POJK on Financial Health of Sharia Insurance and Sharia Reinsurance Companies

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 72 /POJK.05/2016
CONCERNING
FINANCIAL HEALTH OF SHARIA INSURANCE AND SHARIA REINSURANCE COMPANIES BY THE GRACE OF THE ALMIGHTY GOD THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering: That in order to implement the provisions of Article 19 paragraph (4), Article 20 paragraph (5), Article 21 paragraph (4), and Article 22 paragraph (5) of Law Number 40 of 2014 concerning Insurance, it is necessary to establish a Financial Services Authority Regulation concerning the Financial Health of Sharia Insurance and Sharia Reinsurance Companies; 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);
COPY

DECIDES:
Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING FINANCIAL HEALTH OF SHARIA INSURANCE AND SHARIA REINSURANCE COMPANIES.

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

Company means a Sharia insurance company, a Sharia reinsurance company, and a Sharia unit.
Sharia Insurance Company means a Sharia general insurance company and a Sharia life insurance company, as referred to in Law Number 40 of 2014 concerning Insurance.
Sharia Unit is a working unit at the head office of an insurance company or reinsurance company that functions as the head office of offices outside the head office that conduct business based on Sharia principles.
Sharia General Insurance Company is a company that conducts risk management business based on Sharia principles for mutual assistance and protection by providing compensation to participants or policyholders for losses, damages, costs arising, loss of profit, or legal liability to third parties that may be suffered by participants or policyholders due to the occurrence of an uncertain event.
Sharia Life Insurance Company is a company that conducts 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 certain times as regulated in the agreement, the amount of which has been determined and/or based on the results of fund management.
Sharia Reinsurance Company is a company that conducts risk management business based on Sharia principles for risks faced by Sharia Insurance Companies, Sharia guarantee companies, or other Sharia Reinsurance Companies, including Sharia Units of reinsurance companies.
Party means a person or business entity, whether a legal entity or not, as referred to in Law Number 40 of 2014 concerning Insurance.
Sharia Supervisory Board is a part of the insurance company's organ that conducts business activities based on Sharia principles that performs supervision functions over the implementation of insurance and reinsurance business to ensure compliance with Sharia principles.
Insurance Products Linked to Investment, hereinafter referred to as PAYDI, is an insurance product that provides at least death risk protection and provides benefits referring to the investment results of a fund pool specifically formed for the insurance product, whether stated in unit form or not.
Liability is an obligation as referred to in legislation in the field of insurance.
Akad is a written agreement containing specific agreements, along with the rights and obligations of the Parties according to Sharia principles.
Sharia Principle is Islamic law principles in insurance activities based on fatwas issued by institutions having authority in determining fatwas in the field of Sharia as referred to in Law Number 40 of 2014 concerning Insurance.
Underwriting Surplus is the excess of the total contribution of policyholders or participants into the Tabarru' fund plus the total claim recovery from reinsurers minus the payment of benefits/claims/benefits, reinsurance contributions, and the increase in technical reserves, in a certain period.
Tabarru' Fund is a pool of funds originating from the contributions of policyholders or participants, the mechanism of whose use is in accordance with the Sharia insurance agreement or Sharia reinsurance agreement as referred to in Law Number 40 of 2014 concerning Insurance.
Tanahud Fund is a pool of funds originating from the contributions of policyholders or participants in the Sharia pension annuity program, qardh from company funds, and/or Tanahud Fund from reinsurance for Sharia pension annuity products, along with their investment results, the use of which is in accordance with the Sharia annuity agreement for pension programs or Sharia reinsurance agreements for Sharia pension annuity products.
Company Fund is a pool of funds managed by the Company, other than Tabarru' Fund, Tanahud Fund, and participant investment funds.
Participant Investment Fund is an investment fund originating from the contributions of policyholders or participants in PAYDI, managed by the Sharia Insurance Company or Sharia Unit in accordance with the Sharia insurance agreement.
Permitted Assets are assets calculated in the solvency ratio calculation.
Qardh is a loan of funds from the Company to Tabarru' Fund and/or Tanahud Fund in order to address the insufficiency of Tabarru' Fund assets to pay benefits/claims/benefits to policyholders or participants.
Assets Available for Qardh is a portion of Permitted Assets from Company Funds provided to give Qardh to Tabarru' Fund and/or Tanahud Fund.
Risk-Based Minimum Capital, hereinafter abbreviated as MMBR, is the amount of funds needed to anticipate potential losses resulting from deviations in the management of assets and Liabilities of Company Funds.
Risk-Based Minimum Tabarru' and Tanahud Funds, hereinafter abbreviated as DTMBR, is the amount of funds needed to anticipate potential losses resulting from deviations in the management of assets and Liabilities of Tabarru' and Tanahud Funds.
Tabarru' and Tanahud Fund Solvency Ratio is the difference between the amount of Permitted Assets from Tabarru' and Tanahud Funds minus the Liabilities from the management of Tabarru' and Tanahud Funds.
Company Fund Solvency Ratio is the difference between the amount of Permitted Assets from Company Funds minus the Liabilities from the management of Company Funds.
Equity is equity based on accounting standards applicable in Indonesia.
Sharia Medium Term Notes, hereinafter referred to as Sharia MTN, are Sharia securities issued by the company with a maturity of one to five years.
Net Contribution is contributions allocated to Tabarru' Fund minus outgoing Tabarru' reinsurance contributions plus incoming Tabarru' reinsurance contributions.
Guarantee Fund is the assets of a Sharia Insurance Company or Sharia Reinsurance Company that serve as the final guarantee in protecting the interests of policyholders or participants, in the event that a Sharia Insurance Company or Sharia Reinsurance Company is liquidated.
Investment Manager is an investment manager as referred to in Law Number 8 of 1995 concerning Capital Markets.
Sharia Universal Bank is a Sharia bank that in its activities provides services in payment transactions as referred to in Law Number 21 of 2008 concerning Sharia Banking.
Sharia People's Financing Bank, hereinafter abbreviated as BPRS, is a Sharia people's financing bank as referred to in Law Number 21 of 2008 concerning Sharia Banking.
Custodian Bank is a universal bank that has received approval from the Financial Services Authority as a custodian.
Financial Services Authority, hereinafter abbreviated as OJK, is an independent institution having the functions, duties, and authorities of regulation, supervision, examination, and investigation as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.

CHAPTER II
SEPARATION OF ASSETS AND LIABILITIES
Article 2
(1) Assets and Liabilities related to the rights of policyholders or participants must be separated from other assets and Liabilities of the Company.
(2) The separation of assets and Liabilities as referred to in paragraph (1) consists of Tabarru' Fund, Tanahud Fund, Company Fund, and Participant Investment Fund.
(3) The Company must make separate records for Tabarru' Fund, Tanahud Fund, Company Fund, and Participant Investment Fund.
Article 3
(1) Assets and Liabilities of Tabarru' Fund and Tanahud Fund as referred to in Article 2 paragraph (2) are the assets and Liabilities of policyholders or participants collectively. (2) The Company may form Tabarru' Fund for each business line. (3) The Company must maintain Permitted Assets in Tabarru' Fund and Tanahud Fund with a value at least equal to the Liabilities of Tabarru' Fund and Tanahud Fund. (4) In the event that the formation of Tabarru' Fund for each business line as referred to in paragraph (2) does not yet meet the law of large numbers, the Company may form a combined Tabarru' Fund from several business lines. (5) The combination of Tabarru' Fund as referred to in paragraph (4) must be informed by the Company to policyholders or participants and included in the policy. (6) The formation of Tabarru' Fund as referred to in paragraph (2) and/or the combination of Tabarru' Fund as referred to in paragraph (5) must first obtain approval from the Sharia Supervisory Board and the Company's actuary.
Article 4
(1) In the event that the Company forms more than one Tabarru' Fund, each receipt and expense of Tabarru' Fund must be recorded in each respective Tabarru' Fund.
(2) The Company may only use Tabarru' Fund for:
a. payment of benefits/claims/benefits to policyholders or participants who have experienced a disaster or other entitled Parties based on the Sharia insurance policy; b. payment of Tabarru' contributions to reinsurers;
c. repayment of Qardh to the Company;
d. return of Tabarru' Fund; and/or e. costs related to the management of Tabarru' Fund assets.
(3) The return of Tabarru' Fund as referred to in paragraph (2) letter d may be done as a result of:
a. policy cancellation within the permitted time frame (freelook period); b. policy termination by the policyholder or participant before the insurance period ends;
c. policy termination by the Company before the insurance period ends; and/or
d. payment of Tabarru' Fund contributions that are larger than necessary.
(4) The return of Tabarru' Fund as referred to in paragraph (2) letter d and the conditions causing the return of Tabarru' Fund as referred to in paragraph (3) must be included in the policy.
Article 5
(1) Assets and Liabilities of Participant Investment Fund as referred to in Article 2 paragraph (2) of policyholders or participants are the assets and Liabilities of each respective policyholder or participant individually. (2) The Company must form Participant Investment Funds classified based on the type of Akad used for investment management and the type of investment portfolio. (3) In the event that the Company will offer a new type of investment portfolio, the Company must inform policyholders or participants regarding the formation of Participant Investment Funds for the new type of investment portfolio.

