POJK on Good Corporate Governance for Insurance Companies

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 2/POJK.05/2014
CONCERNING
GOOD CORPORATE GOVERNANCE FOR INSURANCE COMPANIES BY THE GRACE OF GOD ALMIGHTY THE COMMISSIONER BOARD OF FINANCIAL SERVICES AUTHORITY Considering:
a. that one of the efforts to strengthen the national insurance industry is by improving the quality of implementation of good corporate governance for insurance companies; b. that in order to optimize the application of good corporate governance for insurance companies, it is necessary to respond proportionally to dynamics occurring in the industry;
c. that based on considerations as referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Good Corporate Governance for Insurance Companies;
Recalling:

Law Number 2 of 1992 concerning Insurance Business (State Gazette of the Republic of Indonesia Year 1992 Number 13, Supplement to State Gazette of the Republic of Indonesia Number 3467);
Law Number 21 of 2011 concerning Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to State Gazette of the Republic of Indonesia Number 5253);
Government Regulation Number 73 of 1992 concerning the Conduct of Insurance Business (State Gazette of the Republic of Indonesia Year 1992 Number 120, Supplement to State Gazette of the Republic of Indonesia Number 3506)
as amended several times lastly with Government Regulation Number 81 of 2008 (State Gazette of the Republic of Indonesia Year 2008 Number 212, Supplement to State Gazette of the Republic of Indonesia Number 4954); DECIDING:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING GOOD CORPORATE GOVERNANCE FOR INSURANCE COMPANIES.
CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined as:
Insurance Company means loss insurance company, life insurance company, reinsurance company, insurance broker company, reinsurance broker company, insurance agent company, insurance loss assessor company, and actuarial consultant company.
Insurance Company means loss insurance company or life insurance company.
Loss Insurance Company means loss insurance company as referred to in legislation in the field of insurance business.
Life Insurance Company means life insurance company as referred to in legislation in the field of insurance business.
Reinsurance Company means a company providing services in reinsurance against risks faced by Insurance Companies as referred to in legislation in the field of insurance business.
Insurance Support Service Company means insurance broker company, reinsurance broker company, insurance loss assessor company, actuarial consultant company, and insurance agent company.
Insurance Agent means insurance agent as referred to in laws concerning insurance business.
Good Corporate Governance for Insurance Companies, hereinafter referred to as Good Corporate Governance, is the structure and process used and applied by the Organ of the Insurance Company to improve the achievement of business results objectives and optimize company value for all stakeholders, particularly policyholders, insureds, participants, and/or parties entitled to receive benefits, in an accountable manner and based on legislation and ethical values.
Organ of the Insurance Company means the General Meeting of Shareholders, Board of Directors, and Board of Commissioners for Insurance Companies formed as limited liability companies or equivalent to the General Meeting of Shareholders, Board of Directors, and Board of Commissioners for Insurance Companies formed as cooperatives or joint ventures.
Stakeholder means a party having an interest in the Insurance Company, directly or indirectly, including policyholders, insureds, participants, parties entitled to receive benefits, shareholders, employees, creditors, service providers, and/or the government.
General Meeting of Shareholders, hereinafter abbreviated as GMS, means the general meeting of shareholders as referred to in laws concerning limited liability companies for Insurance Companies formed as limited liability companies or equivalent to the GMS for Insurance Companies formed as cooperatives or joint ventures.
Board of Directors means the Organ of the Insurance Company performing management functions as referred to in laws concerning limited liability companies for Insurance Companies formed as limited liability companies or equivalent to the Board of Directors for Insurance Companies formed as cooperatives or joint ventures.
Board of Commissioners means the Organ of the Insurance Company performing supervisory and advisory functions as referred to in laws concerning limited liability companies for Insurance Companies formed as limited liability companies or equivalent to the Board of Commissioners for Insurance Companies formed as cooperatives or joint ventures.
Independent Commissioner means a member of the Board of Commissioners who is not affiliated with shareholders, members of the Board of Directors, other members of the Board of Commissioners, and/or members of the Sharia Supervisory Board, namely does not have financial, managerial, shareholding, and/or family relationships with shareholders, members of the Board of Directors, other members of the Board of Commissioners, and/or members of the Sharia Supervisory Board, or other relationships that can influence their ability to act independently.
Sharia Supervisory Board is a part of the Organ of the Insurance Company conducting business activities based on Sharia principles that performs supervision over the conduct of insurance and reinsurance business to ensure compliance with Sharia principles.
Affiliation is a relationship between a person or legal entity with one or more persons or other legal entities, such that one of them can influence the management or policies of the other person or legal entity, or vice versa, by utilizing shared share ownership or shared company management, as referred to in Law Number 2 of 1992 concerning Insurance Business.
Conflict of Interest is a state where there is a conflict between the economic interests of the Insurance Company and the personal economic interests of shareholders, members of the Board of Directors, members of the Board of Commissioners, and/or members of the Sharia Supervisory Board, as well as employees of the Insurance Company.
Financial Services Authority, hereinafter abbreviated as OJK, is an independent agency free from interference by other parties, which has the function, task, and authority for regulation, supervision, examination, and investigation as referred to in Law Number 21 of 2011 concerning Financial Services Authority.
Head of Executive for Insurance Industry, Pension Funds, Financing and Other Financial Services, hereinafter abbreviated as Head of Executive, is a member of the Commissioner Board of OJK tasked with leading the supervision of non-bank financial service institution activities.
Article 2
Principles of Good Corporate Governance include:
a. transparency, namely openness in decision-making processes and openness in disclosure and provision of relevant information regarding the company, which is easily accessible by Stakeholders in accordance with legislation in the field of insurance business as well as standards, principles, and practices of conducting healthy insurance business; b. accountability, namely clarity of functions and execution of responsibilities of the Organ of the Insurance Company so that company performance can run transparently, fairly, effectively, and efficiently;
c. responsibility, namely conformity of the management of the Insurance Company with legislation in the field of insurance business and ethical values as well as standards, principles, and practices of conducting healthy insurance business;
d. independence, namely the state of the Insurance Company being managed independently and professionally and free from Conflicts of Interest and influence or pressure from any party that is not in accordance with legislation in the field of insurance business and ethical values as well as standards, principles, and practices of conducting healthy insurance business; and e. fairness, namely equality, balance, and justice in fulfilling the rights of Stakeholders arising from agreements, legislation, and ethical values as well as standards, principles, and practices of conducting healthy insurance business.
Article 3
The application of Good Corporate Governance aims to:
a. optimize the value of the Insurance Company for Stakeholders, particularly policyholders, insureds, participants, and/or parties entitled to receive benefits; b. improve the management of the Insurance Company professionally, effectively, and efficiently;
c. increase compliance by the Organ of the Insurance Company and the Sharia Supervisory Board and those below them so that in making decisions and carrying out actions they are grounded in high ethics, compliance with legislation, and awareness of the social responsibility of the Insurance Company towards Stakeholders and environmental sustainability;
d. realize a healthier, reliable, trustworthy, and competitive Insurance Company; and e. increase the contribution of the Insurance Company to the national economy.
CHAPTER II
APPLICATION OF GOOD CORPORATE GOVERNANCE
Article 4
(1) Insurance Companies must implement the principles of Good Corporate Governance as referred to in Article 2 in all their business activities at all levels or stages of organization. (2) The implementation of the principles of Good Corporate Governance as referred to in paragraph (1) must at least be embodied in:
a. the execution of duties and responsibilities of the Board of Directors and Board of Commissioners; b. the execution of duties of work units and committees performing internal control functions of the Insurance Company;
c. the application of compliance functions, internal auditors, and external auditors;
d. the application of risk management, including internal control systems; e. the application of remuneration policies; f. the strategic plan of the Insurance Company; g. transparency of the financial and non-financial conditions of the Insurance Company.
CHAPTER III
GMS
Article 5
(1) The GMS of the Insurance Company must be held in accordance with legislation provisions and the transparent and accountable articles of association of the Insurance Company. (2) In making decisions, the GMS must strive to maintain the balance of interests of all parties, particularly the interests of policyholders, insureds, participants, and/or parties entitled to receive benefits and the interests of minority shareholders.
CHAPTER IV
BOARD OF DIRECTORS
Article 6
(1) Insurance Companies and Reinsurance Companies must have at least 3 (three) members of the Board of Directors.
(2) At least half of the number of Board of Directors members of Insurance Companies and Reinsurance Companies must have knowledge and experience in risk management appropriate to the company's business field. (3) Insurance Broker Companies and Reinsurance Broker Companies having brokerage service income of at least Rp10,000,000,000.00 (ten billion rupiah) must have at least 2 (two) members of the Board of Directors. (4) All members of the Board of Directors of the Insurance Company must have knowledge relevant to the company's business field corresponding to their position.
