SEOJK on Risk Management Implementation for Banks Conducting Bancassurance Marketing Cooperation with Insurance Companies

To:

1. The Board of Directors of Conventional Commercial Banks; and
2. The Board of Directors of Sharia Commercial Banks,
   At their respective locations.

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 33/SEOJK.03/2016

ON

THE IMPLEMENTATION OF RISK MANAGEMENT FOR BANKS CONDUCTING MARKETING COOPERATION ACTIVITIES WITH INSURANCE COMPANIES (BANCASSURANCE)

In view of the increasing public demand for insurance products, accompanied by an increase in the marketing of insurance products through marketing cooperation activities between insurance companies and Banks (bancassurance), and considering the developments that have occurred, further regulations regarding bancassurance are required. This regulation is necessary because, in addition to providing benefits, bancassurance activities also have the potential to generate various Risks for Banks, particularly Legal Risk and Reputational Risk.

Therefore, in order to support the development of the financial market, enhance the implementation of Risk Management by Banks, protect the interests of Bank customers, and in accordance with regulations governing matters related to the marketing of insurance products through cooperation with Banks (bancassurance), as well as as an implementation of Financial Services Authority Regulation Number 18/POJK.03/2016 concerning the Implementation of Risk Management for Commercial Banks (State Gazette of the Republic of Indonesia Year 2016 Number 53, Supplement to the State Gazette of the Republic of Indonesia Number 5861) and regulations governing the implementation of risk management for Sharia commercial banks and Sharia business units, it is deemed necessary to regulate provisions regarding the Implementation of Risk Management for Banks Conducting Marketing Cooperation Activities with Insurance Companies (Bancassurance) in a Financial Services Authority Circular Letter as follows:

I. GENERAL PROVISIONS

1. What is meant by marketing cooperation activities between Banks and insurance companies, hereinafter referred to as bancassurance in this Financial Services Authority Circular Letter, is cooperation activities between Banks and insurance companies in order to market insurance products through Banks.

2. Bancassurance activities are classified into 3 (three) business models as follows:

a. Reference
Reference is a marketing cooperation activity for insurance products, with the Bank playing a role only in referring or recommending an insurance product to customers. The Bank's role in marketing is limited to acting as an intermediary in forwarding information about insurance products from the Bank's partner insurance company to customers or providing access to the insurance company to offer insurance products to customers. Reference activities can be distinguished as follows:

1. Reference in the Context of Bank Products
   The Bank refers or recommends insurance products that are requirements to obtain a banking product to customers. The requirement for the existence of such insurance products is intended for the benefit and protection of the Bank regarding Risks related to products issued or services provided by the Bank to customers. In this case, in essence, the insurance product also serves to protect the debtor as the insured party, even though the policy includes a banker’s clause because the Bank is the beneficiary. Examples of Bank products that require the existence of insurance are:
   a) Home ownership loans or financing accompanied by mandatory fire insurance for the house or building financed by the Bank, as well as life insurance for the borrowing customers (debtors). b) Motor vehicle loans or financing accompanied by mandatory property insurance for the motor vehicles financed by the Bank. c) Loans or financing to employees or pensioners accompanied by mandatory life insurance for the borrowing customers (debtors).

2. Reference Not in the Context of Bank Products
   The Bank refers to insurance products that are not requirements to obtain a banking product to customers. Bancassurance activities with this model can be conducted through:
   a) Forwarding brochures, leaflets, and/or similar items by the Bank containing offers, information, and/or explanations from the Bank's partner insurance company regarding an insurance product to Bank customers, both face-to-face and through letters and electronic media, including using the Bank's website. In the event that customers require further information or intend to purchase insurance products referred to through such marketing, the Bank must direct customers to the Bank's partner insurance company. b) Providing space by the Bank within the Bank's office premises that can be used by the Bank's partner insurance company in marketing insurance products (in-branch sales) to customers. c) Providing customer data by the Bank that can be used by the Bank's partner insurance company in marketing insurance products, while adhering to the provisions and principles of implementing Risk Management in the context of Bancassurance regarding the use of customer data.

b. Distribution Cooperation
Distribution cooperation is a marketing cooperation activity for insurance products, where the Bank plays a role in marketing insurance products by providing explanations regarding insurance products directly to customers. Explanations from the Bank can be conducted face-to-face with customers and/or by using communication media (telemarketing), including through letters, electronic media, and the Bank's website. The Bank's role is not only as an intermediary in forwarding information about insurance products from the Bank's partner insurance company to customers, but the Bank also provides direct explanations related to the insurance products, such as characteristics, benefits, and Risks of the marketed products, as well as forwarding customer interest or purchase requests for insurance products to the Bank's partner insurance company.

c. Product Integration
Product integration is a marketing cooperation activity for insurance products, where the Bank plays a role in marketing insurance products to customers by modifying and/or combining insurance products and Bank products. Bancassurance activities with this model are conducted by Banks by offering or selling bundled products to customers through face-to-face interactions and/or by using communication media (telemarketing), including through letters, electronic media, and the Bank's website. Thus, the Bank's role is not only to forward and provide explanations related to insurance products to customers, but also to follow up on customer applications for bundled products, including those related to insurance products, with the Bank's partner insurance company.