CHAPTER III
UNDERWRITING SURPLUS
Article 6
(1) Underwriting Surplus may be distributed with the following options:
a. entirely added to Tabarru' Fund; b. partially added to Tabarru' Fund and partially distributed to policyholders or participants; or
c. partially added to Tabarru' Fund, partially distributed to policyholders or participants, and partially distributed to the Company.
(2) The distribution of Underwriting Surplus as referred to in paragraph (1) must first obtain:
a. a recommendation from the Company's actuary or Company expert; and b. approval from the Sharia Supervisory Board.
(3) The considerations of the Sharia Supervisory Board in providing approval for the distribution of Underwriting Surplus as referred to in paragraph (2) letter b to Company Funds must be presented in the Sharia Supervisory Board's supervision report. (4) Policyholders or participants receiving Underwriting Surplus as referred to in paragraph (1) letters b and c must meet the following requirements:
a. have paid contributions for the period of calculation of Underwriting Surplus; b. are not currently in the process of claim settlement;
c. have never received claim payments exceeding the amount of contributions allocated to Tabarru' Fund; and
d. do not terminate the policy (inforce) during the period of calculation of Underwriting Surplus.
(5) The distribution option for Underwriting Surplus as referred to in paragraph (1) and the proportion of distribution of Underwriting Surplus as referred to in paragraph (1) letter c may only be changed with the following provisions:
a. to increase the solvency of Tabarru' Fund; and b. not to reduce the proportion of the share of policyholders or participants.
(6) Distributable Underwriting Surplus is calculated based on income received in cash on the date of calculation of Underwriting Surplus.
(7) In the event that the distribution of Underwriting Surplus to policyholders or participants economically requires costs greater than the portion to be distributed, the Company must distribute Underwriting Surplus with the following options:
a. adding it to Tabarru' Fund; b. calculating it to reduce the contributions of policyholders or participants in the next period; or
c. utilizing it for social funds.
(8) The options and requirements for the distribution of Underwriting Surplus as referred to in paragraph (1), paragraph (5), and paragraph (7) as well as the requirements for policyholders or participants as referred to in paragraph (4) must be included in the policy.
Article 7
(1) The Company is prohibited from distributing Underwriting Surplus to policyholders or participants or the Company in the event that:
a. there is still Qardh in the Liabilities of Tabarru' Fund; b. the Solvency Ratio of Tabarru' Fund is smaller than the internal target Solvency Ratio of Tabarru' Fund;
c. the investment sufficiency level is not met; or
d. the distribution of Underwriting Surplus may cause the conditions as referred to in letters b or c.
(2) In the event that conditions as referred to in paragraph (1) occur, all Underwriting Surplus must be added to Tabarru' Fund.
(3) The provisions for the distribution conditions of Underwriting Surplus as referred to in paragraph (1) and paragraph (2) must be included in the policy.

CHAPTER IV
QARDH
Article 8
(1) The Company must at all times have the ability to provide Qardh.
(2) The Company must provide Assets Available for Qardh in Company Funds in the event that:
a. the Solvency Ratio of Tabarru' Fund and Tanahud Fund is smaller than the internal target Solvency Ratio of Tabarru' Fund and Tanahud Fund; b. the amount of investment in Permitted Assets from Tabarru' Fund is smaller than the amount of technical reserves and Liabilities for payment of benefits/claims/benefits retention from Tabarru' Fund and Tanahud Fund;
c. there is a Tabarru' Fund underwriting deficit; and/or
d. Tabarru' Fund and Tanahud Fund are insufficient to pay benefits/claims/benefits to policyholders or participants.
(3) Assets Available for Qardh as referred to in paragraph (2) are calculated as:
a. an addition to Permitted Assets of Tabarru' Fund and Tanahud Fund in the calculation of the Solvency Ratio of Tabarru' Fund and Tanahud Fund; b. an addition to Permitted Assets of Tabarru' Fund and Tanahud Fund in the calculation of the sufficiency of investment in Permitted Assets in the form of investments and non-investments; and
c. a reduction of Permitted Assets from Company Funds in the calculation of the Solvency Ratio of Company Funds.
(4) Assets Available for Qardh as referred to in paragraph (2) are at most:
a. the value needed so that the Solvency Ratio of Tabarru' Fund and Tanahud Fund meets the internal target Solvency Ratio of Tabarru' Fund and Tanahud Fund; and/or b. the value needed so that Tabarru' Fund and Tanahud Fund meet the provisions regarding the sufficiency of investment in Permitted Assets in the form of investments and non-investments. (5) The provision of Assets Available for Qardh as referred to in paragraph (2) must obtain approval from the Board of Directors or equivalent. (6) In the event that Tabarru' Fund and/or Tanahud Fund are insufficient to pay benefits/claims/benefits to policyholders or participants or the total assets of Tabarru' Fund and/or Tanahud Fund are smaller than the total Liabilities of Tabarru' Fund and Tanahud Fund, the Company must deposit Qardh in cash to Tabarru' Fund to pay Sharia insurance benefits/claims/benefits. (7) The repayment of Qardh to Company Funds is done from Tabarru' Fund and/or Tanahud Fund. (8) The Company is prohibited from paying dividends or providing any form of compensation to shareholders or equivalents if such actions would cause the Company to lose the ability to provide Qardh.

CHAPTER V
FINANCIAL HEALTH
First Section
Scope of Financial Health
Article 9
(1) The Company must at all times meet the requirements for the level of financial health.
(2) The measurement of the level of financial health of the Company as referred to in paragraph (1) includes:
a. Solvency Ratio of Tabarru' Fund and Tanahud Fund; b. Solvency Ratio of Company Funds;
c. technical reserves;
d. investment sufficiency; e. Equity; f. Guarantee Fund; and g. other provisions related to financial health.

Second Section
Solvency Ratio of Tabarru' Fund and Tanahud Fund as well as Solvency Ratio of Company Funds
Article 10
(1) The Company must at all times meet:
a. Solvency Ratio of Tabarru' Fund and Tanahud Fund at least 100% (one hundred percent) of DTMBR; and b. Solvency Ratio of Company Funds at least 100% (one hundred percent) of MMBR. (2) The Company must annually set internal target Solvency Ratios for Tabarru' Fund and Tanahud Fund as well as internal target Solvency Ratios for Company Funds. (3) Internal target Solvency Ratios for Tabarru' Fund and Tanahud Fund as well as internal target Solvency Ratios for Company Funds as referred to in paragraph (2) are set at least 120% (one hundred twenty percent) of DTMBR and 120% (one hundred twenty percent) of MMBR respectively, considering the risk profile of each Company and considering the results of scenario simulation (stress test). (4) OJK may order the Company to increase and meet the internal target Solvency Ratios for Tabarru' Fund and Tanahud Fund as well as internal target Solvency Ratios for Company Funds as referred to in paragraph (3), considering the risk profile of the Company and considering the results of scenario simulation (stress test). (5) The Company must at all times meet the internal target Solvency Ratios for Tabarru' Fund and Tanahud Fund and internal target Solvency Ratios for Company Funds as referred to in paragraph (3) and paragraph (4). (6) The Company is prohibited from paying dividends or providing any form of compensation to shareholders or equivalents if such actions would cause the failure to achieve the internal target Solvency Ratios for Tabarru' Fund and Tanahud Fund and internal target Solvency Ratios for Company Funds as required as referred to in paragraph (3) and paragraph (4).
Article 11
The limits of the internal Solvency Ratios for Tabarru' Fund and Tanahud Fund as well as Solvency Ratios for Company Funds as referred to in Article 10 paragraph (1) and paragraph (3) are implemented in stages as follows:
a. by December 31, 2017 at the latest, the Company must:

have Solvency Ratios for Tabarru' Fund and Tanahud Fund as well as Solvency Ratios for Company Funds of at least 60% (sixty percent) of DTMBR and 60% (sixty percent) of MMBR respectively; and
set internal Solvency Ratios for Tabarru' Fund and Tanahud Fund as well as internal Solvency Ratios for Company Funds of at least 80% (eighty percent) of DTMBR and 80% (eighty percent) of MMBR respectively.
b. by December 31, 2018 at the latest, the Company must:
have Solvency Ratios for Tabarru' Fund and Tanahud Fund as well as Solvency Ratios for Company Funds of at least 80% (eighty percent) of DTMBR and 80% (eighty percent) of MMBR respectively; and
set internal Solvency Ratios for Tabarru' Fund and Tanahud Fund as well as internal Solvency Ratios for Company Funds of at least 100% (one hundred percent) of DTMBR and 100% (one hundred percent) of MMBR respectively.
c. by December 31, 2019 at the latest, the Company must:
have Solvency Ratios for Tabarru' Fund and Tanahud Fund as well as Solvency Ratios for Company Funds of at least 100% (one hundred percent) of DTMBR and 100% (one hundred percent) of MMBR respectively; and
set internal Solvency Ratios for Tabarru' Fund and Tanahud Fund as well as internal Solvency Ratios for Company Funds of at least 120% (one hundred twenty percent) of DTMBR and 120% (one hundred twenty percent) of MMBR respectively.
Article 12
(1) The calculation of DTMBR as referred to in Article 10 paragraph (1) letter a must consider risks consisting of at least:
a. credit risk; b. liquidity risk;
c. market risk;
d. insurance risk; and e. operational risk.
(2) The calculation of MMBR as referred to in Article 10 paragraph (1) letter b must consider risks consisting of at least:
a. credit risk; b. liquidity risk;
c. market risk; and
d. operational risk.
(3) In the event that a Sharia Insurance Company markets PAYDI, MMBR as referred to in paragraph (2) must be increased by a certain percentage of funds from investments originating from PAYDI. (4) Further provisions regarding the calculation of the amount of DTMBR and MMBR as referred to in paragraph

(1) to (3) are regulated in an OJK Circular.

Third Part
Permitted Assets in the Form of Investment

Article 13
(1) Companies are required to apply prudent principles in the placement of investments.
(2) Permitted Assets from Tabarru’ Funds, Tanahud Funds, and Company Funds in the form of investment must be placed in the following types:
a. time deposits at Sharia Commercial Banks, Sharia business units of commercial banks, or Sharia Rural Banks (BPRS), including deposit on call and deposits with a term of less than or equal to 1 (one) month; b. deposit certificates at Sharia Commercial Banks or Sharia business units of commercial banks;
c. Sharia stocks listed on the stock exchange;
d. Sukuk or Sharia bonds listed on the stock exchange; e. Sharia MTN; f. Sharia securities issued by the Republic of Indonesia; g. Sharia securities issued by countries other than the Republic of Indonesia; h. Sharia securities issued by Bank Indonesia;
i. Sharia securities issued by multinational institutions where the Republic of Indonesia is one of the members or shareholders;
j. Sharia mutual funds; k. Sharia asset-backed securities;
l. Sharia real estate investment funds in the form of collective investment contracts;
m. transactions of Sharia securities through Repurchase Agreement (REPO); n. Sharia financing through cooperation mechanisms with other parties in the form of cooperation for providing Sharia financing (executing); and/or o. pure gold. (3) In addition to the types of investment as referred to in paragraph (2), Permitted Assets from Company Funds in the form of investment may also be placed in:
a. direct participation in companies whose shares are not listed on the stock exchange; b. land, buildings with strata title rights, or land with buildings, for investment; and/or
c. Sharia financing with land mortgage rights.
(4) Permitted Assets in the form of investment as referred to in paragraph (2) and paragraph (3) that can be placed abroad must be in the following types:
a. Sharia stocks listed on the stock exchange; b. Sukuk or Sharia bonds listed on the stock exchange;
c. Sharia securities issued by countries other than the Republic of Indonesia;
d. Sharia securities issued by multinational institutions where the Republic of Indonesia is one of the members or shareholders; e. Sharia mutual funds; and/or f. direct participation in companies whose shares are not listed on the stock exchange. (5) Provisions regarding the valuation basis for each type of investment as referred to in paragraph (2) to paragraph (4) are regulated in an OJK Circular.

