) becomes part of the Board of Commissioners' report and is included in the report on the implementation of Good Corporate Governance.

CHAPTER VI
SHARIA SUPERVISORY BOARD

Article 35
(1) Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles are required to have a DPS. (2) The DPS consists of 1 (one) Sharia expert or more appointed by the GMS based on the recommendation of the National Sharia Board of the Indonesian Ulema Council. (3) The DPS must meet the following criteria:
a. have received approval from OJK; b. be able to act with good faith, honesty, and professionalism;

c. be able to act in the interest of Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles and policyholders, insureds, participants, and/or parties entitled to benefits;
d. prioritize the interests of Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles and policyholders, insureds, participants, and/or parties entitled to benefits over personal interests; e. be able to make decisions based on independent and objective assessments for the interest of Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles and policyholders, insureds, participants, and/or parties entitled to benefits; and f. be able to avoid the abuse of their authority to obtain undue personal benefits or cause losses to Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles. (4) The appointment of the DPS as referred to in paragraph (2) must be clearly stated in a notarial deed.

Article 36
At least half of the number of DPS members must reside in Indonesia.

Article 37
The DPS is required to ensure effective, accurate, and quick decision-making and be able to act independently, without interests that can interfere with their ability to perform tasks independently and critically.

Article 38
(1) The DPS is required to carry out supervisory tasks and provide advice and suggestions to the Board of Directors so that business activities comply with Sharia Principles.
(2) The implementation of supervisory tasks and the provision of advice and suggestions by the DPS as referred to in paragraph (1) is conducted regarding:
a. activities in the management of assets and liabilities, whether tabarru' funds, tanahud funds, company funds, or participant investment funds; b. marketed Sharia insurance products; and
c. marketing practices of Sharia insurance products.

Article 39
(1) In carrying out duties as referred to in Article 38, the DPS may use assistance from:
a. committee members whose organizational structure is below the Board of Commissioners; and/or b. committee members, employees, and professional experts of Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles whose organizational structure is below the Board of Directors. (2) The use of assistance from committee members, employees, and professional experts of Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles as referred to in paragraph (1) must first be notified in writing by the DPS to the Board of Directors and/or the Board of Commissioners.

Article 40
DPS members are entitled to receive complete and timely information from the Board of Directors regarding Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles.

Article 41
(1) DPS members are prohibited from holding concurrent positions as members of the Board of Directors or members of the Board of Commissioners on the same Sharia Insurance Company, Sharia Reinsurance Company, and Insurance Company or Reinsurance Company that conducts part of its business based on Sharia Principles. (2) DPS members may only hold concurrent positions as members of the Board of Directors, members of the Board of Commissioners, or members of the DPS at most on 4 (four) other financial service institutions.

Article 42
Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles are prohibited from appointing DPS members who have previously been members of the Board of Directors, members of the Board of Commissioners, or members of the DPS who were declared guilty or negligent causing:
a. an Insurance Company to be subject to business activity restriction sanctions within the last 3 (three) years before their appointment; b. a company in the financial services sector to have its business license revoked due to violations within the last 3 (three) years before their appointment; and/or
c. a company in the financial services sector or non-financial services sector to be declared bankrupt based on a final and binding court decision within the last 5 (five) years before their appointment.

Article 43
(1) The DPS is required to hold DPS meetings periodically at least 6 (six) times in 1 (one) year.
(2) The results of the DPS meeting as referred to in paragraph (1) must be recorded in the minutes of the DPS meeting and documented properly.
(3) Differences of opinion (dissenting opinions) that occur in the decisions of the DPS meeting must be clearly stated in the minutes of the DPS meeting, accompanied by the reasons for such differences of opinion (dissenting opinions). (4) DPS members who are present or absent from the DPS meeting are entitled to receive a copy of the minutes of the DPS meeting. (5) The number of DPS meetings held and the attendance of each DPS member must be included in the report on the implementation of Good Corporate Governance.

Article 44
DPS members are prohibited from:
a. conducting transactions that have a Conflict of Interest with the activities of Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles where the said DPS member serves; b. utilizing their position for personal, family, and/or other parties' interests that can harm or reduce the profits of Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles where the said DPS member serves; and
c. taking and/or receiving personal benefits from Sharia Insurance Companies, Sharia Reinsurance Companies, and Insurance Companies or Reinsurance Companies that conduct part of their business based on Sharia Principles where the said DPS member serves, other than remuneration and other facilities established based on the GMS decision.

Article 45
(1) In the event that the DPS assesses that there is a policy or action by Board of Directors members related to matters as referred to in Article 38 paragraph (2) that does not comply with Sharia Principles, the DPS is required to request explanations from Board of Directors members regarding the Board of Directors' policy that does not comply with Sharia Principles. (2) In the event that the Board of Directors rejects the DPS assessment results as referred to in paragraph (1), the DPS is required to report completely and comprehensively to the Executive Head and copy the Board of Directors within at most 7 (seven) working days since the explanation from Board of Directors members was received by the DPS. (3) In the event that the Board of Directors accepts the DPS assessment results as referred to in paragraph (1), the DPS requests the Board of Directors to make improvements to the policy or action of Board of Directors members to comply with Sharia Principles. (4) In the event that Board of Directors members do not make improvements to the policy or action as referred to in paragraph (3), the DPS is required to immediately report completely and comprehensively to the Executive Head and copy the Board of Directors within at most 7 (seven) working days since it was known that Board of Directors members did not make the intended improvement efforts.