3. Banks conducting bancassurance must comply with relevant provisions in the banking and insurance sectors, including banking regulations related to risk management, bank secrecy, product information transparency, and insurance regulations, particularly those related to bancassurance.

4. In conducting bancassurance, Banks are not permitted to assume or share Risks arising from the insurance products offered. All Risks from insurance products become the responsibility of the partner insurance company.

5. In conducting bancassurance, Sharia Commercial Banks and Sharia Business Units may only cooperate with Sharia insurance companies.

6. Banks conducting bancassurance are only permitted to market insurance products stated in the cooperation agreement between the Bank and the partner insurance company.

7. Insurance products stated in the cooperation agreement are products that have been registered and obtained approval for marketing through bancassurance from the Financial Services Authority.

II. IMPLEMENTATION OF RISK MANAGEMENT IN THE CONTEXT OF BANCASSURANCE

A. General

1. Banks conducting bancassurance implement Risk Management in accordance with Financial Services Authority Regulations regarding the Implementation of Risk Management for Commercial Banks, regulations governing the implementation of risk management for Sharia commercial banks and Sharia business units, and this Financial Services Authority Circular Letter, considering that Banks face various Risks inherent in such activities, particularly Legal Risk and Reputational Risk.

2. Banks formulate written policies and procedures regarding bancassurance with reference to Financial Services Authority Regulations regarding the Implementation of Risk Management for Commercial Banks, regulations governing the implementation of risk management for Sharia commercial banks and Sharia business units, and this Financial Services Authority Circular Letter.

B. Implementation of Risk Management in Several Key Aspects of Bancassurance

1. Determination of Insurance Companies that Become Bank Partners
   Banks conduct assessments of insurance companies that become Bank partners in bancassurance by meeting at least the following conditions:
   a. Banks ensure that insurance companies used as Bank partners are insurance companies that have solvency levels at least in accordance with regulations governing the financial health of insurance companies and Sharia insurance companies; b. Banks monitor, analyze, and evaluate the performance and/or reputation of Bank partner insurance companies periodically at least 1 (one) time in 1 (one) year or ad hoc in the event of changes in the performance and/or reputation of Bank partner insurance companies known through various information sources;
   c. Banks terminate cooperation before the agreement expires or do not renew cooperation in the event that:

1. the Bank's partner insurance company no longer meets the requirements as referred to in letter a;
2. the Bank's partner insurance company experiences a significant reputation decline that will affect the Bank's Risk profile; and/or
3. the Financial Services Authority has ordered the Bank to stop bancassurance cooperation based on evaluations conducted by the Financial Services Authority;
   d. in the event that Banks terminate cooperation as referred to in letter c, Banks:
4. stop marketing insurance products contained in the aforementioned cooperation agreement; and
5. inform the continuation of the settlement of customer rights and obligations regarding insurance products that have been marketed;
   e. in the event that marketed products are Investment-Linked Insurance Products (PAYDI), including unit links, Banks ensure that the partner insurance company meets the following requirements:
6. has met requirements related to PAYDI as regulated in insurance laws and regulations;
7. records and manages specifically the assets and liabilities of the partner insurance company derived from PAYDI investments; and
8. implements other necessary measures to ensure that customer-trusted investment funds are managed optimally, professionally, and independently.

2. Formulation of Cooperation Agreements
   a. Cooperation agreements in the context of bancassurance between Banks and partner insurance companies are drafted using the Indonesian Language. b. In the event that cooperation agreements in the context of bancassurance are drafted side-by-side in Indonesian and foreign languages, the agreement must include a clause stating that the language used as the reference in the event of disputes or differences of opinion is the Indonesian Language.
   c. Each bancassurance agreement may only contain specifically 1 (one) business model for 1 (one) insurance product or 1 (one) bundled product marketed.
   d. Cooperation agreements in the context of bancassurance must contain at least:

1. clarity of the rights and obligations of each party, particularly clauses stating the responsibility of each party in conducting bancassurance, including:
   a) for reference and/or distribution cooperation business models, the Bank does not assume Risks for insurance products sold; and b) for the product integration business model, the Bank is only responsible for Risks from Bank products;
2. special clauses related to business models and/or special features of insurance products for the distribution cooperation business model regarding PAYDI, including that the partner insurance company must specifically record and manage assets and liabilities of the insurance company derived from PAYDI investments;
3. the business model used and the insurance products or bundled products marketed;
4. the duration of the agreement;
5. clauses stating that underwriting decisions are solely the authority of the insurance company;
6. procedures for policy issuance and premium payment;
7. procedures for claim settlement and payment;
8. clauses regulating the amount of commissions received by Banks from insurance companies in the context of bancassurance;
9. clarity of the responsibility of each party in fulfilling Customer Due Diligence (CDD) obligations with reference to regulations governing anti-money laundering and counter-terrorism financing;
10. determination of clauses containing conditions causing the termination of the cooperation agreement, including clauses allowing Banks to stop cooperation before the cooperation agreement expires as referred to in item 1.d or upon order from the Financial Services Authority to stop bancassurance;
11. clarity on the settlement of rights and obligations of each party, including obligations to customers as insured parties and/or beneficiaries, if the cooperation agreement ends, whether due to the expiration of the cooperation agreement term or because cooperation is stopped as referred to in item 10);
12. clarity on the limits of responsibility of each party for each product marketed in the event of disputes with customers; and
13. the obligation of parties to maintain customer data confidentiality.