Article 14
(1) Placement of Permitted Assets in the form of investment in the form of Sharia stocks as referred to in Article 13 paragraph (2) letter c within the country must be included in the list of Sharia securities issued by the OJK or parties that have obtained OJK approval to issue the list of Sharia securities. (2) Placement of Permitted Assets in the form of investment in the form of Sukuk or Sharia bonds as referred to in Article 13 paragraph (2) letter d must be done on Sukuk or Sharia bonds that have an investment grade rating from a securities rating company recognized by the OJK. (3) Placement of Permitted Assets in the form of investment in Sharia MTN as referred to in Article 13 paragraph (2) letter e must meet the following provisions:
a. Sharia MTN is registered at the Indonesia Central Securities Depository; b. Sharia MTN has a monitoring agent that has obtained a license as a trustee from the OJK; and
c. Sharia MTN has an investment grade rating issued by a securities rating company recognized by the OJK.
(4) Placement of Permitted Assets in the form of investment in the form of Sharia securities issued by multinational institutions where the Republic of Indonesia is one of the members or shareholders as referred to in Article 13 paragraph (2) letter i must meet the following provisions:
a. have an investment grade rating from a securities rating company recognized internationally; b. sold through a public offering; and
c. information regarding the transaction can be accessed in Indonesia.
(5) Placement of Permitted Assets in the form of investment in the form of Sharia mutual funds as referred to in Article 13 paragraph (2) letter j must meet the following provisions:
a. for Sharia mutual funds conducted through a public offering, have obtained an effective statement from the OJK; and b. for Sharia limited participation mutual funds, have been registered with the OJK. (6) Placement of Permitted Assets in the form of investment in the form of Sharia asset-backed securities and Sharia real estate investment funds in the form of collective investment contracts as referred to in Article 13 paragraph (2) letter k and letter l must meet the following provisions:
a. have obtained an effective statement from the OJK; b. have an investment grade rating from a securities rating company recognized by the OJK; and
c. are conducted through a public offering as regulated in capital market legislation.
(7) Companies that invest in the form of investment in REPO as referred to in Article 13 paragraph (2) letter m must meet the following requirements:
a. the Company's risk level based on the assessment conducted by the OJK is low to medium or low; b. use standardized contracts by the OJK;
c. transactions in the form of buying Sharia securities with a promise to sell back at a specified time and price;
d. collateral types are limited to Sharia securities issued by the Republic of Indonesia and/or Sharia securities issued by Bank Indonesia; e. the term does not exceed 90 (ninety) days; f. the REPO value is at most 80% (eighty percent) of the market value of the pledged Sharia securities; and g. REPO transactions are registered at the Indonesia Central Securities Depository or Bank Indonesia Scriptless Securities Settlement System (BI-S4). (8) Placement of Permitted Assets in the form of investment in the form of Sharia financing through cooperation mechanisms with other parties in the form of cooperation for providing Sharia financing (executing) as referred to in Article 13 paragraph (2) letter n must meet the following provisions:
a. is a Sharia financing company that has obtained a business license from the OJK; b. the aforementioned Sharia financing company is not subject to administrative sanctions in the form of business activity restrictions or suspension of business activities by the OJK at the start of the cooperation;
c. the risk level of the Sharia financing company based on the assessment conducted by the OJK is low to medium or low; and
d. meets the financial health level provisions based on Sharia financing legislation at the start of the cooperation.
(9) Placement of Permitted Assets in the form of investment in the form of pure gold as referred to in Article 13 paragraph (2) letter o must meet the following provisions:
a. meet the specification requirements established by a commodity exchange that has obtained a license from the competent authority; and b. are stored at a Custodian Bank or other parties that have obtained a license or approval from the competent authority to provide custody services. (10) Placement of Permitted Assets in the form of investment in the form of land, buildings with strata title rights, or land with buildings, for investment, as referred to in Article 13 paragraph (3) letter b must meet the following provisions:
a. are owned and controlled by the Company, proven by land and/or building ownership certificates in the name of the Company; and b. are not placed on land, buildings, or land with buildings that are currently pledged, in dispute, or blocked by other parties. (11) Placement of Permitted Assets in the form of investment in the form of Sharia financing with land mortgage rights as referred to in Article 13 paragraph (3) letter c must meet the following provisions:
a. the Sharia financing is granted to individuals; b. the Sharia financing is guaranteed with a first land mortgage right;
c. the Sharia financing is conducted in accordance with legislation;
d. land ownership certificates that have been stamped with land mortgage right encumbrances are stored by the Company; and e. the amount of each Sharia financing is at most 75% (seventy-five percent) of the smallest value among the value set by a registered appraiser at the competent authority and the Taxable Object Value (NJOP).

Article 15
In the event that Sukuk or Sharia bonds and/or Sharia MTN issued by Sharia financing companies do not have an investment grade level as referred to in Article 14 paragraph (2) and/or paragraph (3) letter c, placement may be carried out as long as:
a. they have a rating 1 (one) level below investment grade; and b. the Sharia financing company issuing the Sukuk or Sharia bonds and/or Sharia MTN meets the financial health level provisions based on Sharia financing legislation at the time of placement.

Article 16
(1) Placement of Permitted Assets in the form of investment abroad in the form of Sharia stocks listed on the stock exchange as referred to in Article 13 paragraph (4) letter a must meet the following provisions:
a. are included in the category of Sharia stocks at the place where the stocks are listed; b. are included in the category of actively traded stocks on the stock exchange at the place where the Sharia stocks are listed based on criteria established by the aforementioned stock exchange; and
c. information regarding the issuer and transactions of the Sharia stocks can be accessed in Indonesia.
(2) Placement of Permitted Assets in the form of investment abroad in the form of Sukuk or Sharia bonds listed on the stock exchange, Sharia securities issued by countries other than the Republic of Indonesia, and Sharia securities issued by multinational institutions where the Republic of Indonesia is one of the members or shareholders as referred to in Article 13 paragraph (4) letter b to letter d must meet the following provisions:
a. have an investment grade rating from a securities rating company recognized internationally; b. sold through a public offering; and
c. information regarding the transaction can be accessed in Indonesia.
(3) Placement of Permitted Assets in the form of investment abroad in the form of Sharia mutual funds as referred to in Article 13 paragraph (4) letter e must meet the following provisions:
a. managed by an Investment Manager abroad who has obtained a license from the capital market authority in the country where the Investment Manager is domiciled; b. have obtained license/approval/registration from the capital market authority in the country where the aforementioned Investment Manager is domiciled and are conducted through a public offering;
c. managed by an Investment Manager abroad who is not subject to administrative sanctions in the form of business activity restrictions or suspension of business activities by the authority in the country where the aforementioned Investment Manager is domiciled; and
d. information regarding the mutual funds can be accessed in Indonesia.

Article 17
(1) In the event that Permitted Assets in the form of investment in the form of Sharia stocks and/or Sukuk or Sharia bonds as referred to in Article 13 paragraph (2) letter c and d that are listed on stock exchanges within the country and/or abroad and whose issuers are foreign legal entities, they are categorized as investments abroad. (2) In the event that Permitted Assets in the form of investment in the form of Sharia stocks and/or Sukuk or Sharia bonds as referred to in Article 13 paragraph (2) letter c and d that are listed on stock exchanges within the country and/or abroad and whose issuers are Indonesian legal entities, they are categorized as investments within the country. (3) In the event that Permitted Assets in the form of investment in the form of Sukuk or Sharia bonds listed on the stock exchange as referred to in Article 13 paragraph (2) letter d that are issued by foreign legal entities where more than 50% (fifty percent) of their shares are owned by Indonesian legal entities, they are categorized as investments within the country. (4) Permitted Assets in the form of investment in the form of Sukuk or Sharia bonds as referred to in paragraph (2) and paragraph (3) must meet the following provisions:
a. have an investment grade rating from a securities rating company recognized by the OJK or have an investment grade rating from a securities rating company recognized internationally; and b. sold through a public offering. (5) In the event that Permitted Assets in the form of investment in the form of Sharia stocks and/or Sukuk or Sharia bonds listed on the stock exchange issued by multinational institutions where the Republic of Indonesia is one of the members or shareholders as referred to in Article 13 paragraph (2) letter c and d are denominated in Rupiah, they are categorized as investments within the country.

Article 18
(1) Companies are prohibited from having investments abroad, except in the types of investment as referred to in Article 13 paragraph (4).
(2) Companies are prohibited from placing investments abroad each exceeding 20% (twenty percent) of the total investment of Tabarru’ Funds and Tanahud Funds and 20% (twenty percent) of the total investment of Company Funds managed by the Company. (3) In the event that the amount of investment abroad exceeds the limit as referred to in paragraph (2) due to an increase in the value of the investment, the Company is required to adjust the amount of investment in accordance with the provisions as referred to in paragraph (2) within a maximum period of 3 (three) months from the time the increase in investment value is known.