CHAPTER VII
SHAREHOLDERS
Article 46
Shareholders or their equivalents in Insurance Companies through the General Meeting of Shareholders (GMS) strive to ensure that Insurance Companies are operated based on sound insurance business practices and prioritize the fulfillment of obligations related to the interests of policyholders, insured parties, participants, and/or parties entitled to benefits.

Article 47
(1) Shareholders or their equivalents in Insurance Companies are prohibited from interfering in the operational activities of Insurance Companies that are the responsibility of the Board of Directors in accordance with the provisions of the Articles of Association of Insurance Companies and applicable legislation, except in the context of exercising rights and obligations as the GMS. (2) Shareholders or their equivalents in Insurance Companies who serve as members of the Board of Directors, members of the Board of Commissioners, or members of the Sharia Supervisory Board (DPS) in the same Insurance Company must prioritize the interests of the Insurance Company and policyholders, insured parties, participants, and/or parties entitled to benefits over their interests as shareholders or their equivalents.

Article 48
(1) Shareholders or their equivalents in Insurance Companies must meet the following criteria:
a. are not involved as parties prohibited from becoming shareholders or their equivalents in the financial services sector and/or company officials in the financial services sector; b. have never violated commitments agreed upon with OJK;
c. are not currently subject to sanctions from OJK;
d. are not listed in the non-performing loan list; e. have funding sources that do not originate from criminal acts as referred to in laws regarding money laundering crimes; f. have a commitment to the operational development of the Insurance Company; g. have a commitment to comply with applicable legislation; and h. have a good reputation. (2) Provisions regarding the criteria for shareholders or their equivalents as referred to in paragraph (1) apply to Insurance Companies that undergo changes in shareholders or their equivalents and/or Insurance Companies that apply for business licenses.

CHAPTER VIII
COMMITTEES AND EXTERNAL AUDITORS
Article 49
(1) The Board of Directors of Companies is required to form an investment committee.
(2) Members of the investment committee as referred to in paragraph (1) are as follows:
a. for Life Insurance Companies and Sharia Life Insurance Companies, consisting of at least:

1. members of the Board of Directors overseeing the investment management function; and
2. the company actuary;
   b. for General Insurance Companies, Sharia General Insurance Companies, Reinsurance Companies, and Sharia Reinsurance Companies, consisting of at least:
3. members of the Board of Directors overseeing the investment management function; and
4. the company actuary or company experts.
   (3) The investment committee as referred to in paragraph (1) is tasked with assisting the Board of Directors in formulating investment policies and overseeing the implementation of established investment policies.

Article 50
(1) Insurance Companies and Sharia Insurance Companies are required to have a work unit or committee for insurance product development.
(2) The work unit or committee as referred to in paragraph (1) performs the following tasks:
a. formulate strategic plans for the development and marketing of insurance products as part of the Company's business activity strategic plan; b. evaluate the suitability of new insurance products to be marketed with the strategic plan for the development and marketing of insurance products; and
c. evaluate the performance of insurance products and propose changes or cessation of their marketing.
(3) The work unit or committee as referred to in paragraph (1) is responsible to the members of the Board of Directors overseeing the insurance product development function.

Article 51
(1) In order to support the effectiveness of the execution of duties and responsibilities, the Board of Commissioners of Companies is required to form:
a. an audit committee; and b. a risk monitoring committee.
(2) One of the committee members in Insurance Companies and Sharia Insurance Companies as referred to in paragraph (1) is an Independent Commissioner who simultaneously serves as the chairman of the committee. (3) One of the members of the audit committee as referred to in paragraph (1) letter a is a party outside the Company who does not have financial, managerial, shareholding, and/or family relationships with the Board of Commissioners, Board of Directors, and/or controlling shareholders, or other relationships that could influence their ability to act independently. (4) In addition to the committees as referred to in paragraph (1), the Board of Commissioners of Companies may form other committees to support the execution of the Board of Commissioners' duties.

Article 52
(1) The audit committee as referred to in Article 51 paragraph (1) letter a is tasked with assisting the Board of Commissioners in monitoring and ensuring the effectiveness of the internal control system and the execution of duties of internal and external auditors by monitoring and evaluating the planning and implementation of audits to assess the adequacy of internal controls, including the financial reporting process. (2) The risk monitoring committee as referred to in Article 51 paragraph (1) letter b is tasked with assisting the Board of Commissioners in monitoring the implementation of risk management formulated by the Board of Directors and assessing the risk tolerance that the Company can take.

Article 53
Further provisions regarding the formation, composition of members, and term of office of committees as referred to in Article 51 are regulated in OJK Circular Letters.