3. Use of Customer Data
   a. In using customer data, Banks must comply with the following provisions:

1. Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998, Law Number 21 of 2008 concerning Sharia Banking, and regulations governing the requirements and procedures for issuing written orders or permissions to disclose bank secrecy.
2. Regulations governing the transparency of bank product information and the use of customer personal data.
3. Financial Services Authority Regulations concerning Consumer Protection in the Financial Services Sector.
   Based on the above provisions, in conducting bancassurance, Banks may only provide customer personal data to partner insurance companies if there is written consent from the customer. b. In conducting bancassurance, Banks and partner insurance companies apply CDD principles with reference to regulations governing anti-money laundering and counter-terrorism financing.

4. Implementation of Customer Protection Principles
   a. In conducting bancassurance, Banks apply transparency principles by explaining orally and in writing to customers, including the following:

1. insurance marketed is not a Bank product and responsibility, and is not included in the coverage of insurance programs as referred to in laws and regulations concerning deposit insurance institutions, even if there are Bank logos and/or attributes in marketing documents used in distribution cooperation and product integration business models;
2. the use of Bank logos and/or attributes in marketing documents used in distribution cooperation and product integration business models as referred to in item 1) is only intended to indicate the existence of cooperation between Banks and partner insurance companies; and
3. insurance characteristics include, among others, features, contracts, Risks, benefits, insurance costs, membership requirements, and claim procedures by customers.
   b. Banks must ensure that Bank logos and attributes are not included in insurance policies.
   c. For collective insurance, each customer must receive a membership certificate. In the event that membership certificates are issued by Banks, such certificates must clearly state that insurance Risks are the responsibility of the insurance company.
   d. Banks must be transparent to customers regarding costs to be paid, including if insurance premiums include calculations of other cost components such as commission fees, administrative fees, and/or commissions given by partner insurance companies to Banks in the context of bancassurance. Information regarding costs to be paid must be included in marketing media. e. Specifically for bancassurance through distribution cooperation and product integration business models:
4. Banks must ensure that customers have understood explanations regarding product benefits and Risks, whether conducted orally or in writing, as stated in marketing or offer documents.
5. Customer statements that customers have understood the benefits and Risks of products as referred to in item 1) must be included in separate written documents, drafted in the Indonesian Language, and signed by customers using wet signatures.
6. Banks must ensure that the customer signing the written documents is the authorized party to sign.
   f. Banks must ensure that marketed insurance products comply with insurance laws and regulations, including:
7. product criteria and/or product requirements; and
8. product reporting obligations.
   g. The Financial Services Authority may order Banks to stop bancassurance if, based on Financial Services Authority evaluations, the conducted bancassurance:
9. does not match the implementation plan for new activities involving bancassurance reported to the Financial Services Authority or approval for bancassurance and/or registration of insurance products from the Financial Services Authority;
10. has the potential to negatively impact Bank performance; and/or
11. does not comply with laws and regulations.
    h. Since Banks are ordered to stop bancassurance as referred to in letter g, Banks:
12. stop marketing the aforementioned bancassurance products; and
13. are responsible to customers only to the extent of the Bank's obligations according to agreements between Banks and partner insurance companies.

C. Implementation of Risk Management on Each Business Model of Bancassurance

1. Reference
   In addition to the implementation of Risk Management in several key aspects of bancassurance as referred to in Section II.B, Banks must meet specific requirements for the Reference business model as follows:
   a. In conducting business models involving reference in the context of Bank products as referred to in Section I.2.a.1):

1. To accommodate Bank customers' freedom in choosing insurance products required, Banks must offer insurance product choices from at least 3 (three) partner insurance companies, one of which may be a Related Party of the Bank. The definition of Related Parties refers to regulations governing maximum credit granting limits.
2. Referenced insurance products are limited to insurance products that are protective or coverage in nature, and such insurance products are requirements to obtain a banking product for customers.
   b. In conducting business models involving reference not in the context of Bank products as referred to in Section I.2.a.2) conducted, among others, through in-branch sales as referred to in Section I.2.a.2)b):
3. partner insurance companies using space, counters, or tables provided by Banks must clearly display the name of the partner insurance company on the space, counter, or table used;
4. insurance employees marketing in such spaces, counters, or tables must continue to use the identity of the partner insurance company's employees and are not permitted to wear uniforms identical to Bank employees.