Article 19
(1) Restrictions on Permitted Assets in the form of investment for each Tabarru’ Fund and Tanahud Fund as well as Company Funds managed by the Company as referred to in Article 13 are as follows:
a. investment in the form of time deposits at Sharia Commercial Banks or Sharia business units of commercial banks, including deposit on call and deposits with a term of less than or equal to 1 (one) month, for each Sharia Commercial Bank or Sharia business unit of commercial bank is at most 20% (twenty percent) of the total investment; b. investment in the form of time deposits, for each BPRS is at most 1% (one percent) of the total investment and in total is at most 5% (five percent) of the total investment;
c. investment in the form of deposit certificates for each Sharia Commercial Bank or Sharia business unit of commercial bank is at most 50% (fifty percent) of the total investment in time deposits at Sharia Commercial Banks or Sharia business units of commercial banks as referred to in letter a;
d. investment in the form of Sharia stocks listed on the stock exchange, for each issuer is at most 10% (ten percent) of the total investment, and in total is at most 40% (forty percent) of the total investment; e. investment in the form of Sukuk or Sharia bonds listed on the stock exchange for each issuer is at most 20% (twenty percent) of the total investment each, and in total is at most 50% (fifty percent) of the total investment; f. investment in the form of Sharia MTN and Sharia securities issued by multinational institutions where the Republic of Indonesia is one of the members or shareholders for each issuer is at most 20% (twenty percent) of the total investment and in total is at most 40% (forty percent) of the total investment; g. investment in the form of Sharia securities issued by countries other than the Republic of Indonesia for each issuer is at most 10% (ten percent) of the total investment; h. investment in the form of Sharia mutual funds for each Investment Manager is at most 20% (twenty percent) of the total investment, and in total is at most 50% (fifty percent) of the total investment;
i. investment in the form of Sharia asset-backed securities, for each Investment Manager is at most 10% (ten percent) of the total investment, and in total is at most 20% (twenty percent) of the total investment;
j. investment in the form of Sharia real estate investment funds in the form of collective investment contracts, for each Investment Manager is at most 10% (ten percent) of the total investment and in total is at most 20% (twenty percent) of the total investment; k. investment in the form of REPO, for each counterparty is at most 2% (two percent) of the total investment and in total is at most 10% (ten percent) of the total investment;
l. investment in the form of Sharia financing through cooperation mechanisms with other parties in the form of cooperation for providing Sharia financing (executing), for each party is at most 10% (ten percent) of the total investment, and in total is at most 20% (twenty percent) of the total investment;
m. investment in the form of pure gold, in total is at most 10% (ten percent) of the total investment; n. investment in the form of direct participation (shares not listed on the stock exchange), in total is at most 10% (ten percent) of the total investment; o. investment in the form of land, buildings with strata title rights, or land with buildings, for investment, in total is at most 20% (twenty percent) of the total investment; p. investment in the form of land for investment, in total is at most 1/3 (one third) of the total investment as referred to in letter o; and/or g. investment in the form of Sharia financing with land mortgage rights, in total is at most 10% (ten percent) of the total investment. (2) Placement of Permitted Assets in the form of investment in the form of Sharia mutual funds as referred to in Article 13 paragraph (2) letter j, whose underlying assets are entirely Sharia securities issued by the Republic of Indonesia, is exempt from the provisions as referred to in paragraph (1) letter h. (3) Placement of Permitted Assets in the form of investment in the form of Sharia mutual funds as referred to in Article 13 paragraph (2) letter j in the form of limited participation collective investment contracts for each Investment Manager is at most 10% (ten percent) of the total investment and in total is at most 20% (twenty percent) of the total investment. (4) Placement of Permitted Assets in the form of investment as referred to in paragraph (1) letter d to letter k, the total amount is at most 80% (eighty percent) of the total investment.

Article 20
(1) Placement of Permitted Assets in the form of investment in parties affiliated with the Company is at most 25% (twenty-five percent) of the total investment of Tabarru’ Funds plus Tanahud Funds and 25% (twenty-five percent) of Company Funds. (2) Placement of Permitted Assets in the form of investment in one party or several parties that are affiliated but are not affiliated with the Company is at most 25% (twenty-five percent) of the total investment of Tabarru’ Funds plus Tanahud Funds and 25% (twenty-five percent) of Company Funds. (3) In the event that the Company will place investments exceeding the limits as referred to in paragraph (1) and paragraph (2) as well as in Article 19 paragraph (1) letter n, the Company is required to obtain approval from the OJK. (4) In the event that the Company will place investments exceeding the limits as referred to in Article 19 paragraph (1) letter n, the OJK approval as referred to in paragraph (3) can only be granted for direct participation in financial service institutions that have obtained a license from the OJK. (5) Further provisions regarding investment placement exceeding the limits as referred to in paragraph (3) and paragraph (4) are regulated in an OJK Circular.

Article 21
(1) Affiliated parties as referred to in Article 20 paragraph (1) and paragraph (2) are parties that have a relationship with one or more other parties, such that one party can influence the management or policies of the other party or vice versa. (2) Relationships that can influence management or policies as referred to in paragraph (1) in the form of:
a. one party has one or more directors or officials below the director level or commissioners, who also serve as directors or officials below the director level or commissioners in the other party; b. one party has one or more directors, commissioners, or controlling shareholders, who have family relationships due to marriage or descent up to the second degree, either horizontally or vertically, who serve as directors, commissioners, or controlling shareholders in the other party;
c. one party owns at least 25% (twenty-five percent) of the shares of the other party;
d. one party is the largest shareholder of the other party; e. the parties are controlled by the same controller; or f. one party has voting rights in the other party of more than 50% (fifty percent) based on an agreement. (3) Affiliation relationships and/or other legal relationships with other parties as referred to in paragraph (1) and paragraph (2) do not include relationships due to ownership or capital participation by the Republic of Indonesia.

Article 22
(1) Companies are prohibited from carrying out any form of asset transfer of Tabarru’ Funds, Tanahud Funds, Company Funds, and Participant Investment Funds to shareholders or parties affiliated with the Company except through arm’s length transactions. (2) Companies are prohibited from pledging Tabarru’ Funds, Tanahud Funds, Company Funds, and Participant Investment Funds to other parties. (3) Companies are prohibited from granting loans to shareholders or parties affiliated with the Company. (4) The provisions as referred to in paragraph (3) do not apply in the event of loans in the form of investment as referred to in Article 14 paragraph (3). (5) The provisions as referred to in paragraph (1) do not apply in the event of loans or placements for Permitted Assets in the form of investment and Permitted Assets in the form of non-investment.

Article 23
The amount of investment used as the basis for calculating restrictions on Permitted Assets in the form of investment as referred to in Article 19 is calculated from:
a. total investment of Tabarru’ Funds plus Tanahud Funds for calculating restrictions on Permitted Assets on Tabarru’ Funds and Tanahud Funds; or b. total investment of Company Funds for calculating restrictions on Permitted Assets on Company Funds.

Fourth Part
Permitted Assets in the Form of Non-Investment

Article 24
(1) Permitted Assets in the form of non-investment to be placed in Tabarru’ Funds and Tanahud Funds must be in the following types:
a. cash and bank; b. tabarru’ contribution receivables from direct closure, including co-insurance contribution receivables that are part of the Company;

c. reinsurance contribution receivables;
d. Tabarru’ reinsurance assets; e. Tanahud reinsurance assets; f. co-insurance claim receivables; g. reinsurance claim receivables; h. investment receivables; and/or
i. investment result receivables.
(2) Permitted Assets in non-investment form for the Company’s Fund must be in the following types:
a. cash and bank; b. direct closing ujrah receivables, including co-insurance contribution receivables that are part of the Company;
c. reinsurance ujrah receivables;
d. Company’s Fund reinsurance assets; e. investment receivables; f. investment result receivables; g. buildings with strata title (strata title) or land with buildings, for own use; and/or h. deferred acquisition cost. (3) Restrictions on Permitted Assets in non-investment form as referred to in paragraph (1) and paragraph (2) must be implemented with the following provisions:
a. cash and bank, with the provision that foreign cash and bank accounts permitted are at most 1% (one percent) of the current period’s Equity; b. Tabarru’ contribution receivables and direct closing ujrah receivables, including co-insurance contribution receivables that are part of the Company, with a receivable age of at most 2 (two) months calculated from the date:

coverage begins for policies with single premium payment; or
due date of premium payment for policies with installment premium payment;
c. reinsurance contribution receivables and reinsurance ujrah receivables, with a receivable age of at most 2 (two) months calculated from the due date of payment;
d. reinsurance assets, consisting of:
reinsurance assets in Tabarru’ Fund and Tanahud Fund sourced from the estimated recovery value of claims for reinsurance coverage portions; and
reinsurance assets in the Company’s Fund sourced from long-term contract agreements (longterm contract) for capital-oriented reinsurance programs, with the provisions:
a) only for each new PAYDI whose acquisition costs are paid in advance by the Company (back end loading); b) Companies that have recognized assets arising from capital-oriented reinsurance program agreements for one PAYDI are not permitted to recognize deferred acquisition cost assets for the same PAYDI; and c) each capital-oriented reinsurance program agreement must first obtain approval from OJK; e. co-insurance claim receivables, with a receivable age of at most 2 (two) months calculated from the date of claim payment to policyholders or participants; f. reinsurance claim receivables, with a receivable age of at most 2 (two) months calculated from the due date of payment; g. investment receivables, with a receivable age of at most 1 (one) month calculated from the due date of payment; h. investment result receivables, with a receivable age of at most 1 (one) month calculated from the due date of payment;
i. buildings with strata title (strata title) or land with buildings, for own use, with a total value of at most 25% (twenty-five percent) of the current period’s Equity; and/or
j. deferred acquisition cost, with the provisions:
can only be done for PAYDI whose acquisition costs are paid in advance by the Company (back-end loading);
Companies that have recognized deferred acquisition cost assets for PAYDI are not permitted to recognize assets arising from capital-oriented reinsurance program agreements for the same PAYDI product; and
the formation of deferred acquisition cost for each PAYDI product must first obtain approval from OJK.
(4) Provisions regarding the valuation basis for each type of non-investment as referred to in paragraph (1) and paragraph (2), as well as the procedure for requesting OJK approval as referred to in paragraph (3) letter d number 2 letter c) and letter j number 3), are regulated in an OJK Circular Letter.

Fifth Part
Status of Permitted Assets
Article 25
Permitted Assets in investment form as referred to in Article 13 and Permitted Assets in non-investment form as referred to in Article 24 must:
a. be owned and controlled by the Company, proven by ownership certificates in the Company’s name from the competent authority; b. not be in dispute;
c. not currently be used as collateral; and
d. not currently be blocked by competent authorities.