Article 54
(1) External auditors of Companies must be appointed by the GMS from candidates for external auditors proposed by the Board of Commissioners based on the proposal of the audit committee.
(2) External auditors of Insurance Broker Companies and Reinsurance Broker Companies must be appointed by the GMS from candidates for external auditors proposed by the Board of Commissioners.
(3) The nomination of external auditors as referred to in paragraph (1) and paragraph (2) must be accompanied by:
a. reasons for nomination and the proposed honorarium or remuneration for the external auditor; and b. a statement of willingness signed by the external auditor to be free from the influence of the Board of Directors, Board of Commissioners, DPS, and interested parties in the company, and willingness to provide information related to audit results to the Chief Executive. (4) Insurance Companies are required to provide all accounting records and supporting data necessary for external auditors so as to enable external auditors to provide their opinion on the fairness, compliance, and suitability of the Insurance Company's financial reports with applicable audit standards.

CHAPTER IX
REMUNERATION PRACTICES AND POLICIES
Article 55
(1) Insurance Companies are required to apply remuneration policies for members of the Board of Directors, members of the Board of Commissioners, DPS, and employees that encourage prudent behavior aligned with the long-term interests of the Insurance Company and fair treatment of policyholders, insured parties, participants, and/or parties entitled to benefits. (2) The remuneration policy as referred to in paragraph (1) must consider at least:
a. financial performance and fulfillment of the Insurance Company's obligations as regulated in applicable legislation; b. individual work performance;
c. fairness with peer groups; and
d. considerations of the Insurance Company's long-term goals and strategies.

CHAPTER X
INVESTMENT GOVERNANCE
Article 56
(1) Companies are required to formulate written investment policies and strategies.
(2) Compliance with investment policies and strategies as referred to in paragraph (1) is evaluated periodically, at least once in one year.
(3) Investment policies and strategies as referred to in paragraph (1) must contain at least:
a. the Company's asset and liability profile; b. the match between the duration of assets and the duration of liabilities of the Company;
c. investment objectives;
d. target investment return rates expected, including the yield benchmark used; e. evaluation basis and qualitative limits for each type of investment asset; f. maximum allocation limits for investment for each type of investment asset; g. maximum limit of the proportion of the Company's assets that can be placed with one party; h. maximum limit of idle assets not placed in investment form;
i. prohibited investment objects for investment placement;
j. minimum liquidity level of the Company's investment portfolio to support fund availability for insurance benefit payments; k. supervision and reporting systems for the implementation of investment management;
l. provisions regarding the use of investment managers, investment advisors, experts, and other service providers used in investment management;
m. provisions on the use of derivative instruments and other structured financial products for hedging purposes; n. restrictions on investment transaction authority for each management level and their accountability; and o. actions to be taken against the Board of Directors for violations of investment policies. (4) Investment policies and strategies as referred to in paragraph (1) must:
a. be established by the Board of Directors; b. be socialized to employees involved in investment management; and
c. be submitted to the Chief Executive at the latest 1 (one) month after being established by the Board of Directors.

Article 57
(1) The Board of Directors of Companies is required to formulate an annual investment management plan containing at least:
a. plans for the composition of investment types; b. estimated investment return rates for each type of investment; and
c. considerations underlying the plan for the composition of investment types.
(2) The annual investment management plan as referred to in paragraph (1) must reflect investment policies and strategies.

Article 58
In managing investments, the Board of Directors of Companies is required to:
a. analyze investment risks which include among others market risk, liquidity risk, and operational risk, and contingency plans in the event of increased investment risk; and b. conduct adequate and documented studies in placing, maintaining, and releasing investments.

Article 59
The Board of Directors of Companies is required to make investment decisions professionally and optimize the Company's value for Stakeholders, particularly policyholders, insured parties, participants, and/or parties entitled to benefits.

Article 60
Companies are required to have a work unit or employees who perform the investment management function meeting the following provisions:
a. perform analysis functions and execute, monitor, and report on investment management; b. have and apply internal control systems and procedures to ensure that investments are carried out in accordance with investment policies and strategies and do not violate applicable legislation; and
c. have integrity, expertise, and experience in the field of investment.

Article 61
(1) Companies that place investments in capital market investment instruments must account for securities with parties that do not have Affiliation relationships with the Company.
(2) Companies that have investments in the form of shares traded on the stock exchange must have information access that allows them to directly monitor changes in their investment portfolio.
(3) Companies that have at least 50% (fifty percent) of their self-managed investment portfolio in the form of shares, corporate bonds, and/or corporate sukuk, are required to have investment experts who have passed the exam as investment manager representatives.

Article 62
(1) Companies may outsource their investment management to other parties.
(2) The outsourcing of investment management to other parties as referred to in paragraph (1) must meet the following provisions:
a. the other party has a business license as a securities company conducting business as an investment manager from OJK; b. the other party is not currently subject to administrative sanctions in the form of business activity restrictions or business activity suspension by OJK, at the time the investment management outsourcing agreement is in effect;
c. the other party has an investment manager representative who has experience managing funds of at least Rp500,000,000,000.00 (five hundred billion rupiah) at the time of appointment as the Company's investment manager; and
d. the investment manager representative as referred to in letter c is not currently or has never been subject to administrative sanctions by OJK in the last 5 (five) years.
(3) The outsourcing of investment management to other parties must meet provisions regarding the type, limits, and evaluation of investments as referred to in legislation regarding the financial health of Companies. (4) Companies are prohibited from outsourcing investment management to affiliated parties if the members of the Board of Directors, members of the Board of Commissioners, or members of the DPS of the Company concerned hold concurrent positions as members of the Board of Directors, members of the Board of Commissioners, or members of the DPS of the other party concerned.