2. Distribution Cooperation
   In addition to the implementation of Risk Management in several key aspects of bancassurance as referred to in Section II.B, Banks must meet specific requirements for the distribution cooperation business model as follows:
   a. Banks must have a special bancassurance work unit or designated officials responsible for bancassurance at Banks, with task coverage involving development, marketing, and management of bancassurance. b. Bank employees handling bancassurance meet qualifications including:

1. possessing agency certificates issued by relevant associations; and
2. having received training regarding insurance products to be marketed.
   This provision does not apply to the marketing of micro-insurance products.
   c. Bank marketing or customer service employees may conduct initial offers of insurance products in bancassurance, but full explanations of such insurance products and follow-up on offers must be conducted by Bank employees meeting the requirements as referred to in letter b.
   d. Bank's responsibility is limited to offering insurance products, while underwriting processes, policy issuance, policy changes, claims, and other actions related to insurance products are executed and are the responsibility of the partner insurance company. e. Banks are only permitted to conduct distribution cooperation regarding:
3. insurance products that are protective or coverage in nature; and/or
4. PAYDI.
   f. Banks conducting distribution cooperation regarding PAYDI as referred to in item e.2) must meet the following requirements:
5. have a special bancassurance work unit;
6. include clauses in cooperation agreements stating that partner insurance companies are fully responsible for managing PAYDI investment funds;
7. clearly state that the management of PAYDI investment funds is conducted and is the responsibility of the insurance company;

responsibility of the insurance company in the document providing an explanation of benefits and Risks of PAYDI as referred to in item B.4.e.1);
4) products marketed are limited to PAYDI that
have money market investment strategies and/or fixed income investment strategies in accordance with regulations regarding PAYDI regulated by the Financial Services Authority;
5) PAYDI marketing activities must be carried out by
Bank employees; and
6) in addition to having the qualifications referred to in
letter b, Bank employees handling PAYDI must have expertise and a special agency certificate for PAYDI. g. Banks must maintain an adequate number of employees who have agency certificates at every branch that carries out bancassurance.
3. Product Integration
In addition to the implementation of Risk Management in several key aspects of bancassurance as referred to in item II.B, Banks must meet several specific requirements in the product integration business model as follows:
a. Bundled products marketed must be separable into the product portion that is the Bank's Risk and the portion that is the Risk of the Bank's partner insurance company so that the Risks of each can be identified, measured, monitored, and controlled. b. Banks are only permitted to integrate products related to insurance products that are protective or coverage in nature.
c. In the event marketing is conducted using communication
media such as through mail, electronic media, and the Bank's website, communication media are only used as an initial introduction medium regarding bundled products and the subsequent process must be conducted face-to-face with the customer for further explanation. d. Banks explain to customers orally and in writing regarding the product portion that is the Bank's Risk and the portion that is the risk of the Bank's partner insurance company, the rights and obligations of the Bank, the rights and obligations of the partner insurance company, as well as the rights and obligations of the customer. e. Every customer must receive proof of membership in the event the customer is included in collective insurance products as referred to in item II.B.4.c. f. Banks form a special bancassurance work unit with tasks to conduct development, marketing, and management of bundled products. In the event Banks conduct bancassurance with reference business models and/or distribution cooperation, this work unit also handles bancassurance in the form of reference business models and/or distribution cooperation. g. Officials and/or employees who are part of the special bancassurance work unit must meet qualifications including:

1. holding an agency certificate issued by
   the relevant association; and
2. having received training regarding insurance that
   will be marketed.
   These provisions do not apply to the marketing of micro insurance products. h. The insurance coverage period must be at least equal to the term of the product purchased by the customer.
   i. Banks must maintain an adequate number of employees
   who have agency certificates at every branch that carries out bancassurance. j. The product name that is a bundled product must reflect that the product is a combination of Bank products and insurance products.
   III. REPORTING ...

III. REPORTING
A. New Bancassurance Activity Reports

1. Banks conducting bancassurance for the first time must
   include the bancassurance plan as a new activity in the Bank's Business Plan for the same year as the year of the planned implementation of the activity. The obligation to prepare the Bank's Business Plan refers to Financial Services Authority Regulations regarding Bank Business Plans. The format for reporting new activities in the form of bancassurance in the Bank's Business Plan refers to
   Appendix I which is an integral part of
   this Financial Services Authority Circular Letter.

2. Banks that have met the requirements as referred to
   in item 1 or have implemented bancassurance, submit reports for each implementation of bancassurance that meets the criteria for new activities to the Financial Services Authority, consisting of:
   a. New Activity Implementation Plan Report in the form of Bancassurance; and b. New Activity Implementation Realization Report in the form of Bancassurance.

3. Activities in the form of bancassurance are designated as new activities
   if they meet the criteria:
   a. The Bank has never previously conducted bancassurance; or b. The Bank has previously conducted bancassurance but underwent development that changes or increases certain Risks for the Bank related to the bancassurance conducted, including changes in business model, changes in partner insurance company, changes in premiums, changes in benefits, changes in term, changes in product name, changes in terms, and other changes requiring approval from and/or reporting to the Financial Services Authority related to the insurance products offered.