Sixth Part
Liabilities
Article 26
(1) Liabilities calculated in determining the Solvency Level of Tabarru’ Fund and Tanahud Fund must include all Liabilities of Tabarru’ Fund and Tanahud Fund, including Liabilities in the form of technical reserves of Tabarru’ Fund and Tanahud Fund. (2) Liabilities calculated in determining the Solvency Level of the Company’s Fund must include all Liabilities of the Company’s Fund, including Liabilities in the form of technical reserves of the Company’s Fund. (3) Companies must form technical reserves as referred to in paragraph (1) and paragraph (2) according to the type of insurance product. (4) The formation of technical reserves as referred to in paragraph (1) and paragraph (2) is conducted by the Company’s actuary.

Article 27
(1) Liabilities in the form of technical reserves of Tabarru’ Fund and Tanahud Fund as referred to in Article 26 paragraph (1) include:
a. Tabarru’ and Tanahud contribution reserves:

for products with a term longer than 1 (one) year whose policy terms and conditions are not renewable (non renewable) at each policy anniversary; and
for products with a term longer than 1 (one) year whose policy terms and conditions are renewable (renewable);
b. Tabarru’ contribution reserves that have not yet become income or rights for products with a term up to 1 (one) year or with a term longer than 1 (one) year whose policy terms and conditions are renewable (renewable) at each policy anniversary;
c. claim reserves; and
d. catastrophic risk reserves (catastrophic reserve).
(2) The formation of Tabarru’ contribution reserves as referred to in paragraph (1) letter a must consider income and expenditures in Tabarru’ Fund and Tanahud Fund that may occur in the future using central estimate assumptions plus a risk margin. (3) The formation of reserves for Tabarru’ contributions that have not yet become income or rights as referred to in paragraph (1) letter b must be calculated based on Tabarru’ contributions considering reserves for all unexpired risks (unexpired risk reserve).

(4) Claim reserves as referred to in paragraph (1) letter c include:
a. claim reserves in the process of settlement; b. incurred but not reported (IBNR) claim reserves; and
c. claim reserves for claims that have been approved and benefit payments are not made in a lump sum.
(5) Catastrophic risk reserves as referred to in paragraph (1) letter d are calculated based on retained insurance benefits considering the likelihood of catastrophic risks. (6) Liabilities in the form of technical reserves of the Company’s Fund as referred to in Article 26 paragraph (2) include:
a. ujrah reserves; and b. reserves for PAYDI that provide guarantees on investment principal.
(7) Liabilities in the form of technical reserves of the Company’s Fund as referred to in Article 26 paragraph (2) are calculated in the Company’s Fund Solvency Level calculation in stages as follows:
a. starting from January 1, 2018, at 20% of the total technical reserves of the Company’s Fund; b. starting from January 1, 2019, at 40% of the total technical reserves of the Company’s Fund;
c. starting from January 1, 2020, at 60% of the total technical reserves of the Company’s Fund;
d. starting from January 1, 2021, at 80% of the total technical reserves of the Company’s Fund; and e. starting from January 1, 2022, at 100% of the total technical reserves of the Company’s Fund.

Article 28
(1) In the event of unfair technical reserves or parts of technical reserves formed by the Company, OJK may:
a. require the Company to revalue the amount of technical reserves or parts of technical reserves considered unfair; or b. require an independent review of the technical reserves or parts of such technical reserves at the Company’s expense. (2) The Company must appoint an independent party at the latest 1 (one) month after the request for review as referred to in paragraph (1) letter b.
Article 29
Further provisions regarding technical reserves as referred to in Article 27 are regulated in an OJK Circular Letter.

Seventh Part
Subordinated Qardh
Article 30
In calculating the Solvency Level of the Company’s Fund, subordinated Qardh is not treated as a Liability element if the subordinated Qardh meets the following provisions:
a. used to meet the Company’s Fund Solvency Level limit requirements; and b. stipulated in a notarial agreement containing at least:

repayment of the loan principal can only be done if it does not cause the Company to fail to meet the internal Company’s Fund Solvency Level target; and
the loan repayment period is not limited.
Article 31
Companies are prohibited from returning subordinated Qardh if doing so would cause the internal Company’s Fund Solvency Level target requirements as referred to in Article 10 paragraph (3) and paragraph (4) to not be met.

Eighth Part
Investment Adequacy
Article 32
(1) Companies must have Permitted Assets in investment form as referred to in Article 13 paragraph (2) plus Permitted Assets in non-investment form consisting of cash and bank as referred to in Article 24 paragraph (1) letter a, at least equal to the amount of retained technical reserves of Tabarru’ Fund and Tanahud Fund, plus retained claim payment Liabilities, and other Liabilities to policyholders or participants. (2) Retained claim payment Liabilities as referred to in paragraph (1) are Liabilities for claims that have been agreed upon but not yet paid, minus claim costs that are part of the reinsurer.

CHAPTER VI
PARTICIPANT INVESTMENT FUND
Article 33
(1) Participant Investment Fund assets in investment form must be placed in the following types:
a. time deposits at Sharia Commercial Banks, Sharia business units of commercial banks, or Sharia Rural Banks (BPRS), including deposit on call and time deposits with terms of less than or equal to 1 (one) month; b. deposit certificates at Sharia Banks;
c. Sharia stocks listed on the stock exchange;
d. Sharia sukuk or bonds listed on the stock exchange; e. Sharia MTN; f. Sharia securities issued by the Republic of Indonesia; g. Sharia securities issued by countries other than the Republic of Indonesia; h. Sharia securities issued by Bank Indonesia;
i. Sharia securities issued by multinational institutions of which the Republic of Indonesia is a member or shareholder;
j. Sharia mutual funds; k. Sharia asset-backed securities;
l. Sharia securities transactions through Repurchase Agreement (REPO); and/or
m. pure gold.
(2) Participant Investment Fund assets in non-investment form must be in the following types:
a. cash and bank; b. direct closing receivables of Participant Investment Fund contributions;
c. investment receivables; and/or
d. investment result receivables.
(3) Investment types as referred to in paragraph (1) must be adjusted to the product descriptions reported to OJK and promised to prospective policyholders or participants. (4) Assets sourced from PAYDI that are not guaranteed are not calculated as Permitted Assets.

(5) Provisions regarding the valuation basis for each type of investment in Participant Investment Fund as referred to in paragraph (1) and paragraph (2) are regulated in an OJK Circular Letter.
Article 34
Placements of Participant Investment Fund as referred to in Article 33 paragraph (1) must meet the provisions as referred to in Articles 14 through 17.
Article 35
Foreign investment placements for Participant Investment Fund are at most 20% (twenty percent) of the total Participant Investment Fund.
Article 36
(1) Companies must account for all funds sourced from PAYDI at a Custodian Bank.
(2) The Custodian Bank as referred to in paragraph (1) is prohibited from having an affiliate relationship with the Company, except for affiliate relationships arising from ownership or state capital participation.

CHAPTER VII
EQUITY
Article 37
(1) Companies must have Equity of at least:
a. IDR 50,000,000,000.00 (fifty billion rupiah), for Islamic Insurance Companies; b. IDR 100,000,000,000.00 (one hundred billion rupiah), for Islamic Reinsurance Companies.

(2) Sharia Units of insurance and reinsurance companies must have Equity of at least:
a. IDR 25,000,000,000.00 (twenty-five billion rupiah) for Sharia Units of insurance companies; b. IDR 50,000,000,000.00 (fifty billion rupiah) for Sharia Units of reinsurance companies.
Article 38
(1) Companies are prohibited from paying dividends or providing any form of remuneration to shareholders or equivalents if doing so would cause Equity to fall below the required Equity provisions as referred to in Article 37. (2) Payment of dividends or provision of any form of remuneration to shareholders or equivalents as referred to in paragraph (1) must be conducted in accordance with applicable laws and regulations.

CHAPTER VIII
GUARANTEE FUND
First Part
Formation of Guarantee Fund
Article 39
(1) Companies must form a Guarantee Fund of at least 20% (twenty percent) of the minimum Equity required as referred to in Article 37.
(2) The amount of Guarantee Fund as referred to in paragraph (1) must be adjusted to the Company’s business volume development with the following provisions:
a. for Islamic Life Insurance Companies, must form a Guarantee Fund of 2% (two percent) of reserves for PAYDI providing investment principal guarantees plus 5% (five percent) of Tabarru’ and Tanahud contribution reserves, and Tabarru’ contribution reserves that have not yet become income; b. for Islamic General Insurance Companies or Islamic Reinsurance Companies, must form a Guarantee Fund of 1% (one percent) of Net Contributions plus 0.25% (zero point two five percent) of reinsurance Tabarru’ contributions plus 2% (two percent) of reserves for PAYDI providing investment principal guarantees;
c. for Sharia Units in Islamic Life Insurance Companies, must form a Guarantee Fund of 2% (two percent) of reserves for PAYDI providing investment principal guarantees plus 5% (five percent) of Tabarru’ contribution reserves that have not yet become income;
d. for Sharia Units in Islamic General Insurance Companies or Reinsurance Companies, must form a Guarantee Fund of 1% (one percent) of Net Contributions plus 0.25% (zero point two five percent) of reinsurance Tabarru’ contributions plus 2% (two percent) of reserves for PAYDI. (3) The formation of Guarantee Fund as referred to in paragraph (1) and paragraph (2) is sourced from the Company’s Fund. (4) Companies must form a Guarantee Fund equal to the larger amount between the calculation result of the Guarantee Fund as referred to in paragraph (1) and the amount of Guarantee Fund as referred to in paragraph (2). (5) Guarantee Funds for Sharia Units as referred to in paragraph (2) letters c and d must be separated from Guarantee Funds formed by insurance or reinsurance companies for non-Sharia principle insurance or reinsurance businesses.
Article 40
(1) The amounts of Tabarru’ and Tanahud contribution reserves, Tabarru’ contribution reserves that have not yet become income, reserves for PAYDI providing investment principal guarantees, Net Contributions, and outgoing reinsurance Tabarru’ contributions as referred to in Article 39 paragraph (2) letters a through d are obtained from financial reports as of December 31 audited by public accountants registered with OJK. (2) In the event that the Guarantee Fund is less than the amount as referred to in Article 39 paragraph (4), Companies must increase their Guarantee Fund at the latest 5 (five) working days after April 30 of the current year. (3) In the event that the existing Guarantee Fund is greater than the amount as referred to in Article 39 paragraph (4), Companies may reduce their Guarantee Fund after first obtaining approval from OJK. (4) Guarantee Funds as referred to in Article 39 paragraph (1) and paragraph (2) must be placed in the following forms:
a. time deposits with automatic renewal at Sharia Commercial Banks or Sharia business units of commercial banks that are not affiliates of the Company; and/or b. Sharia securities issued by the Republic of Indonesia that, at the time of placement as Guarantee Fund, have a remaining term to maturity of at least 1 (one) year. (5) Guarantee Funds as referred to in Article 39 paragraph (1) and paragraph (2) are prohibited from being pledged or encumbered with any rights.