Article 63
(1) The outsourcing of investment management to other parties as referred to in Article 62 paragraph (1) must be stipulated in a written agreement in the form of a notarial deed.
(2) The written agreement as referred to in paragraph (1) must contain at least provisions regarding:
a. rights and obligations of each party; b. types and limits of investment instruments;
c. the amount of costs charged;
d. types and routine reports on the management of the investment in question; e. the Company's right to obtain information and other documents related to the management of the investment in question; f. compensation for damages in the event that the other party violates cooperation provisions or the other party's negligence causes the Company to suffer losses; g. the accounting of assets managed by the other party with a custodian that does not have an Affiliation relationship with the Company and the other party; h. dispute resolution and termination of the agreement; and
i. the willingness of the parties to provide information related to the Company's investment management to OJK.

Article 64
(1) The Board of Directors of Companies is required to know the investment placement portfolio carried out by other parties.
(2) The outsourcing of investment management to other parties as referred to in Article 62 paragraph (1) does not reduce the responsibility of the Board of Directors in investment management.

CHAPTER XI
INFORMATION TECHNOLOGY GOVERNANCE
Article 65
(1) Insurance Companies are required to apply effective information technology governance.
(2) Information technology governance as referred to in paragraph (1) must contain at least:
a. information system organizational structure; b. guidelines for the use of information systems equipped with instructions or work orders for each function (standard operating procedure); and
c. data security management guidelines and incident management guidelines (disaster recovery plan).

CHAPTER XII
RISK MANAGEMENT AND INTERNAL CONTROL
Article 66
(1) Insurance Companies are required to apply risk management by identifying, assessing, monitoring, and managing business risks effectively.
(2) Risk management as referred to in paragraph (1) must be adjusted to the objectives, business policies, size and complexity of business, and the capabilities of the Insurance Company.
(3) Insurance Companies are required to have a risk management function to monitor the implementation of risk management in the Insurance Company.

Article 67
(1) The Board of Directors of Insurance Companies is required to establish effective and efficient internal controls to provide reasonable assurance that business activities are carried out in accordance with business goals and strategies, the Articles of Association, other internal rules of the Insurance Company, and applicable legislation. (2) Internal controls as referred to in paragraph (1) must cover at least the following:
a. the internal control environment in the Insurance Company which is disciplined and structured; b. the assessment and management of business risks, which is a process to identify, analyze, assess, and manage business risks;
c. control activities, which are actions taken in a control process against the activities of the Insurance Company at every level and unit in the organizational structure of the Insurance Company, including among others regarding authority, authorization, verification, reconciliation, assessment of performance, division of duties, and security of the Insurance Company's assets;
d. information systems and communication, which is a process of presenting reports regarding operational, financial, and compliance activities in the insurance business field; e. monitoring procedures, which is a process of assessing the quality of the internal control system including the internal audit function at every level and unit in the organizational structure of the Insurance Company, so that it can be executed optimally; and f. reporting mechanisms to the Board of Directors with a copy to the audit committee, in the event of deviations in the quality of the internal control system including the internal audit function at every level and unit in the organizational structure of the Insurance Company.

CHAPTER XIII
STRATEGIC PLANS FOR INSURANCE AND REINSURANCE COMPANIES
Article 68
(1) Companies are required to formulate strategic plans in the form of:
a. a corporate plan which includes a formulation of goals and objectives to be achieved by the Company within a 5 (five) year period; and b. a business plan which describes the Company's business activity plans within a 1 (one) year and 3 (three) year period. (2) The corporate plan as referred to in paragraph (1) letter a must contain at least:
a. evaluation of the implementation of the previous corporate plan period; b. the Company's current position;
c. assumptions used in formulating the corporate plan; and
d. goals, objectives, and strategies for achieving them.
(3) The business plan as referred to in paragraph (1) letter a must include at least:
a. executive summary; b. management policies and strategies;
c. implementation of risk management and compliance;
d. the Company's current performance; e. projected financial statements along with assumptions used; f. projected ratios and other specific items; g. capital plans; h. investment plans;
i. reinsurance plans;
j. product development and marketing plans; k. office network development and/or change plans;
l. organizational and human resource (HR) development plans; and
m. other information.
(4) Companies are required to submit corporate plans and business plans as referred to in paragraph (1) to OJK at the latest on October 31.
(5) Further provisions regarding the form, composition, and procedures for formulating and submitting corporate plans and business plans as referred to in paragraph (1) and paragraph (4) are regulated in OJK Circular Letters.

CHAPTER XIV
INFORMATION DISCLOSURE
Article 69
(1) Insurance Companies are required to provide information to OJK completely, on time, and efficiently.
(2) Companies are required to have a reliable financial reporting system for supervision purposes and other Stakeholders.