Article 7
(1) Insurance Companies and Reinsurance Companies must have a Board of Directors member overseeing the compliance function.
(2) The Board of Directors member overseeing the compliance function as referred to in paragraph (1) cannot hold concurrent positions with Board of Directors members overseeing insurance technical functions, marketing functions, and financial functions, except for the Chief Director.
Article 8
Members of the Board of Directors of the Insurance Company must meet the following criteria:
a. declared to have passed the competence and propriety assessment; b. domiciled in Indonesia;
c. able to act with good faith, honesty, and professionalism;
d. able to act in the interest of the Insurance Company and policyholders, insureds, participants, and/or parties entitled to receive benefits; e. prioritizing the interests of the Insurance Company and policyholders, insureds, participants, and/or parties entitled to receive benefits over personal interests; f. able to make decisions based on independent and objective assessments for the interest of the Insurance Company and policyholders, insureds, participants, and/or parties entitled to receive benefits; and g. able to avoid abuse of authority to obtain undue personal gains or cause losses to the Insurance Company.
Article 9
The Board of Directors of the Insurance Company must guarantee effective, accurate, and rapid decision-making and must be able to act independently, having no interests that could interfere with their ability to perform tasks independently and critically.
Article 10
The Board of Directors of the Insurance Company must:
a. comply with legislation, the articles of association, and other internal regulations of the Insurance Company in performing their duties; b. manage the Insurance Company according to their authority and responsibility;
c. account for the execution of their duties to the GMS;
d. ensure that the Insurance Company pays attention to the interests of all parties, particularly the interests of policyholders, insureds, participants, and/or parties entitled to receive benefits; e. ensure that information regarding the Insurance Company is provided to the Board of Commissioners and the Sharia Supervisory Board accurately and completely in a timely manner; and f. assist in meeting the needs of the Sharia Supervisory Board in using investment committee members, company employees, and professional expert personnel whose organizational structure is under the Board of Directors.
Article 11
(1) The Board of Directors of Insurance Companies and Reinsurance Companies must form an investment committee.
(2) Members of the investment committee as referred to in paragraph (1) are as follows:
a. for Life Insurance Companies, consisting of at least:
a Board of Directors member overseeing the investment management function; and
the company actuary.
b. for Loss Insurance Companies and Reinsurance Companies, consisting of at least:
a Board of Directors member overseeing the investment management function; and
the company actuary or company expert personnel.
(3) The investment committee as referred to in paragraph (1) is tasked with assisting the Board of Directors in formulating investment policies and overseeing the implementation of established investment policies.
Article 12
(1) Insurance Companies and Reinsurance Companies must have a work unit or employee performing the compliance function.
(2) The work unit or employee as referred to in paragraph (1) is tasked with assisting the Board of Directors in ensuring compliance with legislation in the field of insurance business and other legislation. (3) The work unit or employee as referred to in paragraph (1) is responsible to the Board of Directors member overseeing the compliance function.
Article 13
(1) Insurance Companies must have a work unit or committee for insurance product development.
(2) The work unit or committee as referred to in paragraph (1) performs the following tasks:
a. drafting strategic plans for the development and marketing of insurance products as part of the company's business activity strategic plan; b. evaluating the suitability of new insurance products to be marketed with the strategic plan for the development and marketing of insurance products; and
c. evaluating the performance of insurance products and proposing changes or cessation of their marketing.
(3) The work unit or committee as referred to in paragraph (1) is responsible to the Board of Directors member overseeing the insurance product development function.
Article 14
(1) Members of the Board of Directors of the Insurance Company are prohibited from holding concurrent positions in other companies except as members of the Board of Commissioners in 1 (one) other Insurance Company having a different business field. (2) Concurrent positions as referred to in paragraph (1) do not include cases where the Board of Directors member responsible for supervision over participation in subsidiary companies performs functional duties as a member of the Board of Commissioners in a subsidiary company controlled by the Insurance Company, provided that such concurrent position does not result in the individual neglecting the execution of duties and authority as a member of the Board of Directors of the Insurance Company. (3) The Chief Director of the Insurance Company is prohibited from holding concurrent positions as a member of the Board of Commissioners in a subsidiary company controlled by the respective Insurance Company.
Article 15
(1) Insurance Companies are prohibited from appointing Board of Directors members originating from active employees or officials of OJK.
(2) Insurance Companies are prohibited from appointing Board of Directors members originating from former employees or officials of OJK if the individual ceased working from OJK less than 1 (one) year ago.
Article 16
Insurance Companies are prohibited from appointing Board of Directors members who previously served as members of the Board of Directors, Board of Commissioners, or Sharia Supervisory Board and were declared guilty or negligent causing:
a. an Insurance Company to be subject to business activity restriction sanctions within 3 (three) years prior to their appointment; b. a company in the financial services sector to have its business license revoked due to violations within 3 (three) years prior to their appointment; and/or
c. a company in the financial services sector or non-financial services sector to be declared bankrupt based on a final court decision within 5 (five) years prior to their appointment.
Article 17
Insurance Companies are prohibited from appointing Board of Directors members who have not been declared to have passed the competence and propriety assessment by OJK.
Article 18
(1) The Board of Directors of the Insurance Company must hold Board of Directors meetings periodically at least once in 1 (one) month.
(2) Results of the Board of Directors meetings as referred to in paragraph (1) must be recorded in the minutes of the Board of Directors meeting and documented properly.
(3) Differences of opinion (dissenting opinions) occurring in Board of Directors meeting decisions must be clearly stated in the minutes of the Board of Directors meeting accompanied by reasons for such differences of opinion. (4) Members of the Board of Directors of the Insurance Company present or absent in the Board of Directors meeting are entitled to receive copies of the minutes of the Board of Directors meeting. (5) The number of Board of Directors meetings held and the attendance of each member of the Board of Directors of the Insurance Company must be included in the report on the application of Good Corporate Governance.
Article 19
Members of the Board of Directors of the Insurance Company must disclose regarding:
a. their share ownership reaching 5% (five percent) or more in the Insurance Company where the respective Board of Directors member serves and/or in other companies located domestically and internationally; and b. financial relationships and family relationships with other Board of Directors members, Board of Commissioners members, Sharia Supervisory Board members, and/or shareholders of the Insurance Company where the respective Board of Directors member serves; to the Insurance Company where the respective Board of Directors member serves and included in the report on the application of Good Corporate Governance.
Article 20
Members of the Board of Directors of the Insurance Company are prohibited from:
a. conducting transactions having Conflicts of Interest with the activities of the Insurance Company where the respective Board of Directors member serves; b. utilizing their position in the Insurance Company where the respective Board of Directors member serves for personal, family, and/or third-party interests that can harm or reduce the profits of the Insurance Company where the respective Board of Directors member serves;
c. taking and/or receiving personal gains from the Insurance Company where the respective Board of Directors member serves other than remuneration and facilities determined based on GMS decisions; and
d. fulfilling requests from related shareholders regarding operational activities of the Insurance Company where the respective Board of Directors member serves other than those established in the GMS.
Article 21
The Board of Directors must ensure that assets, business locations, and facilities of the Insurance Company comply with legislation concerning environmental conservation, health, and occupational safety.
CHAPTER V
BOARD OF COMMISSIONERS
Article 22
(1) Insurance Companies and Reinsurance Companies must have at least 3 (three) members of the Board of Commissioners.
(2) At least half of the number of Board of Commissioners members of Insurance Companies as referred to in paragraph (1) are Independent Commissioners.
(3) Insurance Broker Companies and Reinsurance Broker Companies having brokerage service income of at least Rp10,000,000,000.00 (ten billion rupiah) must have at least 2 (two) members of the Board of Commissioners. (4) The appointment of Independent Commissioners of Insurance Companies is conducted by the GMS and must be clearly stated in the notarial deed containing the GMS decision regarding such appointment.
Article 23
(1) At least half of the number of Board of Commissioners members of the Insurance Company must be domiciled in Indonesia.
(2) Members of the Board of Commissioners of the Insurance Company must meet the following criteria:
a. declared to have passed the competence and propriety assessment; b. having knowledge relevant to the company's business field corresponding to their position;
c. able to act with good faith, honesty, and professionalism;
d. able to act in the interest of the Insurance Company and policyholders, insureds, participants, and/or parties entitled to receive benefits; e. prioritizing the interests of the Insurance Company and policyholders, insureds, participants, and/or parties entitled to receive benefits over personal interests; f. able to make decisions based on independent and objective assessments for the interest of the insurance company and policyholders; and g. able to avoid abuse of authority to obtain undue personal gains or cause losses to the Insurance Company.
Article ...