4. Submission ...

5. Submission of the New Activity Implementation Plan Report
   in the form of Bancassurance as referred to in item 2 letter a is conducted as follows:
   a. The New Activity Implementation Plan Report in the form of Bancassurance is submitted using the format in Appendix II which is an integral part of this Financial Services Authority Circular Letter and must at least contain documents with information and explanations regarding:

1. general information including among others objectives,
   profile of potential customers, analysis of strengths, weaknesses, opportunities, and threats (Strengths, Weaknesses, Opportunities, Threats/SWOT) of bancassurance, the insurance products marketed, and the business model to be implemented;

2. assessment and analysis of solvency and licensing
   of the Bank's partner insurance company;

3. cost and benefit analysis;

4. benefit and Risk analysis for customers;

5. Risk Management including identification,
   measurement, monitoring, and control of Risks inherent to the bancassurance activity;

6. implementation procedures (standard operating
   procedure/SOP), organization, and authority for implementing bancassurance considering regulations governing the implementation of risk management;

7. readiness of the special bancassurance work unit and/or
   officials responsible for bancassurance as well as the readiness of bancassurance marketing human resources;

8. analysis of legal and compliance aspects related
   to bancassurance;

9. readiness of the Bank's information systems related
   to bancassurance;

10. policies and procedures related to the implementation
    of the Anti-Money Laundering and Counter
    Financing of Terrorism (APU and PPT) program;

11. documents ...

12. documents related to activities in the form of
    bancassurance including among others the concept of cooperation agreements with the Bank's partner insurance company;

13. documents for transparency to customers
    including among others brochures, leaflets and/or application forms; and

14. Form for checklist of requirements (compliance check
    list) for the completeness of documents for the New Activity Implementation Plan Report in the form of Bancassurance as referred to in items 1) to 12) accompanied by a statement from the director overseeing the compliance function and the director overseeing the risk management function, that:
    a) the data and/or information submitted by the Bank regarding the New Activity Implementation Plan Report in the form of Bancassurance has met the provisions in this Financial Services Authority Circular Letter; b) the content of the data and/or information submitted is true and corresponds to the actual facts; and c) in the event it is later discovered that the data and/or information submitted does not meet the provisions in this Financial Services Authority Circular Letter and/or is not true and/or does not correspond to the actual facts, the Bank is willing to be subject to sanctions in accordance with Financial Services Authority Regulations regarding the Implementation of Risk Management for General Banks or regulations governing the implementation of risk management for sharia general banks and sharia business units. b. In the event the attached documents do not comply with provisions or based on the assessment of the Financial Services Authority, the Bank is deemed not to meet the provisions to conduct bancassurance cooperation, the Financial ...

Financial Services Authority sends a notification of rejection of the new activity implementation plan in the form of bancassurance to the Bank accompanied by reasons for rejection.
c. In the event the Financial Services Authority rejects the plan
for new activity implementation in the form of bancassurance as referred to in letter b, the Bank may resubmit the new activity implementation plan in the form of bancassurance in accordance with the provisions of the Financial Services Authority. d. In the event the documents comply with provisions and based on the assessment of the Financial Services Authority the Bank is deemed to meet the provisions to conduct c bancassurance cooperation, the Financial Services Authority issues a bancassurance approval letter to the Bank. e. Notification of rejection of the new activity implementation plan in the form of bancassurance as referred to in letter b or the bancassurance approval letter as referred to in letter d, is sent by the Financial Services Authority within a maximum period of 19 (nineteen) working days from the date the Bank receives notification of the submission of the new activity implementation plan report in the form of bancassurance from the Financial Services Authority. f. Banks may implement bancassurance after receiving approval from the Financial Services Authority.
5. In the event the Bank has not conducted bancassurance activities
after exceeding a period of 6 (six) months from the date of the approval letter from the Financial Services Authority, the approval letter is deemed invalid and the Bank must resubmit the New Activity Implementation Plan Report in the form of Bancassurance in accordance with this Financial Services Authority Circular Letter.
6. The New Activity Implementation Realization Report in the form of
Bancassurance as referred to in item 2.b must be submitted no later than 7 (seven) working days after the implementation of the bancassurance activity. Report ...

The New Activity Implementation Realization Report in the form of Bancassurance must at least contain information and explanations regarding:
a. name and type of product and the business model conducted; b. date of implementation of the new activity, namely the date the insurance product is first marketed and can be utilized by customers; and
c. conformity of the bancassurance activity conducted
with the New Activity Implementation Plan Report in the form of Bancassurance that has been submitted.
7. The Bank is deemed to have realized the bancassurance activity
when the Bank has marketed the insurance product and the Bank's function in bancassurance can be utilized by customers. B. Periodic Bancassurance Reports

1. Banks conducting bancassurance prepare Periodic
   Bancassurance Reports at the end of each month.
2. The Periodic Bancassurance Report as referred to in
   item 1 is submitted to the Financial Services Authority quarterly using a format according to Appendix III which is an integral part of this Circular Letter of the Financial Services Authority.
3. Submission of the Periodic Bancassurance Report as referred to
   in item 2 is conducted no later than 15 (fifteen) days after the end of the 3rd (third) month of the relevant quarter. The end of the quarter refers to the end of the month of March, the month of June, the month of September, and the month of December. In the event the 15th (fifteenth) is a holiday, the report must be submitted no later than 1 (one) working day thereafter.
   C. Report Submission
4. New Activity Implementation Plan Report in the form of
   Bancassurance a. The New Activity Implementation Plan Report in the form of Bancassurance is submitted to the Financial Services Authority online by uploading (uploading) all ...