Article 70
(1) Insurance Companies are required to disclose to OJK regarding important matters, at least including:
a. resignation or dismissal of external auditors; b. material transactions with related parties;
c. material claims filed by and/or against the Insurance Company;
d. Conflicts of Interest that are ongoing and/or may occur; and e. other material information regarding the Insurance Company.
(2) The disclosure of important matters as referred to in paragraph (1) is included in the report on the implementation of Good Corporate Governance.
(3) Further provisions regarding the disclosure of important matters as referred to in paragraph (1) are regulated in OJK Circular Letters.

CHAPTER XV
RELATIONSHIPS WITH STAKEHOLDERS
Article 71
(1) Insurance Companies are required to protect the interests of policyholders, insured parties, participants, and/or parties entitled to benefits, so that policyholders, insured parties, participants, and/or parties entitled to benefits can receive their rights according to the insurance policy. (2) In order to protect the rights and interests of policyholders, insured parties, participants, and/or parties entitled to benefits as referred to in paragraph (1), Insurance Companies are required to do the following:
a. for Insurance Companies and Sharia Insurance Companies, fulfill obligations as agreed with policyholders, insured parties, participants, and/or parties entitled to benefits; b. for Insurance Companies, Sharia Insurance Companies, and Insurance Broker Companies, evaluate the needs of policyholders, insured parties, or participants and/or parties receiving benefits;
c. for Insurance Companies, Sharia Insurance Companies, and Insurance Broker Companies, disclose material and relevant information to policyholders, insured parties, participants, and/or parties entitled to benefits; and
d. for Insurance Companies, act with integrity, competence, and utmost good faith.

Article 72
Insurance Companies are required to:
a. respect the rights of Stakeholders; and b. fulfill obligations arising from applicable legislation and/or agreements made with employees, policyholders, insured parties, participants, and/or other Stakeholders.

CHAPTER XVI
BUSINESS ETHICS
Article 73
(1) The Board of Directors, Board of Commissioners, DPS, and employees of Insurance Companies are prohibited from offering or giving anything, directly or indirectly, to other parties, to influence decision-making related to insurance transactions, in violation of applicable legislation. (2) The Board of Directors, Board of Commissioners, DPS, and employees of Insurance Companies are prohibited from receiving anything for their own interests in violation of applicable legislation, directly or indirectly, from anyone, which can influence decision-making related to insurance transactions.

Article 74
Insurance Companies are required to create guidelines on ethical behavior, containing business ethics values, as a guide for the Organs of Insurance Companies and all employees of Insurance Companies.

Article 75
(1) Insurance Companies may provide donations for charitable purposes within reasonable and fair limits and not disturb the financial health of the Insurance Company.
(2) Insurance Companies may provide donations other than as referred to in paragraph (1), as long as they do not conflict with applicable legislation and do not disturb the financial health of the Insurance Company.

CHAPTER XVII
SELF-ASSESSMENT AND REPORT ON THE IMPLEMENTATION OF GOOD CORPORATE GOVERNANCE
Article 76
(1) Insurance Companies are required to conduct self-assessments on the implementation of Good Corporate Governance periodically.
(2) Self-assessments on the implementation of Good Corporate Governance as referred to

in paragraph (1) is based on the Good Corporate Governance guidelines and the applicable self-assessment checklist.

Article 77
(1) Insurance Companies are required to prepare a report on the implementation of Good Corporate Governance at the end of each fiscal year.
(2) The report on the implementation of Good Corporate Governance as referred to in paragraph (1) consists of at least:
a. transparency of the implementation of Good Corporate Governance which includes the disclosure of all aspects of the implementation of the principles of Good Corporate Governance as referred to in Article 4; b. self-assessment on the implementation of Good Corporate Governance as referred to in Article 76; and
c. action plan which includes corrective actions required and the completion time and obstacles to its completion, if there are still shortcomings in the implementation of Good Corporate Governance.
(3) Further provisions regarding the structure and procedures for submitting the report on the implementation of Good Corporate Governance as referred to in paragraph (1) are regulated in an OJK Circular Letter.

Article 78
(1) Insurance Companies are required to submit the report on the implementation of Good Corporate Governance to the Executive Head in the form of computer printout (hard copy) and electronic (soft copy).

(2) The report on the implementation of Good Corporate Governance as referred to in paragraph (1) must be submitted no later than February 28 of the following year.
(3) If February 28 as referred to in paragraph (2) is a holiday, then the submission deadline is the first working day after the aforementioned February 28.

CHAPTER XVIII
MONITORING AND EVALUATION OF THE IMPLEMENTATION OF GOOD CORPORATE GOVERNANCE

Article 79
OJK conducts monitoring and evaluation of the reports on the implementation of Good Corporate Governance submitted by Insurance Companies as referred to in Article 78.