Article 24
The Board of Commissioners of an Insurance Company is required to ensure effective, precise, and rapid decision-making and to act independently, without interests that could impair its ability to perform its duties autonomously and critically.

Article 25
The Board of Commissioners of an Insurance Company is required to:
a. perform supervisory duties and provide advice to the Board of Directors; b. supervise the Board of Directors in maintaining the balance of interests of all parties, particularly the interests of policyholders, insured parties, participants, and/or parties entitled to benefits;
c. prepare a report on the activities of the Board of Commissioners, which is part of the report on the implementation of Good Corporate Governance;
d. monitor the effectiveness of the implementation of Good Corporate Governance; and e. assist in meeting the needs of the Shariah Supervisory Board in utilizing members of committees whose organizational structure is below the Board of Commissioners.

Article 26
Members of the Board of Commissioners of an Insurance Company have the right to obtain complete and timely information from the Board of Directors regarding the Insurance Company.

Article 27
(1) In order to support the effectiveness of the implementation of duties and responsibilities, the Board of Commissioners of Insurance Companies and Reinsurance Companies is required to form:
a. an audit committee; and b. a risk monitoring committee.
(2) One of the members of the committee as referred to in paragraph (1) is an Independent Commissioner who simultaneously serves as the chairman of the committee.
(3) The Audit Committee as referred to in paragraph (1) letter a is tasked with assisting the Board of Commissioners in monitoring and ensuring the effectiveness of the internal control system and the implementation of duties of internal and external auditors by monitoring and evaluating the planning and execution of audits in order to assess the adequacy of internal controls, including the financial reporting process. (4) The Risk Monitoring Committee as referred to in paragraph (1) letter b is tasked with assisting the Board of Commissioners in monitoring the implementation of risk management formulated by the Board of Directors and assessing the risk tolerance that can be taken by the Insurance Company or Reinsurance Company. (5) In addition to the committees as referred to in paragraph (1), the Board of Commissioners of Insurance Companies and Reinsurance Companies may form other committees to support the implementation of the duties of the Board of Commissioners. (6) Further provisions regarding the formation, composition of members, and term of office of committees are regulated in an OJK Circular.

Article 28
(1) Members of the Board of Commissioners of an Insurance Company may only hold concurrent positions as members of the Board of Commissioners, members of the Board of Directors, or members of the Shariah Supervisory Board in 1 (one) other company. (2) Members of the Board of Commissioners of an Insurance Company are prohibited from holding concurrent positions as members of the Board of Commissioners, members of the Board of Directors, or members of the Shariah Supervisory Board in an Insurance Company that has the same business field. (3) Concurrent positions as referred to in paragraph (1) do not include:
a. non-independent Board of Commissioners members performing functional tasks from the shareholders of the Insurance Company that is a legal entity within its business group; and/or b. Board of Commissioners members holding positions in organizations or non-profit institutions; provided that the individual does not neglect the implementation of duties and responsibilities as a member of the Board of Commissioners of the Insurance Company.

Article 29
(1) Insurance Companies are prohibited from appointing members of the Board of Commissioners who are active employees or officials of OJK.
(2) Insurance Companies are prohibited from appointing members of the Board of Commissioners who are former employees or officials of OJK if the individual ceased working from OJK for less than 6 (six) months.

Article 30
Insurance Companies are prohibited from appointing members of the Board of Commissioners who have previously been members of the Board of Directors, members of the Board of Commissioners, or members of the Shariah Supervisory Board who were declared guilty or negligent causing:
a. an Insurance Company to be subject to business activity restriction sanctions within 3 (three) years prior to their appointment; b. a company in the financial services sector to have its business license revoked due to violations within 3 (three) years prior to their appointment; and/or
c. a company in the financial services sector or non-financial services sector declared bankrupt based on a final and binding court decision within a period of 5 (five) years prior to their appointment.

Article 31
Insurance Companies are prohibited from appointing members of the Board of Commissioners who have not been declared to have passed the competency and propriety assessment by OJK.

Article 32
(1) The Board of Commissioners of an Insurance Company is required to hold Board of Commissioners meetings at least 1 (one) time in 1 (one) month.
(2) Board of Commissioners meetings as referred to in paragraph (1) are conducted with the following provisions:
a. at least 4 (four) of the meetings are conducted by inviting the Board of Directors; and b. at least 1 (one) of the meetings is conducted by inviting external auditors.
(3) Members of the Board of Commissioners of an Insurance Company are required to attend Board of Commissioners meetings for at least 80% (eighty percent) of the total number of Board of Commissioners meetings in a 1 (one) year period. (4) Board of Commissioners meetings as referred to in paragraph (1) must be attended in person by each member of the Board of Commissioners at least 4 (four) times in 1 (one) year. (5) The results of Board of Commissioners meetings as referred to in paragraph (1) must be recorded in the minutes of the Board of Commissioners meeting and documented properly. (6) Differences of opinion (dissenting opinions) occurring in the decisions of Board of Commissioners meetings must be clearly stated in the minutes of the Board of Commissioners meeting, accompanied by the reasons for the difference of opinion. (7) Members of the Board of Commissioners of an Insurance Company, whether present or absent from the Board of Commissioners meeting, have the right to receive a copy of the minutes of the Board of Commissioners meeting. (8) The number of Board of Commissioners meetings held and the attendance of each member of the Board of Commissioners must be included in the report on the implementation of Good Corporate Governance.

Article 33
Members of the Board of Commissioners of an Insurance Company are required to disclose regarding:
a. their share ownership reaching 5% (five percent) or more in the Insurance Company where the member of the Board of Commissioners serves and/or in other companies located domestically and abroad; and b. financial relationships and family relationships with other members of the Board of Commissioners, members of the Board of Directors, members of the Shariah Supervisory Board, and/or shareholders of the Insurance Company where the member of the Board of Commissioners serves; to the Insurance Company where the member of the Board of Commissioners serves and included in the report on the implementation of Good Corporate Governance.

Article 34
Members of the Board of Commissioners of an Insurance Company are prohibited from:
a. conducting transactions that have a Conflict of Interest with the activities of the Insurance Company where the member of the Board of Commissioners serves; b. utilizing their position in the Insurance Company where the member of the Board of Commissioners serves for personal, family, and/or third-party interests that can harm or reduce the profits of the Insurance Company where the member of the Board of Commissioners serves;
c. taking and/or receiving personal benefits from the Insurance Company where the member of the Board of Commissioners serves, other than remuneration and facilities established based on a GMS Resolution;
and d. interfering in the operational activities of the Insurance Company that are the responsibility of the Board of Directors.

Article 35
Independent Commissioners have the main task of performing supervisory functions to voice the interests of policyholders, insured parties, participants, and/or parties entitled to benefits.

Article 36
Insurance Companies are prohibited from dismissing Independent Commissioners due to actions taken by Independent Commissioners in performing duties as referred to in Article 35.

Article 37
Independent Commissioners of Insurance Companies as referred to in Article 22 paragraph (2) must meet the following requirements:
a. do not have Affiliation relationships with members of the Board of Directors, members of the Board of Commissioners, members of the Shariah Supervisory Board, or shareholders of the Insurance Company, in the same Insurance Company; b. have never been members of the Board of Directors, members of the Board of Commissioners, members of the Shariah Supervisory Board, or held a position 1 (one) level below the Board of Directors in the same Insurance Company or another company that has an affiliation relationship with the Insurance Company within the last 2 (two) years;
c. understand insurance legislation and other relevant legislation;
d. have good knowledge of the financial condition of the Insurance Company where the Independent Commissioner serves; e. have good knowledge of the interests of policyholders, insured parties, participants, and/or parties entitled to benefits; and f. reside in Indonesia.