Second Part
Management of Guarantee Fund
Article 41
(1) Companies must manage all Guarantee Funds at a Custodian Bank.
(2) The Custodian Bank as referred to in paragraph (1) is not an affiliate of the Company, except for affiliate relationships arising from ownership or state capital participation.
Article 42
Management of Guarantee Funds at Custodian Banks as referred to in Article 41 paragraph (1) must be based on an agreement between the Company and the Custodian Bank containing at least:
a. delegation or authorization by the Company to the Custodian Bank to withdraw, transfer, or hand over the Guarantee Fund after obtaining approval from OJK; b. the Custodian Bank’s obligation to place funds obtained from the maturity of Guarantee Fund in the form of Sharia securities issued by the Republic of Indonesia into 1 (one) month time deposits at Sharia Commercial Banks or Sharia business units of commercial banks in the Company’s name, in the event the Company has not yet replaced the matured Guarantee Fund;
c. provisions that the Custodian Bank cannot execute instructions from the Company or other parties to withdraw, transfer, or hand over deposits or Sharia securities issued by the Republic of Indonesia used as Guarantee Fund, unless OJK approval has been obtained; and
d. provisions that the Custodian Bank must submit monthly reports on the management of the Company’s Guarantee Fund to OJK by the 15th of the following month at the latest, containing at least:

name of the Company owning the Guarantee Fund;
type of Guarantee Fund;
bill number and Sharia Commercial Bank or Sharia business unit of commercial bank issuer for deposits;
series of Sharia securities issued by the Republic of Indonesia;
nominal value of the Guarantee Fund; and
maturity date.

Third Part
Changes to Guarantee Fund
Article 43
(1) Companies may make changes to Guarantee Funds in the form of formation, addition, replacement, transfer, and/or withdrawal of Guarantee Funds.
(2) Formation or addition of Guarantee Funds can be done with the following provisions:
a. new placements of time deposits at Sharia Commercial Banks or Sharia business units of commercial banks and/or Sharia securities issued by the Republic of Indonesia as Guarantee Funds; b. placements of time deposits at Sharia Commercial Banks or Sharia business units of commercial banks that were previously not Guarantee Funds becoming Guarantee Funds; and/or
c. placements of Sharia securities issued by the Republic of Indonesia that were previously not Guarantee Funds becoming Guarantee Funds.
(3) Companies may transfer or replace Guarantee Funds with the following provisions:
a. from time deposits at Sharia Commercial Banks or Sharia business units of commercial banks to Sharia securities issued by the Republic of Indonesia or vice versa; b. changing the term of time deposits at Sharia Commercial Banks or Sharia business units of commercial banks;
c. changing the Sharia Commercial Bank or Sharia business unit of commercial bank where the deposit is placed; and/or
d. exchanging Sharia securities issued by the Republic of Indonesia with other Sharia securities issued by the Republic of Indonesia.
(4) In the event that Companies will transfer or replace Guarantee Funds as referred to in paragraph (3), Companies must first place replacement Guarantee Funds of at least the value of the Guarantee Fund to be transferred or replaced. (5) In the event that there are Guarantee Funds in the form of Sharia securities issued by the Republic of Indonesia that will mature, Companies must first place new Guarantee Funds of at least the value of the Sharia securities issued by the Republic of Indonesia that will mature, at the latest 1 (one) day before the maturity date.

(6) Companies may withdraw Guarantee Funds in the event that the amount of Guarantee Funds exceeds the minimum amount required as referred to in Article 39 paragraph (1) and paragraph (2). (7) The amount of Guarantee Funds that can be withdrawn as referred to in paragraph (6) is the excess over the minimum amount required as referred to in Article 39 paragraph (1) and paragraph (2). (8) Companies can only transfer or withdraw Guarantee Funds after obtaining OJK approval. (9) Transfer or withdrawal of Guarantee Funds is conducted by submitting application documents containing at least:
a. reasons for transfer or withdrawal of Guarantee Funds; b. approval from the Board of Directors or equivalents for the transfer or withdrawal of Guarantee Funds; and
c. supporting documents proving the reasons for transfer or withdrawal of Guarantee Funds.
Article 44
(1) OJK may order Companies to increase the amount of Guarantee Funds up to the amount of technical reserves, in the event:
a. Companies cannot meet the solvency level requirements as referred to in Article 10 paragraph (1); and b. Companies are subject to business activity restriction sanctions. (2) Companies must increase the amount of Guarantee Funds as referred to in paragraph (1) at the latest 1 (one) month since being ordered to increase the amount of Guarantee Funds.

CHAPTER IX
PERIODIC REPORT SUBMISSION
First Section
Report Preparation
Article 45
(1) Companies are required to prepare:
a. annual financial reports for the period from January 1 to December 31 based on applicable Indonesian financial accounting standards; b. annual financial reports for the period from January 1 to December 31 based on insurance legislation;
c. quarterly financial reports ending on March 31, June 30, September 30, and December 31 based on insurance legislation;
d. monthly financial reports for the period from the 1st to the end of the current month; and e. annual actuarial reports for the period from January 1 to December 31. (2) The annual financial reports referred to in paragraph (1) letter a must be audited by a public accountant registered with the OJK. (3) The annual financial reports referred to in paragraph (1) letter b must be reviewed and assessed for compliance with insurance legislation regarding the financial health of insurance companies by the Company's actuary or a public accountant registered with the OJK. (4) The actuarial report referred to in paragraph (1) letter e is a report that describes the Company's estimated ability to meet its future obligations. (5) The report referred to in paragraph (1) letter e must be signed by the Company's actuary. (6) The annual actuarial report referred to in paragraph (1) letter e must be reviewed and assessed for fair presentation by a registered actuary consultant with the OJK at least once every 3 (three) years. (7) The annual financial reports referred to in paragraph (1) letter b and the quarterly financial reports referred to in paragraph (1) letter c must contain at least:
a. Company profile; b. statement letter from the Board of Directors or equivalent;
c. statement letter from the Sharia Supervisory Board;
d. financial position report; e. comprehensive income/loss report; f. cash flow report; g. Equity change report; h. Solvency Level report;
i. asset and Liability calculation;
j. Participant Investment Fund report; k. consolidated financial reports; and
l. additional reports.
(8) Regulations regarding the form and structure of reports as referred to in paragraph (1) letters b through e are governed by an OJK Circular Letter.

Article 46
Insurance companies and reinsurance companies that conduct part of their business using Sharia Principles are required to prepare annual financial reports as referred to in Article 45 paragraph (1) letter a separately from the annual financial reports for insurance or reinsurance business not based on Sharia Principles.

Article 47
In the reports referred to in Article 45 paragraph (1), every asset and Liability in foreign currency units must be presented in Rupiah based on the middle exchange rate set by Bank Indonesia on the date of the report.

Second Section
Report Submission
Article 48
(1) Companies are required to submit to the OJK:
a. reports as referred to in Article 45 paragraph (1) letters a, b, and e, at the latest by April 30 of the following year; b. reports as referred to in Article 45 paragraph (1) letter c, at the latest 1 (one) month after the end of the relevant quarter; and
c. reports as referred to in Article 45 paragraph (1) letter d at the latest by the 10th of the following month.
(2) If the final deadline for report submission as referred to in paragraph (1) is a holiday, the final submission deadline is the first working day after the said final deadline. (3) The reports referred to in paragraph (1) letters a and b must be accompanied by a statement from the Sharia Supervisory Board that the management of assets and Liabilities has been conducted in accordance with Sharia Principles. (4) Regulations regarding the procedure for report submission as referred to in paragraph (1) are governed by an OJK Circular Letter.

Third Section
Report Announcement
Article 49
(1) Companies are required to announce a summary of the audited annual financial reports as referred to in Article 45 paragraph (2) on the Company's website and in a daily newspaper in Indonesian language circulated nationally at the latest 1 (one) month after the submission deadline for financial reports as referred to in Article 48 paragraph (1) letter a. (2) Evidence of announcement as referred to in paragraph (1) must be submitted to the OJK at the latest 2 (two) working days after the announcement in the newspaper. (3) Companies are required to announce a summary of quarterly financial reports as referred to in Article 45 paragraph (1) letter c on the Company's website at the latest 1 (one) month after the end of the relevant quarter. (4) Regulations regarding the form and structure of the summary of annual financial reports and quarterly financial reports as referred to in paragraph (1) and paragraph (3) are governed by an OJK Circular Letter.

Article 50
In the event that there are parts that need correction in the reports that have been announced as referred to in Article 49 paragraph (1) and paragraph (3), the Company is required to correct the report and announce it again on the Company's website.

CHAPTER X
FINANCIAL HEALTH REHABILITATION PLAN
Article 51
Companies that do not meet the internal Tabarru’ Fund and Tanahud Fund Solvency Level targets and/or the internal Company Fund Solvency Level targets as referred to in Article 10 paragraph (3) and paragraph (4):
a. are required to submit a financial health rehabilitation plan; and b. are prohibited from distributing dividends or providing remuneration in any form to shareholders.