all documents as referred to in item III.A.4.b through the integrated licensing and registration system of the Financial Services Authority. b. Banks must coordinate with the insurance company in the process of uploading (uploading) all documents as referred to in letter a so that the uploading process (upload) can be conducted on the same day or within a time frame of no more than 2 (two) days from the time one of the parties to conduct bancassurance registers in the integrated licensing and registration system of the Financial Services Authority.
c. In the event the provisions as referred to in letter b
are not met, the registration is deemed automatically voided by the integrated licensing and registration system of the Financial Services Authority. d. The New Activity Implementation Plan Report in the form of Bancassurance submitted to the Financial Services Authority online after 17.00 Western Indonesia Time (WIB) is deemed received by the Financial Services Authority on the next working day. e. In the event of technical disturbances in the integrated licensing and registration system of the Financial Services Authority during the submission of the new activity implementation plan in the form of bancassurance, the new activity implementation plan in the form of bancassurance is submitted to the Financial Services Authority offline in the form of electronic data using media in the form of Compact Disc (CD) or other electronic data storage media, which is submitted to the Financial Services Authority with the address:

1. Department of Supervision of the Relevant Bank or
   Department of Sharia Banking for Banks whose headquarters or branches of banks located abroad are in the Special Capital Region of Jakarta; or
2. Regional Office of the Financial Services Authority or Local
   Office of the Financial Services Authority for banks whose headquarters are ...

headquartered outside the Special Capital Region of Jakarta. f. In the event technical disturbances as referred to in letter e are experienced by the Financial Services Authority, the Financial Services Authority announces via the Financial Services Authority website on the same day as the occurrence of the technical disturbance along with the mechanism for processing the Report on New Activity Implementation in the form of Bancassurance. g. The Bank is deemed to have submitted the New Activity Implementation Plan Report in the form of Bancassurance with the following provisions:

1. for online submission through the Financial Services Authority's data communication network system,
   proven by notification from the Financial Services Authority issued by the integrated licensing and registration system of the Financial Services Authority; or
2. for offline submission, proven by
   a receipt letter from the Financial Services Authority or shipping receipt from the courier service company. h. Banks must retain all documents of the New Activity Implementation Plan Report in the form of Bancassurance for a period in accordance with provisions and legislation and can present the documents in question whenever required by the Financial Services Authority.

2. New Activity Implementation Realization Report in the form of
   Bancassurance
   The New Activity Implementation Realization Report in the form of Bancassurance is submitted to the Financial Services Authority with the address:
   a. Department of Supervision of the Relevant Bank or Department of Sharia Banking, for Banks whose headquarters or branches of banks located abroad are in the Special Capital Region of Jakarta; or b. Regional Office ...

b. Regional Office of the Financial Services Authority or Local Office of the Financial Services Authority for banks whose headquarters are outside the Special Capital Region of Jakarta.
3. Periodic Bancassurance Reports
a. Periodic Bancassurance Reports are submitted online through the Financial Services Authority's reporting system. b. In the event submission of reports through the Financial Services Authority's reporting system cannot yet be conducted, Banks submit reports online through the General Commercial Bank Headquarters Reporting System (LKPBU) by referring to regulations governing LKPBU.
IV. SANCTION IMPOSITION PROCEDURE

1. Violations of the implementation of Risk Management as referred to in item II of this Financial Services Authority Circular Letter
   are subject to administrative sanctions as referred to in Financial Services Authority Regulation Number 18/POJK.03/2016 regarding Implementation of Risk Management for General Banks or regulations governing the implementation of risk management for sharia general banks and sharia business units.
2. Violations of reporting obligations as referred to in
   item III.A.4, and item III.A.6 are subject to sanctions related to reporting as referred to in Financial Services Authority Regulation Number 18/POJK.03/2016 regarding Implementation of Risk Management for General Banks or Financial Services Authority Regulation Number 24/POJK.03/2015 regarding Products and Activities of Sharia Banks and Sharia Business Units.
   V. TRANSITIONAL PROVISIONS
3. The provisions in this Financial Services Authority Circular Letter take effect
   on September 1, 2016.
4. Submission of the New Activity Implementation Plan Report in the form of
   Bancassurance that has been submitted to the Financial Services Authority and is still in process at the time this Financial Services Authority Circular Letter is established, is processed in accordance with the provisions in effect at the time the report is submitted.
   VI. CLOSING ...