Article 38
(1) In the event that an Independent Commissioner assesses that there is a policy or action by members of the Board of Directors that harms or has the potential to harm the interests of policyholders, insured parties, participants, and/or parties entitled to benefits, the Independent Commissioner is required to propose the convening of a Board of Commissioners meeting. (2) The Board of Commissioners meeting as referred to in paragraph (1) is held to discuss the results of the Independent Commissioner's assessment of the policy or action by members of the Board of Directors that harms or has the potential to harm the interests of policyholders, insured parties, participants, and/or parties entitled to benefits. (3) In the event that other members of the Board of Commissioners are unwilling to accept the proposal for convening a Board of Commissioners meeting as referred to in paragraph (1), the Independent Commissioner is required to report fully and comprehensively to the Executive Head and copy the Board of Directors within a maximum of 7 (seven) working days since other members of the Board of Commissioners were unwilling to accept the proposal for convening the meeting. (4) In the event that the decision results of the Board of Commissioners meeting as referred to in paragraph (1) reject or do not agree with the results of the Independent Commissioner's assessment of the policy or action by members of the Board of Directors that harms or has the potential to harm the interests of policyholders, insured parties, participants, and/or parties entitled to benefits, the Independent Commissioner is required to report fully and comprehensively to the Executive Head and copy the Board of Directors within a maximum of 7 (seven) working days since the decision results of the Board of Commissioners meeting.

Article 39
(1) Independent Commissioners are required to make an annual report regarding the implementation of their duties related to the protection of the interests of policyholders, insured parties, participants, and/or parties entitled to benefits, both regarding services and claim settlement, including reports regarding disputes that are in the process of settlement at mediation bodies, arbitration bodies, or judicial bodies. (2) The annual report as referred to in paragraph (1) becomes part of the Board of Commissioners' report and is included in the report on the implementation of Good Corporate Governance.

CHAPTER VI
SHARIAH SUPERVISORY BOARD

Article 40
(1) Insurance Companies or Reinsurance Companies that conduct all or part of their business based on Shariah principles are required to have a Shariah Supervisory Board.
(2) The Shariah Supervisory Board as referred to in paragraph (1) consists of 1 (one) Shariah expert or more who are appointed by the GMS based on a recommendation from the Indonesian Ulema Council. (3) The Shariah Supervisory Board as referred to in paragraph (1) must meet the following criteria:
a. declared to have passed the competency and propriety assessment; b. able to act with good faith, honesty, and professionalism;
c. able to act in the interests of the Insurance Company or Reinsurance Company and policyholders, insured parties, participants, and/or parties entitled to benefits;
d. prioritize the interests of the Insurance Company or Reinsurance Company and policyholders, insured parties, participants, and/or parties entitled to benefits over personal interests; e. able to make decisions based on independent and objective assessments for the interests of the Insurance Company or Reinsurance Company and policyholders, insured parties, participants, and/or parties entitled to benefits; and f. able to prevent the misuse of authority to obtain undue personal benefits or cause losses to the Insurance Company or Reinsurance Company. (4) The appointment of the Shariah Supervisory Board as referred to in paragraph (2) must be clearly stated in a notarial deed.

Article 41
In the event that members of the Shariah Supervisory Board of an Insurance Company or Reinsurance Company are more than 1 (one) person, at least half of the number of members of the Shariah Supervisory Board must reside in Indonesia.

Article 42
The Shariah Supervisory Board of Insurance Companies and Reinsurance Companies is required to ensure effective, precise, and rapid decision-making and to act independently, without interests that could impair its ability to perform its duties autonomously and critically.

Article 43
(1) The Shariah Supervisory Board is required to perform supervisory duties and provide advice and suggestions to the Board of Directors so that the activities of the Insurance Company or Reinsurance Company are in accordance with Shariah principles. (2) The implementation of supervisory duties and the provision of advice and suggestions by the Shariah Supervisory Board as referred to in paragraph (1) is conducted regarding:
a. the activities of the Insurance Company or Reinsurance Company in managing assets and liabilities, including tabarru' funds, company funds, and participant investment funds; b. Shariah insurance products marketed by the Insurance Company or Reinsurance Company; and
c. marketing practices of Shariah insurance products conducted by the Insurance Company or Reinsurance Company.

Article 44
(1) In the implementation of duties as referred to in Article 43, the Shariah Supervisory Board may use assistance from:
a. members of committees whose organizational structure is below the Board of Commissioners; and/or b. members of committees, employees, and professional company experts whose organizational structure is below the Board of Directors. (2) The use of assistance from members of committees, employees, and professional experts of the Insurance Company or Reinsurance Company as referred to in paragraph (1) must first be notified in writing by the Shariah Supervisory Board to the Board of Directors and/or the Board of Commissioners.

Article 45
Members of the Shariah Supervisory Board have the right to obtain complete and timely information from the Board of Directors regarding the Insurance Company or Reinsurance Company.

Article 46
(1) Members of the Shariah Supervisory Board of an Insurance Company or Reinsurance Company are prohibited from holding concurrent positions as members of the Board of Directors or members of the Board of Commissioners in the same Insurance Company or Reinsurance Company. (2) Members of the Shariah Supervisory Board of an Insurance Company or Reinsurance Company may only hold concurrent positions as members of the Board of Directors, members of the Board of Commissioners, or members of the Shariah Supervisory Board in 3 (three) other financial services institutions.

Article 47
Insurance Companies or Reinsurance Companies are prohibited from appointing members of the Shariah Supervisory Board who have previously been members of the Board of Directors, members of the Board of Commissioners, or members of the Shariah Supervisory Board who were declared guilty or negligent causing:
a. an Insurance Company to be subject to business activity restriction sanctions within 3 (three) years prior to their appointment; b. a company in the financial services sector to have its business license revoked due to violations within 3 (three) years prior to their appointment; and/or
c. a company in the financial services sector or non-financial services sector declared bankrupt based on a final and binding court decision within a period of 5 (five) years prior to their appointment.

Article 48
(1) In the event that members of the Shariah Supervisory Board are more than 1 (one) person, the Shariah Supervisory Board is required to hold Shariah Supervisory Board meetings periodically at least 6 (six) times in 1 (one) year. (2) The results of Shariah Supervisory Board meetings as referred to in paragraph (1) must be recorded in the minutes of the Shariah Supervisory Board meeting and documented properly. (3) Differences of opinion (dissenting opinions) occurring in the decisions of Shariah Supervisory Board meetings must be clearly stated in the minutes of the Shariah Supervisory Board meeting, accompanied by the reasons for the difference of opinion. (4) Members of the Shariah Supervisory Board who are present or absent from the Shariah Supervisory Board meeting have the right to receive a copy of the minutes of the Shariah Supervisory Board meeting. (5) The number of Shariah Supervisory Board meetings held and the attendance of each member of the Shariah Supervisory Board must be included in the report on the implementation of Good Corporate Governance.

Article 49
Insurance Companies or Reinsurance Companies are prohibited from appointing members of the Shariah Supervisory Board who have not been declared to have passed the competency and propriety assessment by OJK.

Article 50
Members of the Shariah Supervisory Board are prohibited from:
a. conducting transactions that have a Conflict of Interest with the activities of the Insurance Company or Reinsurance Company where the member of the Shariah Supervisory Board serves; b. utilizing their position in the Insurance Company or Reinsurance Company where the member of the Shariah Supervisory Board serves for personal, family, and/or third-party interests that can harm or reduce the profits of the Insurance Company or Reinsurance Company where the member of the Shariah Supervisory Board serves; and
c. taking and/or receiving personal benefits from the Insurance Company or Reinsurance Company where the member of the Shariah Supervisory Board serves, other than remuneration and other facilities established based on a GMS Resolution.