CHAPTER XIX
SANCTIONS

Article 80
(1) Violations of the provisions as referred to in Article 2 paragraph (1), Article 4, Article 5 paragraph (1) and (3), Article 6 paragraph (1) and (3), Article 7, Article 8 paragraph (1), Article 9 paragraph (1), Article 10, Article 11, Article 12 paragraph (1) and (3), Article 13, Article 14, Article 15 paragraph (1), (2) and (3), Article 16, Article 17, Article 18, Article 19 paragraph (1) and (3), Article 20, Article 21, Article 23, Article 24, Article 25, Article 26 paragraph (1), (3), (4), (5), and (6), Article 27, Article 28, Article 30, Article 32 paragraph (1), (3), and (4), Article 33, Article 34 paragraph (1), Article 35 paragraph (1), Article 36, Article 37, Article 38 paragraph (1), Article 41 paragraph (1) and (2), Article 42, Article 43 paragraph (1), (2), and (3), Article 44, Article 45 paragraph (1), (2), and (4), Article 47,

Article 48 paragraph (1), Article 49 paragraph (1), Article 50 paragraph (1), Article 51 paragraph (1), Article 54, Article 55 paragraph (1), Article 56 paragraph (1) and (4), Article 57 paragraph (1), Article 58, Article 59, Article 60, Article 61 paragraph (1) and (3), Article 62 paragraph (2), (3), and (4), Article 63, Article 64 paragraph (1), Article 65 paragraph (1), Article 66 paragraph (1) and (3), Article 67 paragraph (1), Article 68 paragraph (1) and (4), Article 69, Article 70 paragraph (1), Article 71, Article 72, Article 73, Article 74, Article 76 paragraph (1), Article 77 paragraph (1), and Article 78 paragraph (1) and (2) of this OJK Regulation are subject to administrative sanctions;
a. written warning; b. restriction of business activities for part/all of business activities; or
c. revocation of business license.
(2) Administrative sanctions as referred to in paragraph (1) are implemented in stages.
(3) In addition to administrative sanctions as referred to in paragraph (1), OJK may impose additional sanctions in the form of prohibition to become a shareholder, controller, Board of Directors, Board of Commissioners, or equivalent to shareholder, controller, Board of Directors, and Board of Commissioners, or to hold executive positions below the Board of Directors, or equivalent to executive positions below the Board of Directors, in an insurance company. (4) Procedures and methods for imposing sanctions are regulated in an OJK Regulation regarding procedures and methods for imposing administrative sanctions. (5) In the event that the OJK Regulation regarding procedures and methods for imposing administrative sanctions has not yet been promulgated, provisions regarding procedures and methods for imposing administrative sanctions are subject to Government Regulation Number 73 of 1992 concerning the Conduct of Insurance Business as last amended by Government Regulation Number 81 of 2008.

CHAPTER XX
OTHER PROVISIONS

Article 81
For Insurance Companies that are public companies, in addition to the provisions in this OJK Regulation, provisions of legislation in the field of capital markets also apply.

CHAPTER XXI
TRANSITIONAL PROVISIONS

Article 82
For Companies that have obtained business licenses before this OJK Regulation was promulgated and have not yet met the provisions regarding audit committee members as referred to in Article 51 paragraph (3) must make adjustments no later than 3 (three) years since this OJK Regulation was promulgated.

CHAPTER XXII
CLOSING PROVISIONS

Article 83
At the time this OJK Regulation takes effect, provisions regarding good corporate governance for Insurance Companies in the form of limited liability companies and cooperatives are subject to this OJK Regulation.

Article 84
This OJK Regulation takes effect on the date it is promulgated, except for the provisions as referred to in Article 76 paragraph (1) and Article 77 paragraph (2) letter b for insurance loss assessors, which take effect since the establishment of the Good Corporate Governance Guidelines for Insurance Loss Assessors and self-assessment checklist by a committee formed by the government tasked with formulating corporate governance policies.

Article 85
(1) With the implementation of this OJK Regulation, provisions in OJK Regulation Number 2/POJK.05/2014 dated March 28, 2014 (State Gazette of the Republic of Indonesia Year 2014 Number 71) regarding Good Corporate Governance for Insurance Companies that apply to Insurance Companies in the form of limited liability companies and cooperatives are revoked and declared invalid. (2) With the implementation of this OJK Regulation, provisions in OJK Regulation Number 2/POJK.05/2014 dated March 28, 2014 (State Gazette of the Republic of Indonesia Year 2014 Number 71) regarding Good Corporate Governance for Insurance Companies that apply to Insurance Companies in the form of joint venture companies are revoked and declared invalid since the implementation of Government Regulations regarding Insurance Companies in the form of joint venture companies. (3) Implementation regulations of OJK Regulation Number 2/POJK.05/2014 dated March 28, 2014 (State Gazette of the Republic of Indonesia Year 2014 Number 71) regarding Good Corporate Governance for Insurance Companies remain valid as long as they do not conflict with this OJK Regulation.

Article 86
This OJK Regulation takes effect on the date it is promulgated.

In order that everyone knows it, ordering the promulgation of this OJK Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on December 23, 2016
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY, signed
MULIAMAN D. HADAD

Promulgated in Jakarta on December 28, 2016
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 306 Copy in accordance with the original Legal Director 1 Legal Department signed Yuliana

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 73 /POJK.05/2016
CONCERNING
GOOD CORPORATE GOVERNANCE FOR INSURANCE COMPANIES

I. GENERAL
Good Corporate Governance is one of the pillars in building a healthy economic condition. The implementation of Good Corporate Governance is closely related to the credibility of companies that operate and the economic climate in a country. The rapid development of the insurance industry must be supported by a conducive climate. In order to support the achievement of a conducive business climate and healthy business competition, it is important for the insurance industry to implement Good Corporate Governance. The implementation of Good Corporate Governance by the insurance industry is an important part of handling risk. If the implementation of corporate governance of Insurance Companies runs well, then risk management will also run effectively.