VI. CLOSING
With the implementation of this Financial Services Authority Circular Letter, the Bank Indonesia Circular Letter No. 12/35/DPNP dated December 23, 2010 regarding Implementation of Risk Management for Banks Conducting Marketing Cooperation Activities with Insurance Companies (Bancassurance) is revoked and declared invalid. The provisions in this Financial Services Authority Circular Letter take effect on the date of establishment. Established in Jakarta on September 1, 2016 EXECUTIVE HEAD OF BANKING SUPERVISOR FINANCIAL SERVICES AUTHORITY, sign NELSON TAMPUBOLON Copy matches the original Director of Law 1 Department of Law sign Yuliana

Format for New Activity Report in the form of Bancassurance NEW ACTIVITY REPORT BANK NAME : …………………………… YEAR : …………………………… No. Type of New Activity a) Planned Time for Implementation of New Activity Objective of Implementation of New Activity Relevance of New Activity to Bank Strategy b) General Description regarding New Activity b) Risks that May Arise from Implementation of New Activity b) Risk Mitigation for Implementation of New Activity For Bank For Customers New b) Notes:
a) Type of New Activity is filled with "Bancassurance-Reference" or "Bancassurance-Distribution Cooperation" or "Bancassurance- Product Integration". b) More detailed explanations/descriptions can be attached on a separate sheet. Established ...

Established in Jakarta on September 1, 2016
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, sign
NELSON TAMPUBOLON
Copy matches the original
Director of Law 1
Department of Law sign
Yuliana

NEW ACTIVITY IMPLEMENTATION PLAN REPORT
IN THE FORM OF BANCASSURANCE
I. COVER LETTER
......... (filled with city name, date, month, year)
Number : .......
Subject : New Activity Implementation Plan in the form of Bancassurance
Attachments : .........
To:
a)
With respect,
Pursuant to the provisions of the OJK Circular Letter regarding Implementation of Risk Management for Banks Conducting Marketing Cooperation Activities with Insurance Companies (Bancassurance), we the Board of Directors ... b) (filled with Bank name) submit the New Activity Implementation Plan Report in the form of Bancassurance ... c) (filled with product name) through Bancassurance cooperation with ... d) (filled with partner insurance company name) for the business model .... e) (filled with business model of Bancassurance). In relation to this matter, we attach the completeness of documents in accordance with the provisions. Thus, we submit the New Activity Implementation Plan Report in the form of Bancassurance. Thank you for your attention and cooperation. Sincerely, Director overseeing Bancassurance cooperation ..... b) (filled with Bank name) signature (Name) Notes:
a) In accordance with the provisions of Item III.C.1.e. of this Financial Services Authority Circular Letter. b) Fill in the Bank name. c) Fill in the product name. d) Fill in the name of the Bank's partner insurance company. e) Fill in the bancassurance business model.
II. FORM ...

II. COMPLIANCE CHECKLIST FORM FOR COMPLETENESS OF DOCUMENTS FOR THE NEW ACTIVITY IMPLEMENTATION PLAN REPORT
IN THE FORM OF BANCASSURANCE
DOCUMENT COMPLETENESS ANALYSIS
No. Document Yes No Notes

1. General information, including:
   a. objectives; b. profile of potential customers, analysis of strengths, weaknesses, opportunities, and threats (Strengths, Weaknesses, Opportunities, Threats/ SWOT) of bancassurance;
   c. insurance products
   marketed; and d. business model to be implemented.

2. Assessment and analysis of solvency
   and licensing of the
   Bank's partner insurance company.

3. Cost and benefit analysis for
   the bank (cost and benefit analysis).

4. Benefit and risk analysis for
   customers.

5. Risk Management including
   identification, measurement, monitoring, and control of Risks inherent to activities in the form of bancassurance.

6. Implementation procedures (standard
   operating procedure/SOP), organization, and authority for implementing bancassurance considering regulations regarding the implementation of risk management.

7. Readiness of the special work unit
   for bancassurance and/or officials responsible for bancassurance as well as readiness of bancassurance marketing human resources.

8. Analysis ...

9. Analysis of legal and compliance aspects related
   to bancassurance.

10. Readiness of the Bank's information systems related
    to bancassurance.

11. Policies and procedures related
    to the implementation of the Anti
    Money Laundering and Counter
    Financing of Terrorism (APU and
    PPT) program.

12. Documents related to
    activities in the form of bancassurance including among others the concept of cooperation agreements with the partner insurance company as required in the Circular Letter of the Financial Services Authority regarding Implementation of Risk Management for Banks Conducting Marketing Cooperation Activities with Insurance Companies (Bancassurance).

13. Documents for the purpose of
    transparency to customers, including among others brochures, leaflets, and/or application forms.

14. Concept ...

COMPLIANCE AND SUBSTANTIVE ANALYSIS
No. Document Yes No Notes

1. Concept of cooperation agreement
   in the context of bancassurance, which contains:
   a. clarity of rights and obligations of each party, especially the presence of clauses stating the responsibility of each party in conducting bancassurance, including among others as follows:

1. For reference business models and/or cooperation
   distribution, the Bank does not bear Risks for the insurance products sold;
2. For the product integration business model, the Bank
   is only responsible to the extent of Risks from Bank products; b. special clauses related to the business model and/or special features of insurance products for the business model of cooperation distribution related to PAYDI products, including among others the partner insurance company must record and manage specifically the assets and liabilities of the insurance company derived from investments in PAYDI products;
   c. the business model used
   and the insurance products or bundled products marketed; d. term of the agreement; e. clauses stating that the decision to underwriting is fully the authority of ...