Article 51
(1) In the event that the Shariah Supervisory Board assesses that there is a policy or action by members of the Board of Directors related to matters as referred to in Article 43 paragraph (2) that is not in accordance with Shariah principles, the Shariah Supervisory Board is required to request explanations from members of the Board of Directors regarding the policy or action by members of the Board of Directors that is not in accordance with Shariah principles. (2) In the event that the Board of Directors rejects the results of the assessment by the Shariah Supervisory Board as referred to in paragraph (1), the Shariah Supervisory Board is required to report fully and comprehensively to the Executive Head and copy the Board of Directors within a maximum of 7 (seven) working days since the explanation from members of the Board of Directors was received by the Shariah Supervisory Board. (3) In the event that the Board of Directors accepts the results of the assessment by the Shariah Supervisory Board as referred to in paragraph (1), the Shariah Supervisory Board requests the Board of Directors to make improvements to the policy or action by members of the Board of Directors so that it is in accordance with Shariah principles. (4) In the event that members of the Board of Directors do not make improvements to the policy or action as referred to in paragraph (3), the Shariah Supervisory Board is required to immediately report fully and comprehensively to the Executive Head and copy the Board of Directors within a maximum of 7 (seven) working days since it was known that members of the Board of Directors did not make the intended improvement efforts.

CHAPTER VII
SHAREHOLDERS

Article 52
Shareholders of an Insurance Company through the GMS strive to ensure that the Insurance Company is managed based on sound insurance business practices and prioritizes the fulfillment of obligations related to the interests of policyholders, insured parties, participants, and/or parties entitled to benefits.

Article 53
(1) Shareholders of an Insurance Company are prohibited from interfering in the operational activities of the Insurance Company that are the responsibility of the Board of Directors in accordance with the provisions of the Articles of Association of the Insurance Company and legislation, except in order to exercise rights and obligations as the GMS. (2) Shareholders of an Insurance Company who serve as members of the Board of Directors, members of the Board of Commissioners, or members of the Shariah Supervisory Board in the same Insurance Company must prioritize the interests of the Insurance Company and policyholders, insured parties, participants, and/or parties entitled to benefits over their interests as shareholders.

Article 54
(1) Shareholders of an Insurance Company must meet the following criteria:
a. are not involved as parties prohibited from becoming shareholders of companies in the financial services sector and/or managers of companies in the financial services sector; b. have never violated commitments agreed upon with OJK;
c. are not currently subject to sanctions from OJK;
d. are not listed in the bad credit list; e. have funding sources that do not originate from criminal acts as referred to in legislation regarding money laundering criminal acts; f. have a commitment to the development of the operations of the Insurance Company; g. have a commitment to comply with legislation; and h. have a good reputation. (2) Provisions regarding the criteria for shareholders as referred to in paragraph (1) apply to Insurance Companies that undergo changes in shareholders and/or Insurance Companies that submit business license applications.

CHAPTER VIII
EXTERNAL AUDITORS

Article 55
(1) External auditors of Insurance Companies and Reinsurance Companies must be appointed by the GMS from candidate external auditors proposed by the Board of Commissioners based on the proposal of the audit committee. (2) External auditors of Insurance Brokerage Companies and Reinsurance Brokerage Companies must be appointed by the GMS from candidate external auditors proposed by the Board of Commissioners. (3) The nomination of external auditors as referred to in paragraph (1) and paragraph (2) must be accompanied by:
a. reasons for nomination and the amount of remuneration or service fees proposed for the external auditors; and b. a statement of willingness signed by the external auditors, to be free from the influence of the Board of Directors, Board of Commissioners, Shariah Supervisory Board, and interested parties in the Insurance Company, and willingness to provide information related to the results of their audit to the Executive Head. (4) Insurance Companies are required to provide all accounting records and supporting data necessary for external auditors so as to enable external auditors to provide their opinion on the fairness, compliance, and consistency of the financial reports of the Insurance Company with applicable audit standards.

CHAPTER IX
REMUNERATION PRACTICES AND POLICIES

Article 56
(1) Insurance Companies are required to apply remuneration policies for members of the Board of Directors, members of the Board of Commissioners, and employees that encourage prudent behavior aligned with the long-term interests of the company and fair treatment of policyholders, insured parties, participants, and/or parties entitled to benefits. (2) The policy...

(2) The remuneration policy referred to in paragraph (1) must consider at least:
a. financial performance and fulfillment of obligations as regulated in applicable legislation; b. individual work performance;
c. fairness with peer groups; and
d. considerations of the Insurance Company's long-term goals and strategy.

CHAPTER X
INVESTMENT GOVERNANCE

Article 57
(1) Insurance Companies and Reinsurance Companies must formulate written investment policies and strategies.
(2) Compliance with the investment policies and strategies referred to in paragraph (1) is evaluated periodically, at least once (1) in one (1) year.
(3) The investment policies and strategies referred to in paragraph (1) must contain at least:
a. the asset and liability profile of the Insurance Company and Reinsurance Company; b. the alignment between the duration of assets and the duration of liabilities of the Insurance Company and Reinsurance Company;
c. investment objectives;
d. target levels of expected investment returns, including the yield benchmark used; e. the basis for assessment and qualitative limitations for each type of investment asset; f. maximum allocation limits for investment for each type of investment asset; g. maximum limits on the proportion of company assets that can be placed with one party; h. maximum limits on the amount of idle assets not placed in investments;
i. prohibited investment objects for investment placement;
j. minimum liquidity level of the company's investment portfolio to support fund availability for insurance benefit payments; k. supervision and reporting systems for the implementation of investment management;
l. provisions regarding the use of investment managers, investment advisors, experts, and other service providers used in investment management;
m. provisions on the use of derivative instruments and other structured financial products for hedging purposes; n. restrictions on investment transaction authority for each management level and their accountability; and o. measures to be applied to the Board of Directors for violations of investment policies. (4) The investment policies and strategies referred to in paragraph (1) must:
a. be determined by the Board of Directors; b. be socialized to employees involved in investment management; and
c. be submitted to the Chief Executive Officer at the latest 1 (one) month after being determined by the Board of Directors.

Article 58
(1) The Board of Directors of Insurance Companies and Reinsurance Companies must formulate annual investment management plans containing at least:
a. plans for the composition of investment types; b. estimated investment returns for each type of investment; and
c. considerations underlying the planned composition of investment types.
(2) The annual investment management plan referred to in paragraph (1) must reflect the investment policies and strategies.

Article 59
In managing investments, the Board of Directors of Insurance or Reinsurance Companies must conduct:
a. analysis of investment risks, including market risk, credit risk, liquidity risk, and operational risk, and mitigation plans in the event of increased investment risk; and b. adequate and documented studies in placing, maintaining, and releasing investments.

Article 60
The Board of Directors of Insurance and Reinsurance Companies must make investment decisions professionally and optimize the value of the Insurance and Reinsurance Companies for Stakeholders, particularly policyholders, insured parties, participants, and/or parties entitled to receive benefits.

Article 61
Insurance or Reinsurance Companies must have a work unit or employees performing investment management functions meeting the following provisions:
a. performing analysis functions and executing, monitoring, and reporting on investment management; b. having and applying internal control systems and procedures to ensure that investments are conducted in accordance with investment policies and strategies and do not violate applicable legislation; and
c. possessing integrity, expertise, and experience in the field of investment.

Article 62
(1) Insurance and Reinsurance Companies placing investments in capital market investment instruments must account for securities with parties that do not have an Affiliation relationship with the Insurance or Reinsurance Company. (2) Insurance or Reinsurance Companies having investments in the form of shares traded on the stock exchange must have information access allowing them to directly monitor changes in their investment portfolio. (3) Insurance or Reinsurance Companies having at least 50% (fifty percent) of their self-managed investment portfolio in the form of shares, corporate bonds, and/or corporate sukuk must have investment experts who have passed the exam as deputy investment managers.

Article 63
(1) Insurance and Reinsurance Companies may outsource their investment management to other parties.
(2) The outsourcing of investment management to other parties as referred to in paragraph (1) must meet the following provisions:
a. the other party must have a business license as a securities company conducting business as an investment manager from the OJK; b. the other party is not currently subject to administrative sanctions in the form of business activity restrictions or suspension by the OJK, at the time the investment management outsourcing agreement is in effect;
c. the other party has a deputy investment manager with experience managing funds of at least Rp500,000,000,000.00 (five hundred billion rupiah) at the time of appointment as the company's investment manager; and
d. the deputy investment manager referred to in letter c is not currently or has never been subject to administrative sanctions by the OJK in the last 5 (five) years.
(3) The outsourcing of investment management to other parties must meet provisions regarding the type, limits, and assessment of investments as referred to in applicable legislation in the field of financial health of Insurance and Reinsurance Companies. (4) Insurance and Reinsurance Companies are prohibited from outsourcing investment management to affiliated parties if members of the Board of Directors, members of the Board of Commissioners, or members of the Sharia Supervisory Board of the respective Insurance and Reinsurance Companies hold concurrent positions as members of the Board of Directors, members of the Board of Commissioners, or members of the Sharia Supervisory Board of the said other party.