There are five main principles in Good Corporate Governance, namely:

1. Transparency (transparency), namely openness in the decision-making process and openness in the disclosure and provision of relevant information regarding the company, which is easily accessible by Stakeholders in accordance with insurance legislation as well as standards, principles, and practices of conducting healthy insurance business;

2. Accountability (accountability), namely the clarity of functions and the implementation of responsibility of the Insurance Company's Organ so that company performance can run transparently, fairly, effectively, and efficiently;

3. Responsibility (responsibility), namely the suitability of the management of Insurance Companies with insurance legislation and ethical values as well as standards, principles, and practices of conducting healthy insurance business;

4. Independence (independency), namely the state of Insurance Companies that are managed independently and professionally and free from Conflicts of Interest and influence or pressure from any party that is not in accordance with insurance legislation and ethical values as well as standards, principles, and practices of conducting healthy insurance business; and

5. Fairness and Justice (fairness), namely equality, balance, and justice in fulfilling the rights of Stakeholders arising from agreements, legislation, and ethical values as well as standards, principles, and practices of conducting healthy insurance business.

In implementing the aforementioned corporate governance principles, Insurance Companies are required to refer to a series of provisions, requirements, and guidelines related to the implementation of Good Corporate Governance. These guidelines are contained in OJK Regulation Number 2/POJK.05/2014 concerning Good Corporate Governance for Insurance Companies. However, with the enactment of Law Number 40 of 2014 concerning Insurance, particularly regarding the mandate in Article 11, adjustments and refinements are required, which are then included in this OJK Regulation.

In the implementation of Good Corporate Governance for Insurance Companies, it is also necessary to pay attention to legislation related to these provisions, including legislation applicable regarding limited liability companies, cooperatives, capital markets, and other provisions.

II. ARTICLE BY ARTICLE

Article 1
Clear enough.

Article 2
Paragraph (1)
Clear enough.
Letter a
Clear enough.
Letter b
The implementation of corporate accountability (accountability) referred to in letter b includes levels below the Board of Directors and Board of Commissioners (committees).
Letter c
Clear enough.
Letter d
Clear enough.
Letter e
Clear enough.

Article 3
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Article 4
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Article 5
Clear enough.

Article 6
Paragraph (1)
Clear enough.
Paragraph (2)
Based on these provisions, if the number of Board of Directors members is even, then the number of Board of Directors members with knowledge and experience in risk management must be at least equal to the number of Board of Directors members without knowledge and experience in risk management. Whereas if the number of Board of Directors members is odd, then the number of Board of Directors members with knowledge and experience in risk management must be greater than the number of Board of Directors members without knowledge and experience in risk management. As an example, if the number of Board of Directors members is 3 (three) people, then the number of Board of Directors members with knowledge and experience in risk management is at least 2 (two) people. Knowledge and experience in risk management are evidenced by having:

1. risk management training certificates; and
2. Letter of Confirmation of work experience in the insurance field.
   Paragraph (3)
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   Paragraph (4)
   Clear enough.
   Paragraph (5)
   Clear enough.
   Paragraph (6)
   Clear enough.

Article 7
Clear enough.

Article 8
Paragraph (1)
Clear enough.
Paragraph (2)
What is meant by insurance technical functions includes actuarial functions, product development and monitoring, underwriting, and claims.

Article 9
Clear enough.

Article 10
Clear enough.

Article 11
Clear enough.

Article 12
Paragraph (1)
Examples of other Insurance Companies with different business fields include:
a. life insurance companies with general insurance companies or reinsurance companies; b. general insurance companies with insurance brokers;
c. insurance brokers with insurance loss assessors; and
d. general insurance companies with Sharia general insurance companies.
Paragraph (2)
Clear enough.
Paragraph (3)
Clear enough.

Article 13
Clear enough.

Article 14
Clear enough.

Article 15
Paragraph (1)
Meeting formats are adjusted to the needs of Insurance Companies, including the use of teleconference technology.
Paragraph (2)
Clear enough.
Paragraph (3)
Clear enough.
Paragraph (4)
Clear enough.
Paragraph (5)
Clear enough.

Article 16
Letter a
Clear enough.
Letter b
What is meant by family relationships in these provisions are family relationships up to the second degree, both vertically and horizontally, including husband and wife, parents-in-law, children-in-law, siblings-in-law, and full/step/adopted siblings of the husband or wife together with the husband or wife of the sibling in question.

Article 17
Clear enough.

Article 18
Clear enough.

Article 19
Paragraph (1)
Clear enough.
Paragraph (2)
Based on these provisions, if the number of Board of Commissioners members is even, then the number of Independent Commissioners must be at least equal to the number of non-independent commissioners. Whereas if the number of Board of Commissioners members is odd, then the number of Independent Commissioners must be greater than the number of non-independent commissioners. As an example, if the number of Board of Commissioners members is 3 (three) people, then the number of Independent Commissioners is at least 2 (two) people. Paragraph (3) Clear enough. Paragraph (4) Clear enough. Paragraph (5) Clear enough. Paragraph (6) Clear enough.