• authority of the insurance company;
  f. insurance closure procedures and premium payment; g. claim settlement and payment procedures; h. clauses regulating the amount of commission received by the Bank from the insurance company in the context of bancassurance;
  i. clarity of responsibilities of each party in fulfilling Customer Due Diligence (CDD) obligations, referring to regulations concerning anti-money laundering and counter-terrorist financing;
  j. determination of clauses containing conditions causing the termination of the cooperation agreement, including clauses allowing the Bank to terminate cooperation before the agreement term expires as referred to in item II.B.1.d or upon the order of the Financial Services Authority (OJK) as referred to in item II.B.4.g of the Financial Services Authority Circular Letter on Risk Management Implementation for Banks Conducting Marketing Cooperation with Insurance Companies (Bancassurance); k. clarity on the settlement of rights and obligations of each party, including obligations to customers as the insured and/or beneficiary, when the cooperation agreement ends, whether due to the expiration of the agreement term or termination as referred to in letter j;
  l. clarity on the limit of responsibility of each party for each product marketed in the event of a dispute with customers;
  m. obligation of all parties to maintain customer data confidentiality; and n. clauses stating that the language used as a reference in the event of a dispute or difference of opinion is the Indonesian language (specifically for bancassurance agreements drafted using both Indonesian and foreign languages side-by-side).

. Bancassurance policies and procedures based on Financial Services Authority Regulations on Risk Management Implementation for Commercial Banks, regulations concerning risk management implementation for Sharia commercial banks and Sharia business units, and Financial Services Authority Circular Letter on Risk Management Implementation for Banks Conducting Marketing Cooperation with Insurance Companies (Bancassurance).

. List of agency certificates for Bank employees handling bancassurance (specifically for distribution and product integration cooperation business models).

. Evidence that Bank employees handling bancassurance have received...

We, the undersigned, hereby declare that:

1. the data and/or information provided has met the provisions in the Financial Services Authority Circular Letter on Risk Management Implementation for Banks Conducting Marketing Cooperation with Insurance Companies (Bancassurance);
2. the content of the provided data and/or information is true and consistent with actual facts; and
3. in the event that it is later discovered that the provided data and/or information does not meet the provisions in the Financial Services Authority Circular Letter on Risk Management Implementation for Banks Conducting Marketing Cooperation with Insurance Companies (Bancassurance) and/or is not true and/or inconsistent with actual facts, we are willing to be subject to sanctions in accordance with Financial Services Authority Regulations on Risk Management Implementation for Commercial Banks or regulations concerning risk management implementation for Sharia commercial banks and Sharia business units.

has received training regarding insurance products to be marketed (specifically for distribution and product integration cooperation business models).
5. Results of the assessment of the adequacy of human resources handling bancassurance.
(to be filled...)

(to be filled with city name, date, month, and year) Director overseeing the compliance function (Bank Name) Director overseeing the risk management function (Bank Name) (Name) (Name) Established in Jakarta on 1 September 2016 EXECUTIVE HEAD OF BANKING SUPERVISOR FINANCIAL SERVICES AUTHORITY, signature NELSON TAMPUBOLON Copy consistent with the original Legal Director 1 Legal Department signature Yuliana

Format for Periodic Bancassurance Report
PERIODIC BANCASSURANCE REPORT
BANK NAME : …………………………………………
MONTHLY POSITION a)
: …………………………………………
PERIOD b)
: …………………………………………
Notes:
EXECUTIVE HEAD OF BANKING SUPERVISOR signature NELSON TAMPUBOLON Insurance Company Name Notes Type c) Related Party d) Value Fund Month l) Report j) Accumulation from the beginning i) Fee Based Income k) Premium Received Business Model Product Type e) Product Name Number of Policies f) Number of Customers g) Original Currency Total Coverage h) a) Fill in the monthly report position, e.g., September 2016 position. b) Fill in the report period, e.g., Quarter III, 2016. c) Fill in with "life", "general", or "reinsurance". d) Fill in with "yes" or "no". Related Party as per regulations concerning maximum credit limits. e) Product types include general, life, unit link, others. f) Fill in the number of policies based on policies that are still outstanding, valid, not yet paid out, or in-force policies. g) Fill in the number of customers based on policies that are still outstanding, valid, not yet paid out, or in-force policies. h) Fill in the coverage amount in full original currency units based on policies that are still outstanding, valid, not yet paid out, or in-force policies. i) Fill in premiums received since the product was sold by the bank until the end of the reporting month in full original currency units, originating from customers whose policies are still outstanding, valid, not yet paid out, or in-force policies as of the end of the reporting month. j) All premiums received in full original currency units during the reporting month. k) Fee-based income in full original currency units for all original currencies received by the Bank during the current year (up to the end of the reporting month) and presented in net amount FINANCIAL SERVICES AUTHORITY, (after deducting taxes imposed by the insurance company). l) Fund value of customer-owned insurance policies that are still in outstanding, valid, not yet paid out, or in-force status as of the reporting position in full original currency units, calculated since the product was sold by the bank to each respective customer until the end of the reporting month. If the product type is filled as unit link, this column must be filled. Established in Jakarta on 1 September 2016 Copy consistent with the original Legal Director 1 Legal Department signature Yuliana