Article 64
(1) The outsourcing of investment management to other parties as referred to in Article 63 paragraph (1) must be stipulated in a written agreement in the form of a notarial deed. (2) The written agreement referred to in paragraph (1) must contain at least the following provisions:
a. the rights and obligations of each party; b. the type and limits of investment instruments;
c. the amount of costs charged;
d. the type and routine reports on the management of the aforementioned investments; e. the company's right to obtain information and other documents related to the management of the aforementioned investments; f. compensation for damages in the event the other party violates cooperation provisions or negligence by the other party causes the Insurance or Reinsurance Company to suffer losses; g. the accounting of assets managed by the other party with a custodian that does not have an Affiliation relationship with the Insurance or Reinsurance Company and the other party; h. dispute resolution and termination of the agreement; and
i. the willingness of the parties to provide information related to the management of the Insurance or Reinsurance Company's investments to the OJK.

Article 65
(1) The Board of Directors of Insurance and Reinsurance Companies must know the investment placement portfolio conducted by other parties.
(2) The outsourcing of investment management to other parties as referred to in Article 63 paragraph (1) does not reduce the responsibility of the Board of Directors in investment management.

CHAPTER XI
RISK MANAGEMENT AND INTERNAL CONTROL

Article 66
(1) Insurance Companies must apply risk management by effectively identifying, assessing, monitoring, and managing business risks.
(2) Risk management as referred to in paragraph (1) must be adjusted to the objectives, business policies, size and complexity of business, and the capabilities of the Insurance Company.

Article 67
(1) The Board of Directors of Insurance Companies must establish effective and efficient internal controls to provide reasonable assurance that business activities are conducted in accordance with business objectives and strategies, the articles of association, other internal company regulations, and applicable legislation. (2) Internal control as referred to in paragraph (1) must include at least the following:
a. the internal control environment within the Insurance Company, which is disciplined and structured; b. the assessment and management of business risks, which is a process to identify, analyze, assess, and manage business risks;
c. control activities, which are actions taken in a control process regarding company activities at every level and unit within the structure of the Insurance Company, including regarding authority, authorization, verification, reconciliation, performance assessment, division of tasks, and security of company assets;
d. information systems and communication, which is a process of presenting reports regarding operational, financial, and compliance activities with applicable legislation in the insurance business; e. monitoring procedures, which is the assessment process of the quality of the internal control system, including the internal audit function, at every level and unit of the structure of the Insurance Company, so that it can be implemented optimally; and f. reporting mechanisms to the Board of Directors with copies to the audit committee, in the event of deviations in the quality of the internal control system, including the internal audit function, at every level and unit of the structure of the Insurance Company.

CHAPTER XII
STRATEGIC PLANNING FOR INSURANCE AND REINSURANCE COMPANIES

Article 68
(1) Insurance and Reinsurance Companies must formulate strategic plans in the form of:
a. corporate plans covering formulations regarding objectives and targets to be achieved by the Insurance or Reinsurance Company within a 5 (five) year period; and b. business plans describing the business activities of the Insurance or Reinsurance Company within a 1 (one) year and 3 (three) year period. (2) The corporate plan referred to in paragraph (1) letter a must contain at least:
a. an evaluation of the implementation of the previous corporate plan period; b. the current position of the Insurance or Reinsurance Company;
c. assumptions used in formulating the corporate plan; and
d. objectives, targets, and strategies for achieving them.
(3) The business plan referred to in paragraph (1) letter b must include at least:
a. executive summary; b. management policies and strategies;
c. implementation of risk management and compliance;
d. current company performance; e. projected financial statements along with assumptions used; f. projected ratios and certain other items; g. capital plans; h. investment plans;
i. reinsurance plans;
j. product development and marketing plans; k. office network development and/or change plans;
l. organizational and human resource (HR) development plans;
m. other information.
(4) Insurance and Reinsurance Companies must submit corporate plans and business plans as referred to in paragraph (1) to the OJK.
(5) Further provisions regarding the form, structure, and procedures for formulating and submitting corporate plans and business plans as referred to in paragraph (1) and paragraph (4) are regulated in an OJK Circular Letter.

CHAPTER XIII
INFORMATION DISCLOSURE

Article 69
(1) The communication policies and strategies of Insurance Companies must enable information required to be provided to the OJK completely, accurately, and in a timely manner, and in an efficient manner. (2) Insurance and Reinsurance Companies must have reliable financial reporting systems for supervision purposes and other Stakeholders.

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

CHAPTER XIV
RELATIONSHIPS WITH STAKEHOLDERS

Article 71
(1) Insurance Companies, insurance broker companies, and insurance agency companies must protect the interests of policyholders, insured parties, participants, and/or parties entitled to receive benefits, so that policyholders, insured parties, participants, and/or parties entitled to receive benefits can receive their rights according to the insurance policy. (2) In order to protect the rights and interests of policyholders, insured parties, participants, and/or parties entitled to receive benefits as referred to in paragraph (1), Insurance Companies must do the following:
a. for Insurance Companies, fulfill obligations as agreed with policyholders, insured parties, participants, and/or parties entitled to receive benefits; b. for Insurance Companies, insurance broker companies, and insurance agency companies, evaluate the needs of policyholders, insured parties, or participants and/or parties entitled to receive benefits;
c. for Insurance Companies, insurance broker companies, and insurance agency companies, disclose material and relevant information to policyholders, insured parties, participants, and/or parties entitled to receive benefits; and
d. for Insurance Companies, Reinsurance Companies, insurance broker companies, reinsurance broker companies, insurance loss assessors, and insurance agency companies, act with integrity, competence, and utmost good faith.

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

CHAPTER XV
RELATIONSHIPS BETWEEN INSURANCE COMPANIES AND INSURANCE AGENTS

Article 73
(1) In the event that Insurance Companies market insurance products through Insurance Agents, Insurance Companies must meet the following provisions:
a. have an agency agreement with Insurance Agents marketing their insurance products; b. ensure that Insurance Agents have agency certificates from associations of similar Insurance Companies; (2) Insurance Companies marketing through Insurance Agents as referred to in paragraph (1) are fully responsible for the consequences arising from insurance closures conducted by the respective Insurance Agents. (3) Insurance Companies are prohibited from employing Insurance Agents who are still bound by agency agreements with other Insurance Companies. (4) Procedures and methods for terminating agency agreements as referred to in paragraph (1) letter a are established by the Insurance Company association after obtaining approval from the Chief Executive Officer.

Article 74
Insurance Companies marketing through Insurance Agents must do at least the following:
a. provide continuous education and training to Insurance Agents so they can practice their profession with high competence and integrity; b. require Insurance Agents to first possess agency certificates as referred to in Article 73 paragraph (1) letter b;
c. include ethical codes established by associations of similar Insurance Companies in agency contracts; and
d. require Insurance Agents to comply with ethical codes or similar codes established by Insurance Company associations corresponding to their business fields, along with sanctions imposed for any violations committed by Insurance Agents.

CHAPTER XVI
BUSINESS ETHICS

Article 75
(1) The Board of Directors, Board of Commissioners, Sharia Supervisory Board, and employees of Insurance Companies are prohibited from offering or giving anything, directly or indirectly, to other parties, to influence decision-making related to insurance transactions. (2) The Board of Directors, Board of Commissioners, Sharia Supervisory Board, and employees of Insurance Companies are prohibited from receiving anything for their own interests, directly or indirectly, from anyone, which can influence decision-making related to insurance transactions.

Article 76
Insurance Companies must create guidelines on ethical behavior, containing business ethics values, as a guide for the Company's Organs and all employees of the Insurance Company.

Article 77
(1) Insurance Companies may provide donations for charitable purposes within reasonable and fair limits and without disrupting the financial health of the Insurance Company. (2) Insurance Companies may provide donations other than as referred to in paragraph (1), provided they do not conflict with applicable legislation and do not disrupt the financial health of the Insurance Company.