Article 20
Clear enough.

Article 21
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Article 22
Clear enough.

Article 23
Clear enough.

Article 24
Clear enough.

Article 25
Clear enough.

Article 26
Paragraph (1)
Meeting formats are adjusted to the needs of Insurance Companies, including the use of teleconference technology.
Paragraph (2)
Letter a
Meetings involving the Board of Directors are conducted for the purpose of evaluating/setting strategic policies and/or evaluating the realization of the Insurance Company's business plan every quarter. Letter b Clear enough. Paragraph (3) What is meant by fulfilling 80% (eighty percent) at the Board of Commissioners meeting includes attendance through circular resolutions (circulair resolution). Paragraph (4) Clear enough. Paragraph (5) Clear enough. Paragraph (6) Clear enough. Paragraph (7) Clear enough. Paragraph (8) Clear enough.

Article 27
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Article 28
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Article 29
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Article 30
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Article 31
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Article 32
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Article 33
Clear enough.

Article 34
Clear enough.

Article 35
Clear enough.

Article 36
Based on these provisions, if the Sharia Supervisory Board consists of only 1 (one) person, then that DPS must reside in Indonesia.

Article 37
Clear enough.

Article 38
Clear enough.

Article 39
Clear enough.

Article 40
Clear enough.

Article 41
Paragraph (1)
Clear enough.
Paragraph (2)
What is meant by other financial service institutions includes Sharia Insurance Companies and other Sharia Reinsurance Companies, banks, securities companies, financing companies, and pension funds.

Article 42
Clear enough.

Article 43
Paragraph (1)
What is meant by "DPS meeting" includes meetings using teleconference technology.
Paragraph (2)
Clear enough.
Paragraph (3)
Clear enough.
Paragraph (4)
Clear enough.
Paragraph (5)
Clear enough.

Article 44
Clear enough.

Article 45
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Article 46
Clear enough.

Article 47
Clear enough.

Article 48
Clear enough.

Article 49
Clear enough.

Article 50
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Article 51
Clear enough.

Article 52
Clear enough.

Article 53
Clear enough.

Article 54
Clear enough.

Article 55
Clear enough.

Article 56
Clear enough.

Article 57
Clear enough.

Article 58
Clear enough.

Article 59
Clear enough.

Article 60
Clear enough.

Article 61
Paragraph (1)
What is meant by accounting for securities in this paragraph is storing all investment instruments in the capital market with other parties (custodian institutions/securities storage institutions). Paragraph (2) Clear enough. Paragraph (3) Investment field experts who have passed the exam as investment manager representatives evidenced by certificates issued by the capital market professional standards committee or expertise certificates from specialized educational institutions in the field of capital markets that have received recognition from OJK. Investment field experts of Insurance Companies and Reinsurance Companies are not required to have individual licenses as investment manager representatives from OJK.

Article 62
Clear enough.

Article 63
Clear enough.

Article 64
Clear enough.

Article 65
Clear enough.

Article 66
Clear enough.

Article 67
Clear enough.

Article 68
Paragraph (1)
Letter a
Corporate plan (corporate plan) is a written document describing the activities planned by Insurance Companies and Reinsurance Companies over a 5 (five) year period to determine strategy or direction, and making decisions to allocate resources owned (including capital and human resources) to achieve company goals. Letter b Business plan (business plan) is a written document describing the business activities of Insurance Companies and Reinsurance Companies over a 1 (one) and 3 (three) year period, including plans to improve business performance, and strategies to realize these plans in accordance with targets and timeframes set, while still paying attention to the fulfillment of prudential requirements and the application of risk management. Paragraph (2) Clear enough. Paragraph (3) Letter a Clear enough. Letter b Clear enough. Letter c Clear enough. Letter d Clear enough. Letter e Clear enough. Letter f Clear enough. Letter g Clear enough. Letter h Clear enough. Letter i Clear enough. Letter j Clear enough. Letter k Clear enough. Letter l Clear enough. Letter m What is meant by "other information" includes information that needs to be submitted because it affects the business activities of Insurance Companies and Reinsurance Companies, which are not mentioned in the scope of business plans as referred to in numbers 1 letter a to letter l. Examples:

1. merger, acquisition, and consolidation plans;
2. portfolio transfer plans;
3. plans to change insurance business fields; and
4. plans to change conventional business activities to Sharia-based principles.
   Paragraph (4)
   Clear enough.
   Paragraph (5)
   Clear enough.

Article 69
Clear enough.

Article 70
Clear enough.

Article 71
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Article 72
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Article 73
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Article 74
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Article 75
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Article 76
Paragraph (1)
Clear enough.
Paragraph (2)
Good Corporate Governance Guidelines for Insurance Companies and self-assessment checklists are formulated by a committee formed by the government tasked with formulating corporate governance policies.

Article 77
Clear enough.

Article 78
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Article 79
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Article 80
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Article 81
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Article 82
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Article 83
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Article 84
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Article 85
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Article 86
Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5996