Article 52
(1) The financial health rehabilitation plan as referred to in Article 51 letter a must be submitted to the OJK at the latest 1 (one) month from the time it is known that the internal Solvency Targets as referred to in Article 10 paragraph (5) have not been met. (2) The financial health rehabilitation plan as referred to in paragraph (1) must contain at least financial health rehabilitation steps accompanied by specific timeframes needed to meet the internal Tabarru’ Fund and Tanahud Fund Solvency Level targets and the internal Company Fund Solvency Level targets as referred to in Article 10 paragraph (5). (3) The financial health rehabilitation steps as referred to in paragraph (2) include the following action plans:
a. adding all Underwriting Surplus to the Tabarru’ Fund; b. asset and/or Liability restructuring;
c. addition of paid-up capital or working capital;
d. provision of subordinate Qardh; e. increase in contribution tariffs; f. transfer of part or all of the participant portfolio; g. merger of business entities or business units; and/or h. other actions. (4) The financial health rehabilitation plan as referred to in paragraph (1) must be signed by all Directors and the Board of Commissioners or equivalent. (5) The financial health rehabilitation plan as referred to in paragraph (1) must first be approved by the General Meeting of Shareholders or equivalent in the event the rehabilitation plan includes an action plan for adding paid-up capital or merging business entities. (6) In the event that the financial health rehabilitation plan as referred to in paragraph (1) is assessed by the OJK as insufficient to address the problems, the Company is required to improve the financial health rehabilitation plan at the latest 1 (one) month from the notification from the OJK. (7) The financial health rehabilitation plans as referred to in paragraph (1) and paragraph (6) must obtain a statement of no objection from the OJK. (8) The OJK provides a statement of no objection for the financial health rehabilitation plan submitted by the Company as referred to in paragraph (7) by considering the problem conditions faced by the Company at the latest 14 (fourteen) working days counted from the date of receipt of the complete financial health rehabilitation plan. (9) If within the timeframe as referred to in paragraph (8) the OJK does not provide a statement of no objection or response, the Company may implement the financial health rehabilitation plan as referred to in paragraph (1) and paragraph (6).

Article 53
(1) Companies are required to submit to the OJK a report on the implementation of the financial health rehabilitation plan at the latest by the 15th of the following month. (2) The report on the implementation of the financial health rehabilitation plan as referred to in paragraph (1) must contain at least:
a. monthly financial reports prepared in accordance with the form and structure of quarterly financial reports; b. realization of action plans consisting of:

financial health rehabilitation plans that have been implemented according to the set target time;
financial health rehabilitation plans that could not be implemented according to the set target time; and
reasons for the inability to implement the rehabilitation plan according to the set target time; and
c. supporting documents proving that financial health rehabilitation actions have been implemented.
(3) If the 15th is a holiday, the final deadline for submitting the implementation report of the rehabilitation plan as referred to in paragraph (1) is the first working day after the 15th.

Article 54
(1) In the event that the Company estimates that the Tabarru’ Fund and Tanahud Fund Solvency Level or the Company Fund Solvency Level will not be met within the timeframe as set in the financial health rehabilitation plan, the Company may make changes to the financial health rehabilitation plan. (2) Changes to the financial health rehabilitation plan as referred to in paragraph (1) must first obtain approval from the OJK. (3) The OJK provides a statement of no objection for changes to the financial health rehabilitation plan submitted by the Company at the latest 14 (fourteen) working days counted from the date of receipt of the complete change to the financial health rehabilitation plan. (4) If within the timeframe as referred to in paragraph (3) the OJK does not provide a statement of no objection or response, the Company may implement the changes to the financial health rehabilitation plan as referred to in paragraph (1).

Article 55
The OJK may order the Company to transfer part or all of the insurance portfolio to another Company, in the event:
a. the Company cannot meet the provisions regarding solvency levels as referred to in Article 10 paragraph (1) letter a and/or letter b; and/or b. it is subject to business activity restriction sanctions.

CHAPTER XI
SANCTIONS
Article 56
(1) Companies that do not meet the provisions in Article 2 paragraph (1) and paragraph (3), Article 3 paragraph (5) and paragraph (6), Article 4 paragraph (2) and paragraph (4), Article 5 paragraph (2), paragraph (3), Article 6, paragraph (5), paragraph (7), and paragraph (8), Article 7 paragraph (1), and paragraph (3), Article 8 paragraph (1), paragraph (2), paragraph (6), and paragraph (8), Article 9 paragraph (1), Article 10 paragraph (1), paragraph (2), and paragraph (6), Article 11, Article 12 paragraph (3), Article 13 paragraph (1), Article 18, Article 20 paragraph (3), Article 22 paragraph (1), paragraph (2), and paragraph (3), Article 26 paragraph (1), paragraph (2), and paragraph (3), Article 27 paragraph (2), and paragraph (3), Article 28 paragraph (2), Article 31, Article 32 paragraph (1), Article 33 paragraph (1), and paragraph (3), Article 34, Article 36, Article 37 paragraph (1), and paragraph (2), Article 38 paragraph (1), and paragraph (2), Article 39 paragraph (1), paragraph (2), paragraph (4), and paragraph (5), Article 40 paragraph (2), paragraph (4), and paragraph (5), Article 41 paragraph (1), Article 42, Article 43 paragraph (4), paragraph (5), and paragraph (8), Article 44 paragraph (2), Article 45 paragraph (1), paragraph (2), paragraph (3), and paragraph (6), Article 46, Article 47, Article 48 paragraph (1), and paragraph (3), Article 49 paragraph (1), paragraph (2), and paragraph (3), Article 50, Article 51, Article 52 paragraph (1), paragraph (6), and paragraph (7), Article 53 paragraph (1), Article 54 paragraph (2), shall be subject to administrative sanctions in the form of:
a. written warning; b. restriction of business activities, for part or all of the business activities; and/or
c. revocation of business license or establishment license for the Sharia Unit.
(2) Administrative sanctions as referred to in paragraph (1) are carried out in a phased manner.
(3) In addition to administrative sanctions as referred to in paragraph (1), the OJK may add additional sanctions in the form of:
a. prohibition on marketing insurance products for specific business lines; b. re-evaluation of competence and propriety for controllers, Directors, or Board of Commissioners or equivalent in the Company;
c. prohibition for the Company to become a shareholder, controller, or equivalent to a shareholder and/or controller in a legal entity in the form of a cooperative or joint venture, in insurance companies; and/or
d. prohibition for shareholders, controllers, Directors, and/or Board of Commissioners, or equivalent to shareholders, Directors, and/or Board of Commissioners of the Company to become shareholders, controllers, Directors, and/or Board of Commissioners, or equivalent to shareholders, Directors, and/or Board of Commissioners in a legal entity in the form of a cooperative or joint venture, in insurance companies.

Article 57
The OJK may impose a business license revocation sanction:
a. without prior imposition of other administrative sanctions; or b. without prior imposition of phased administrative sanctions as referred to in Article 56 paragraph (2), in the event the Company has a Tabarru’ Fund and Tanahud Fund Solvency Level or Company Fund Solvency Level of less than 40% (forty percent) and based on OJK supervision results is deemed to endanger policyholders or participants.

Article 58
(1) Companies that violate the provisions of Article 48 paragraph (1) letter a or letter b shall be subject to additional sanctions in the form of an administrative fine of Rp1,000,000.00 (one million Rupiah) per day of delay and at most Rp360,000,000.00 (three hundred sixty million Rupiah) for each report. (2) Companies that violate the provisions of Article 49 paragraph (1) shall be subject to additional sanctions in the form of an administrative fine of Rp2,500,000.00 (two million five hundred thousand Rupiah) per day and at most Rp50,000,000.00 (fifty million Rupiah).

CHAPTER XII
TRANSITIONAL PROVISIONS
Article 59
Assessment of Liabilities in the form of technical provisions as referred to in Article 26 paragraph (1) and signing of actuarial reports as referred to in Article 45 paragraph (5) for Sharia General Insurance Companies may be carried out by:
a. Company employees who have a certified non-life analyst certificate from the Indonesian Actuaries Association; or b. actuary consultants registered with the OJK and not affiliated with the Company, at the latest until December 31, 2017.

Article 60
(1) Every administrative sanction that has been imposed on Companies based on the Regulation of the Minister of Finance of the Republic of Indonesia Number 11/PMK.010/2011 concerning Financial Health of Insurance and Reinsurance Business with Sharia Principles is declared to remain valid and effective. (2) Companies that have not been able to overcome the causes of the imposition of administrative sanctions as referred to in paragraph (1) shall be subject to further sanctions in accordance with this OJK Regulation.

CHAPTER XIII
CLOSING PROVISIONS
Article 61
At the time this OJK Regulation comes into force, provisions regarding the financial health of Sharia Insurance Companies and Sharia Reinsurance Companies are subject to this OJK Regulation.

Article 62
Provisions regarding the form and structure of reports, calculation of DTMBR and MMBR amounts, basis for investment and non-investment assessment, and formation of technical provisions are declared to remain in force as long as they do not conflict with the provisions in this OJK Regulation.

Article 63
This OJK Regulation comes into force on July 1, 2017.

In order that everyone knows it, it is ordered to promulgate this OJK Regulation by placing it in the State Gazette of the Republic of Indonesia.

Determined in Jakarta on December 23, 2016
CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY,
MULIAMAN D. HADAD
Promulgated in Jakarta on December 28, 2016
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, sd
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 305 sd Copy in accordance with the original Director of Legal Affairs 1 Ministry of Law sd Yuliana

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 72 /POJK.05/2016
CONCERNING
FINANCIAL HEALTH OF INSURANCE AND REINSURANCE COMPANIES WITH SHARIA PRINCIPLES

I. GENERAL
Law Number 21 of 2011 concerning the Financial Services Authority mandates that the supervision and regulation functions over all activities in the financial services sector operating in Indonesia are carried out by the OJK, and the purpose of establishing the OJK is to ensure that all financial services activities are conducted in an orderly, fair, transparent, and accountable manner and are able to protect consumer and public interests.

In line with the OJK's objectives, the establishment of Law Number 40 of 2014 concerning Insurance aims to create a healthier, more reliable, trustworthy, and competitive insurance industry, generally achieved through the establishment of new provisions and the improvement of existing provisions. These efforts are carried out, among others, by improving provisions regarding financial health.