CHAPTER XVII
SELF-ASSESSMENT AND REPORT ON THE IMPLEMENTATION OF GOOD CORPORATE GOVERNANCE

Article 78
(1) Insurance Companies must conduct periodic self-assessments on the implementation of Good Corporate Governance.
(2) Self-assessments on the implementation of Good Corporate Governance as referred to in paragraph (1) are conducted based on the Guidelines for Good Corporate Governance for Insurance Companies and the applicable self-assessment checklists.

Article 79
(1) Insurance Companies must formulate reports on the implementation of Good Corporate Governance at the end of each fiscal year.
(2) Reports on the implementation of Good Corporate Governance as referred to in paragraph (1) must consist of at least:
a. transparency of the implementation of Good Corporate Governance, which includes the disclosure of all aspects of the implementation of the principles of Good Corporate Governance as referred to in Article 4 paragraph (2); b. self-assessments on the implementation of Good Corporate Governance as referred to in Article 78;
c. action plans, including corrective actions required and completion times, as well as obstacles to completion, if there are still deficiencies in the implementation of Good Corporate Governance.
(3) Further provisions regarding the form and structure of reports on the implementation of Good Corporate Governance are regulated in an OJK Circular Letter.

Article 80
(1) Insurance Companies must submit reports on the implementation of Good Corporate Governance to the Chief Executive Officer in the form of computer printouts (hard copy) and electronic (soft copy). (2) Reports on the implementation of Good Corporate Governance as referred to in paragraph (1) must be submitted no later than February 28 of the following year. (3) In the event that February 28 as referred to in paragraph (2) is a holiday, the submission deadline is the first working day after the aforementioned February 28.

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

Article 81
The OJK conducts monitoring and evaluation of reports on the implementation of Good Corporate Governance submitted by Insurance Companies as referred to in Article 80.

CHAPTER XIX
OTHER PROVISIONS

Article 82
This OJK Regulation does not apply to individual Insurance Agents except for provisions as referred to in Article 73 and Article 74.

CHAPTER XX
SANCTIONS

Article 83
(1) Violations of the provisions of Article 4 paragraph (1), Article 5, Article 6 paragraph (1) and (3), Article 7 paragraph (1), Article 8, Article 9, Article 10, Article 11 paragraph (1), Article 12 paragraph (1), Article 13 paragraph (1), Article 14 paragraph (1), Article 15, Article 16, Article 17, Article 18 paragraph (1) and (2), Article 19, Article 20, Article 21, Article 22 paragraph (10) and (3), Article 23, Article 24, Article 25, Article 27 paragraph (1), Article 28 paragraph (2), Article 29, Article 30, Article 31, Article 32 paragraph (1), (3), (4), (5) and (6), Article 33, Article 34, Article 36, Article 38 paragraph (1), (3) and (4), Article 39 paragraph (1), Article 40 paragraph (1), Article 41, Article 42, Article 43 paragraph (1), Article 46, Article 47, Article 48 paragraph (1), (2) and (3), Article 49 paragraph (1), Article 50, Article 51 paragraph (1), (2) and (4), Article 53, Article 55 paragraph (1), (2) and (4), Article 56 paragraph (1), Article 57 paragraph (1) and (4), Article 58 paragraph (1), Article 59, Article 60, Article 61, Article 62 paragraph (1) and (2), Article 63 paragraph (2) and (4), Article 64, Article 65 paragraph (1), Article 66 paragraph (1), Article 67 paragraph (1), Article 68 paragraph (1) and (4), Article 69 paragraph (1), Article 70 paragraph (1), Article 71, Article 72, Article 73 paragraph (1) and (2), Article 74, Article 75, Article 76, Article 78 paragraph (1) and (2), Article 79 paragraph (1) and (2), and Article 84 of this OJK Regulation and its implementing regulations are subject to administrative sanctions; (2) Administrative sanctions as referred to in paragraph (1) consist of:
a. warnings; b. restrictions on business activities; and/or
c. revocation of business licenses.
(3) The procedures and timing for imposing administrative sanctions as referred to in paragraph (2) are implemented in accordance with provisions regarding sanctions as referred to in Government Regulation Number 73 of 1992 concerning the Conduct of Insurance Business, as amended several times, lastly by Government Regulation Number 81 of 2008.

CHAPTER XXI
TRANSITIONAL PROVISIONS

Article 84
(1) Insurance and Reinsurance Companies that have obtained business licenses before the implementation of this OJK Regulation...

Insurance companies are required to adjust to the provisions of this OJK Regulation within a maximum period of 6 (six) months from the enactment of this OJK Regulation, except for adjustments to the provisions of Article 22 paragraph (2) which must be completed within a maximum period of 1 (one) year from the enactment of this OJK Regulation.

(2) Insurance Support Businesses that have obtained business licenses prior to the effective date of this OJK Regulation are required to adjust to the provisions of this OJK Regulation within a maximum period of 1 (one) year from the enactment of this OJK Regulation.

CHAPTER XXII
FINAL PROVISIONS

Article 85
For Insurance Companies that are public companies, in addition to the provisions in this OJK Regulation, the provisions of legislation in the field of capital markets also apply.

Article 86
At the time this OJK Regulation takes effect, regulations concerning good corporate governance for Insurance Companies are subject to this OJK Regulation.

Article 87
This OJK Regulation takes effect on the date of enactment, except for the provisions referred to in Article 78 paragraph (1) and Article 79 paragraph (2) letter b for insurance loss assessors, which take effect since the establishment of the Guidelines on Good Corporate Governance for Insurance Loss Assessors and the self-assessment checklist by the committee formed by the government tasked with formulating governance policies.

So that everyone knows it, it is ordered to enact this OJK Regulation by placing it in the State Journal of the Republic of Indonesia.

Established in Jakarta on 28 March 2014

CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY
Signed,
MULIAMAN D. HADAD

Enacted in Jakarta on 8 April 2014

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA
Signed,
AMIR SYAMSUDIN

STATE JOURNAL OF THE REPUBLIC OF INDONESIA YEAR 2014 NUMBER 71

A copy in accordance with the original

HEAD OF THE LEGAL ASSISTANCE DIVISION
LAW DIRECTORATE,
Signed,
MUFLI ASMAWIDJAJA

EXPLANATION
OF
FINANCIAL SERVICES AUTHATION REGULATION
NUMBER 2/POJK.05/2014
CONCERNING
GOOD CORPORATE GOVERNANCE FOR INSURANCE COMPANIES

I. GENERAL
Along with the development of the insurance industry and to anticipate global competition, the implementation of good corporate governance has become a very important issue. The implementation of good corporate governance in insurance companies will serve as a tool to prepare insurance companies in Indonesia to be able to compete not only at the national level but also to operate at the regional and international levels.

Regulations regarding the implementation of good corporate governance are actually not new for insurance companies because in Indonesia in recent years, the supervisory and regulatory bodies for the insurance business have requested companies to conduct self-assessments on the implementation of good corporate governance and submit reports to the supervisory and regulatory bodies for the insurance business.

II. ARTICLE BY ARTICLE

Article 1
Clear enough.

Article 2
Letter a
Clear enough.

Letter b
The implementation of corporate accountability referred to in letter b includes levels below the Board of Directors and Board of Commissioners (committees).

Letter c
Clear enough.

Letter d
Clear enough.

Letter e
Clear enough.

Article 3
Clear enough.

Article 4
Clear enough.

Article 5
Clear enough.

Article 6
Paragraph (1)
Clear enough.

Paragraph (2)
Based on this provision, if the number of members of the Board of Directors is even, then the number of Board of Directors members with knowledge and experience in risk management must be at least equal to the number of Board of Directors members without knowledge and experience in risk management. Whereas if the number of Board of Directors members is odd, then the number of Board of Directors members with knowledge and experience in risk management must be greater than the number of Board of Directors members without knowledge and experience in risk management. As an example, if the number of Board of Directors members is 3 (three), then the number of Board of Directors members with knowledge and experience in risk management must be at least 2 (two).

Paragraph (3)
Intermediary service income of Rp10,000,000,000 (ten billion rupiah) is calculated based on audited annual financial reports.

Paragraph (4)
Clear enough.

Article 7
Paragraph (1)
Clear enough.

Paragraph (2)
What is meant by insurance technical functions is underwriting and claims.
Based on this provision, the compliance function can be held concurrently by the President Director.

Article 8
Clear enough.

Article 9
Clear enough.

Article 10
Clear enough.

Article 11
Clear enough.

Article 12
Clear enough.

Article 13
Clear enough.

Article 14
Paragraph (1)
Examples of other Insurance Companies with different business fields include:
a. life insurance companies with property insurance companies or reinsurance companies; b. property insurance companies with insurance brokers;
c. insurance brokers with insurance loss assessors.

Paragraph (2)
Clear enough.

Paragraph (3)
Clear enough.

Article 15
Clear enough.

Article 16
Clear enough.

Article 17
Clear enough.

Article 18
Paragraph (1)
The form of the meeting is adjusted to the needs of the Insurance Company, including the use of teleconference technology.

Paragraph (2)
Clear enough.

Paragraph (3)
Clear enough.

Paragraph (4)
Clear enough.

Paragraph (5)
Clear enough.

Article 19
Letter a
Clear enough.

Letter b
What is meant by family relationship in this provision is the relationship of husband/wife or family relationships both vertical and horizontal, including parents-in-law, children-in-law, and siblings-in-law.

Article 20
Clear enough.

Article 21
Clear enough.

Article 22
Paragraph (1)
Clear enough.

Paragraph (2)
Based on this provision, if the number of members of the Board of Commissioners is even, then the number of Independent Commissioners must be at least equal to the number of non-independent commissioners. Whereas if the number of Board of Commissioners members is odd, then the number of Independent Commissioners must be greater than the number of non-independent commissioners. As an example, if the number of Board of Commissioners members is 3 (three), then the number of Independent Commissioners must be at least 2 (two).

Paragraph (3)
Intermediary service income of Rp10,000,000,000 (ten billion rupiah) is calculated based on audited annual financial reports.

Paragraph (4)
Clear enough.

Article 23
Clear enough.

Article 24
Clear enough.

Article 25
Clear enough.

Article 26
Clear enough.

Article 27
Paragraph (1)
Clear enough.

Paragraph (2)
Clear enough.

Paragraph (3)
Clear enough.

Paragraph (4)
Clear enough.

Paragraph (5)
Other committees that can be formed by the Board of Commissioners include:
a. remuneration and nomination committee; b. corporate governance policy committee.

Paragraph (6)
Clear enough.

Article 28
Paragraph (1)
Clear enough.

Paragraph (2)
Insurance companies with the same business fields include:
a. life insurance companies with life insurance companies; b. property insurance companies with property insurance companies or reinsurance companies;
c. insurance brokers with insurance brokers;
d. insurance loss assessors with insurance loss assessors; e. actuary consultants with actuary consultants.

Paragraph (3)
Letter a
Included in the meaning of performing functional tasks is if the function concerned in the Insurance Company and/or the group of legal entity shareholders of the Insurance Company, including subsidiary companies of the Insurance Company, is to perform its function as a representative of the shareholders of the Insurance Company, such as members of the Board of Commissioners, members of the Board of Directors, or Executive Officers.

Letter b
Clear enough.

Article 29
Clear enough.

Article 30
Clear enough.

Article 31
Clear enough.

Article 32
Paragraph (1)
The form of the meeting is adjusted to the needs of the Insurance Company, including the use of teleconference technology.

Paragraph (2)
Letter a
Meetings involving the Board of Directors are conducted for the purpose of evaluating/setting strategic policies and/or evaluating the realization of the Insurance Company's business plan every quarter.

Letter b
Clear enough.

Paragraph (3)
Clear enough.

Paragraph (4)
Efforts should be made so that all members of the Board of Commissioners can attend physically at meetings for the purpose of evaluating/setting strategic policies and evaluating the realization of the Insurance Company's business plan every quarter.

Paragraph (5)
Clear enough.

Paragraph (6)
Clear enough.

Paragraph (7)
Clear enough.

Paragraph (8)
Clear enough.

Article 33
Letter a
Clear enough.

Article 34
Clear enough.

Article 35
Clear enough.

Article 36
Clear enough.

Article 37
Clear enough.

Article 38
Clear enough.

Article 39
Clear enough.

Article 40
Clear enough.

Article 41
If the Sharia Supervisory Board of the Insurance Company or Reinsurance Company consists of only 1 (one) person, then that Sharia Supervisory Board must reside in Indonesia.

Article 42
Clear enough.

Article 43
Clear enough.

Article 44
Clear enough.

Article 45
Clear enough.

Article 46
Paragraph (1)
Clear enough.

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

Article 47
Clear enough.

Article 48
Clear enough.

Article 49
Clear enough.

Article 50
Clear enough.

Article 51
Clear enough.

Article 52
Clear enough.

Article 53
Clear enough.

Article 54
Clear enough.

Article 55
Clear enough.

Article 56
Clear enough.

Article 57
Clear enough.

Article 58
Clear enough.

Article 59
Clear enough.

Article 60
Clear enough.

Article 61
Clear enough.

Article 62
Paragraph (1)
What is meant by managing securities in this paragraph is storing all investment instruments in the capital market with other parties (custodian/custody institutions).

Paragraph (2)
Clear enough.

Paragraph (3)
Investment experts who have passed the exam as investment manager representatives evidenced by a certificate issued by the capital market professional standards committee or expertise certificates from specialized educational institutions in the field of capital markets that have received recognition from OJK. Investment experts for Insurance Companies and Reinsurance Companies are not required to have individual licenses as investment manager representatives from OJK.

Article 63
Clear enough.

Article 64
Clear enough.

Article 65
Clear enough.

Article 66
Clear enough.

Article 67
Paragraph (1)
Clear enough.

Paragraph (2)
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
Clear enough.

Letter d
Clear enough.

Letter e
Clear enough.

Letter f
The obligation to submit copies of reports to the audit committee applies only to Insurance Companies and Reinsurance Companies.

Article 68
Paragraph (1)
Letter a
Corporate Plan is a written document describing the activities carried out by Insurance Companies and Reinsurance Companies over a period of 5 (five) years to determine strategy or direction, and making decisions to allocate resources owned (including capital and human resources) to achieve company goals.

Letter b
Business Plan is a written document describing the business activities of Insurance Companies and Reinsurance Companies over a period of 1 (one) and 3 (three) years, including plans to improve business performance, and strategies to realize these plans in accordance with targets and timeframes set, while still paying attention to the fulfillment of prudential regulations and the application of risk management.

Paragraph (2)
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
Clear enough.

Letter d
Clear enough.

Paragraph (3)
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
Clear enough.

Letter d
Clear enough.

Letter e
Clear enough.

Letter f
Clear enough.

Letter g
Clear enough.

Letter h
Clear enough.

Letter i
Clear enough.

Letter j
Clear enough.

Letter k
Clear enough.

Letter l
Clear enough.

Letter m
What is meant by "other information" includes information that needs to be submitted because it affects the business activities of Insurance Companies and Reinsurance Companies, which is not mentioned in the scope of the business plan as referred to in numbers 1 letter a to letter k. Examples:

merger, acquisition, and consolidation plans;
portfolio transfer plans;
plans to change the insurance business field;
plans to change conventional business activities to Sharia-based principles.

Paragraph (4)
Clear enough.

Paragraph (5)
Clear enough.

Article 69
Clear enough.

Article 70
Clear enough.

Article 71
Clear enough.

Article 72
Clear enough.

Article 73
Clear enough.

Article 74
Clear enough.

Article 75
Clear enough.

Article 76
Clear enough.

Article 77
Clear enough.

Article 78
Paragraph (1)
Clear enough.

Paragraph (2)
Guidelines on Good Corporate Governance for Insurance Companies and self-assessment checklists are prepared by a committee formed by the government tasked with formulating good corporate governance policies.

Article 79
Clear enough.

Article 80
Clear enough.

Article 81
Clear enough.

Article 82
Clear enough.

Article 83
Clear enough.

Article 84
Clear enough.

Article 85
Clear enough.

Article 86
Clear enough.

Article 87
Clear enough.

SUPPLEMENT TO THE STATE JOURNAL OF THE REPUBLIC OF INDONESIA NUMBER 5526

POJK on Good Corporate Governance for Insurance Companies

Lineage: In force