This OJK Regulation is a mandate from Law Number 40 of 2014 concerning Insurance, specifically contained in Article 19 paragraph (4), Article 20 paragraph (5), Article 21 paragraph (4), and Article 22 paragraph (5). The provisions in these articles mandate regulations regarding:
a. financial health and risk mitigation methods to maintain financial health; b. Guarantee Fund;
c. separation of assets and Liabilities; and
d. report submission.

In addition to this material, efforts were also made to improve the material in previously applicable regulations, namely the Regulation of the Minister of Finance Number 11/PMK.010/2011 concerning Financial Health of Insurance and Reinsurance Business with Sharia Principles. This is an effort to meet the legal needs of the insurance industry.

Therefore, this OJK Regulation is expected to provide guidelines for Companies in carrying out operational activities, particularly in maintaining the financial health of the Company.

II. ARTICLE BY ARTICLE
Article 1
Sufficiently clear.

Article 2
Sufficiently clear.

Article 3
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
The merging of Tabarru’ Funds must still consider the characteristics of Sharia insurance products. For example, Tabarru’ Funds from Sharia insurance products that provide Underwriting Surplus distribution to policyholders or participants cannot be merged with Tabarru’ Funds from Sharia insurance products that do not provide Underwriting Surplus distribution to policyholders or participants. Paragraph (5) Sufficiently clear. Paragraph (6) Sufficiently clear.

Article 4
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Letter a
Claims payments not based on Sharia insurance policies, such as exgratia claim payments, cannot be paid from the Tabarru’ Fund but can be paid from the Company Fund.
Letter b
Sufficiently clear.
Letter c
Sufficiently clear.
Letter d
Return of Tabarru’ Funds is given to policyholders or participants who pay contributions.
Letter e
Examples of Tabarru’ Fund asset management costs are account administration fees, stamp duty fees, and taxes on investment returns.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
Sufficiently clear.

Article 5
Sufficiently clear.

Article 6
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Letter a
Recommendations from the Company's actuary or Company experts are given based on an analysis of the fairness of Underwriting Surplus calculation and the impact of Underwriting Surplus distribution on the Tabarru’ Fund and Tanahud Fund Solvency Level. Letter b Approval from the Sharia Supervisory Board is given at least for Sharia insurance policies or Sharia reinsurance agreements and the Company's internal procedures or guidelines regarding Underwriting Surplus usage policy. Paragraph (3) Sufficiently clear. Paragraph (4) Sufficiently clear. Paragraph (5) Sufficiently clear. Paragraph (6) Sufficiently clear. Paragraph (7) Sufficiently clear. Paragraph (8) Sufficiently clear.

Article 7
Sufficiently clear.

Article 8
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Letter a
What is meant by Tabarru’ Fund and Tanahud Fund Solvency Level being smaller than the internal Tabarru’ Fund and Tanahud Fund Solvency Level target in this paragraph is the solvency level before calculating Qardh and Assets Available for Qardh as an addition to Assets permitted for the Tabarru’ Fund. Letter b Sufficiently clear. Letter c Sufficiently clear. Letter d Sufficiently clear. Paragraph (3) Sufficiently clear. Paragraph (4) Sufficiently clear. Paragraph (5) Sufficiently clear. Paragraph (6) Sufficiently clear. Paragraph (7) Sufficiently clear. Paragraph (8) Sufficiently clear.

Article 9
Sufficiently clear.

Article 10
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
The Company's risk profile that may arise includes, among others, from planned changes in strategy and/or Company business development and considering the results of scenario simulation changes (stress test). In addition, the Company can consider geographical location, Company products, business plans, and claim experience in measuring the risk profile. Paragraph (5) Sufficiently clear. Paragraph (6) Sufficiently clear.

Article 11
Sufficiently clear.

Article 12
Paragraph (1)
Credit risk, liquidity risk, and market risk are part of asset and Liability risks contained in the assessment of the risk level of non-bank financial services institutions. Paragraph (2) Sufficiently clear. Paragraph (3) Sufficiently clear. Paragraph (4) Sufficiently clear.

Article 13
Paragraph (1)
What is meant by "prudence principle" is investment placement that considers security, optimal returns, liquidity needs, and the Company's Liability profile.
Paragraph (2)
Letter a
Sufficiently clear.
Letter b
What is meant by deposit certificate is a deposit in the form of a deposit based on Sharia Principles where the certificate of deposit can be transferred.
Letter c
Sufficiently clear.
Letter d
Sufficiently clear.
Letter e
Sufficiently clear.
Letter f
Sufficiently clear.
Letter g
Sufficiently clear.
Letter h
Sufficiently clear.
Letter i
Sufficiently clear.
Letter j
Sufficiently clear.
Letter k
Sufficiently clear.
Letter l
Sufficiently clear.
Letter m
Sufficiently clear.
Letter n
Sufficiently clear.
Letter o
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
Sufficiently clear.
Paragraph (5)
Sufficiently clear.

Article 14
Paragraph (1)
Sufficiently clear.
Paragraph (2)
What is meant by investment grade is the eligibility given to types of investments issued by companies that receive ratings from rating agencies recognized by the OJK or equivalent to BBB. Paragraph (3) Sufficiently clear. Paragraph (4) Sufficiently clear. Paragraph (5) Sufficiently clear. Paragraph (6) Sufficiently clear. Paragraph (7) Sufficiently clear. Paragraph (8) Sufficiently clear. Paragraph (9) Sufficiently clear. Paragraph (10) Sufficiently clear. Paragraph (11) Sufficiently clear.

Article 15
Sufficiently clear.

Article 16
Sufficiently clear.

Article 17
Sufficiently clear.

Article 18
Sufficiently clear.

Article 19
Sufficiently clear.

Article 20
Sufficiently clear.

Article 21
Sufficiently clear.

Article 22
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Letter a
Sufficiently clear.
Letter b
What is meant by "family relationship due to marriage or descent up to the second degree, both horizontally and vertically" refers to the following parties:

biological/step/adopted parents;
biological/step/adopted siblings;
biological/step/adopted children;
biological/step/adopted grandparents;
biological/step/adopted grandchildren;
biological/step/adopted siblings of parents;
husband or wife;
in-laws;
husband or wife of biological/step/adopted children;
grandparents of husband or wife;
husband or wife of biological/step/adopted grandchildren;
Brother/step/adopted sibling of the spouse or wife, along with the spouse or wife of the said sibling.

Letter c
Clearly stated.

Letter d
Clearly stated.

Letter e
Clearly stated.

Paragraph (3)
Clearly stated.

Article 23
Clearly stated.

Article 24

Paragraph (1)
Clearly stated.

Paragraph (2)

Letter a
Clearly stated.

Letter b
Clearly stated.

Letter c
Clearly stated.

Letter d
Clearly stated.

Letter e
Clearly stated.

Letter f
Clearly stated.

Letter g
Clearly stated.

Letter h
The term "acquisition costs" refers to commission costs, policy fees, and overriding commission costs.

Paragraph (3)
Clearly stated.

Article 25
Clearly stated.

Article 26
Clearly stated.

Article 27

Paragraph (1)
The technical provisions referred to in this paragraph include those for the protection element in PAYDI.

Letter a.
Clearly stated.

Letter b.
Clearly stated.

Letter c.
Clearly stated.

Letter d.
The term "disaster risk" refers to the risk of loss arising from natural phenomena or pure accident risks that cause significant losses to the Company.

Paragraph (2)
Clearly stated.

Paragraph (3)
The term "Tabarru' contribution" refers to contributions from policyholders or participants allocated to the Tabarru' Fund.

Paragraph (4)
Clearly stated.

Paragraph (5)
Clearly stated.

Paragraph (6)

Letter a
Clearly stated.

Letter b
Provisions for PAYDI, for example, provisions for unit-link and universal life products.

Paragraph (7)
Clearly stated.

Article 28
Clearly stated.

Article 29
To be regulated in an OJK Circular Letter, including the formation methods for each type of technical provision and the assumptions used.

Article 30
The term "Qardh subordinasi" refers to loans from the Company's shareholders to the Company's Fund with an obligation to repay the loan amount equal to the principal without remuneration to the lender, and in the event of liquidation, the claim rights for such loans apply last among all existing loans.

Article 31
Clearly stated.

Article 32

Paragraph (1)
The term "Other Liabilities to Policyholders or Participants" includes, among others, entrusted contributions.

Paragraph (2)
Clearly stated.

Article 33
Clearly stated.

Article 34
Clearly stated.

Article 35
Clearly stated.

Article 36
Clearly stated.

Article 37
Clearly stated.

Article 38
Clearly stated.

Article 39
Clearly stated.

Article 40
Clearly stated.

Article 41
Clearly stated.

Article 42
Clearly stated.

Article 43
Clearly stated.

Article 44
Clearly stated.

Article 45

Paragraph (1)
Clearly stated.

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Clearly stated.

Paragraph (5)
Clearly stated.

Paragraph (6)
Clearly stated.

Paragraph (7)

Letter a
Clearly stated.

Letter b
Clearly stated.

Letter c
Clearly stated.

Letter d
Clearly stated.

Letter e
Clearly stated.

Letter f
Clearly stated.

Letter g
Clearly stated.

Letter h
Clearly stated.

Letter i
Clearly stated.

Letter j
Clearly stated.

Letter k
Clearly stated.

Letter l
The term "additional reports" includes, among others, reports regarding the Guarantee Fund, health ratios other than DTMBR and MMBR, education and training ratios, and other reports.

Paragraph (8)
Clearly stated.

Article 46
Clearly stated.

Article 47
Clearly stated.

Article 48
Clearly stated.

Article 49
Clearly stated.

Article 50
Clearly stated.

Article 51
Clearly stated.

Article 52
Clearly stated.

Article 53
Clearly stated.

Article 54
Clearly stated.

Article 55
Clearly stated.

Article 56
Clearly stated.

Article 57
Clearly stated.

Article 58
Clearly stated.

Article 59
Clearly stated.

Article 60
Clearly stated.

Article 61
Clearly stated.

Article 62
Clearly stated.

Article 63
Clearly stated.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5995 ---

POJK on Financial Health of Sharia Insurance and Sharia Reinsurance Companies

Lineage: Superseded

Timeline