Undang-Undang Republik Indonesia Nomor 40 Tahun 2014 tentang Perasuransian (Law of the Republic of Indonesia Number 40 of 2014 concerning Insurance)

English translation of the Indonesian text from ojk.go.id (the Indonesian text is the official one). Retrieved 2026-10-26.

LAW OF THE REPUBLIC OF INDONESIA NUMBER 40 OF 2014 CONCERNING INSURANCE BY THE GRACE OF GOD ALMIGHTY THE PRESIDENT OF THE REPUBLIC OF INDONESIA, Considering: a. that a healthy, reliable, trustworthy, and competitive insurance industry will enhance protection for policyholders, insureds, or participants, and play a role in driving national development;

b. that in order to respond to and anticipate developments in the insurance industry as well as economic developments, both at the national and global levels, it is necessary to replace Law Number 2 of 1992 concerning Insurance Business with a new law;

c. that based on the considerations referred to in letter a and letter b, it is necessary to establish a Law concerning Insurance;

Recalling: Article 5 paragraph (1), Article 20, and Article 33 of the Constitution of the Republic of Indonesia of 1945;

With the Joint Approval of THE HOUSE OF REPRESENTATIVES OF THE REPUBLIC OF INDONESIA and THE PRESIDENT OF THE REPUBLIC OF INDONESIA DECIDES:

To enact: A LAW CONCERNING INSURANCE.

CHAPTER I . . .

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CHAPTER I GENERAL PROVISIONS

Article 1 In this Law what is meant by:

1. Insurance is an agreement between two parties, namely an insurance company and a policyholder, which forms the basis for the receipt of premiums by the insurance company as consideration for:

a. providing compensation to the insured or policyholder for losses, damages, costs incurred, loss of profits, or legal liability to third parties that may be suffered by the insured or policyholder due to the occurrence of an uncertain event; or b. providing payments based on the death of the insured or payments based on the survival of the insured with benefits the amount of which has been determined and/or based on the results of fund management.

2. Sharia Insurance is a collection of agreements, consisting of an agreement between a sharia insurance company and a policyholder and an agreement among the policyholders, in the context of managing contributions based on sharia principles for the purpose of mutual assistance and protection by way of:

a. providing compensation to the participant or policyholder for losses, damages, costs incurred, loss of profits, or legal liability to third parties that may be suffered by the participant or policyholder due to the occurrence of an uncertain event; or b. providing payments based on the death of the participant or payments based on the survival of the participant with benefits the amount of which has been determined and/or based on the results of fund management.

3. Principle . . .

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3. Sharia Principles are principles of Islamic law in insurance activities based on fatwas issued by an institution that has the authority to determine fatwas in the sharia field.

4. Insurance Business is all business concerning risk coverage services or risk management, reinsurance of risk, marketing and distribution of insurance products or sharia insurance products, insurance consulting and brokerage, sharia insurance, reinsurance, or sharia reinsurance, or assessment of insurance or sharia insurance losses.

5. General Insurance Business is a risk coverage service business that provides compensation to the insured or policyholder for losses, damages, costs incurred, loss of profits, or legal liability to third parties that may be suffered by the insured or policyholder due to the occurrence of an uncertain event.

6. Life Insurance Business is a business that provides risk management services that provides payments to the policyholder, insured, or other entitled party in the event that the insured dies or survives, or other payments to the policyholder, insured, or other entitled party at a certain time stipulated in the agreement, the amount of which has been determined and/or based on the results of fund management.

7. Reinsurance Business is a reinsurance service business for risks faced by insurance companies, guarantee companies, or other reinsurance companies.

8. Sharia General Insurance Business is a risk management business based on Sharia Principles for the purpose of mutual assistance and protection by providing compensation to the participant or policyholder for losses, damages, costs incurred, loss of profits, or legal liability to third parties that may be suffered by the participant or policyholder due to the occurrence of an uncertain event.

9. Business . . .

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9. Sharia Life Insurance Business is a risk management business based on Sharia Principles for the purpose of mutual assistance and protection by providing payments based on the death or survival of the participant, or other payments to the participant or other entitled party at a certain time stipulated in the agreement, the amount of which has been determined and/or based on the results of fund management.

10. Sharia Reinsurance Business is a risk management business based on Sharia Principles for risks faced by sharia insurance companies, sharia guarantee companies, or other sharia reinsurance companies.

11. Insurance Brokerage Business is a consulting and/or brokerage service business in the placement of insurance or sharia insurance as well as handling the settlement of claims by acting for and on behalf of the policyholder, insured, or participant.

12. Reinsurance Brokerage Business is a consulting and/or brokerage service business in the placement of reinsurance or placement of sharia reinsurance as well as handling the settlement of claims by acting for and on behalf of an insurance company, sharia insurance company, guarantee company, sharia guarantee company, reinsurance company, or sharia reinsurance company that places reinsurance or sharia reinsurance.

13. Insurance Loss Assessment Business is a claim assessment service business and/or consulting service on insurance objects.

14. Insurance Company means an insurance company, a sharia insurance company, a reinsurance company, a sharia reinsurance company, an insurance brokerage company, a reinsurance brokerage company, and an insurance loss appraisal company.

15. Insurance Company means a general insurance company and a life insurance company.

16. Sharia Insurance Company means a sharia general insurance company and a sharia life insurance company.

17. Pihak . . .

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17. Party means a person or a business entity, whether in the form of a legal entity or not in the form of a legal entity.

18. Guarantee Fund means the assets of an Insurance Company, a Sharia Insurance Company, a reinsurance company, or a sharia reinsurance company which constitute the last resort in order to protect the interests of policyholders, the insured, or participants, in the event that the Insurance Company, the Sharia Insurance Company, the reinsurance company, and the sharia reinsurance company are liquidated.

19. Controlling Party means a Party that directly or indirectly has the ability to determine the directors, the board of commissioners, or those equivalent to the directors or the board of commissioners in a legal entity in the form of a cooperative or joint venture and/or to influence the actions of the directors, the board of commissioners, or those equivalent to the directors or the board of commissioners in a legal entity in the form of a cooperative or joint venture.

20. Insurance Fund means a collection of funds derived from premiums formed to fulfill obligations arising from policies issued or from insurance claims.

21. Tabarru’ Fund is a collection of funds originating from the contributions of participants, the mechanism for whose use is in accordance with the Sharia Insurance agreement or the sharia reinsurance agreement.

22. Policyholder is a Party who binds itself based on an agreement with an Insurance Company, a Sharia Insurance Company, a reinsurance company, or a sharia reinsurance company to obtain protection or risk management for itself, the insured, or other participants.

23. Insured is a Party who faces risk as regulated in the Insurance agreement or the reinsurance agreement.

24. Peserta . . .

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24. Participant is a Party who faces risk as regulated in the Sharia Insurance agreement or the sharia reinsurance agreement.

25. Object of Insurance is life and body, human health, legal liability, goods and services, as well as all other interests that can be lost, damaged, suffer loss, and/or decrease in value.

26. Insurance Broker is a person who works at an insurance brokerage company and meets the requirements to give recommendations or represent the Policyholder, Insured, or Participant in carrying out insurance or sharia insurance underwriting and/or claim settlement.

27. Reinsurance Broker is a person who works at a reinsurance brokerage company and meets the requirements to provide recommendations or represent an Insurance Company, Sharia Insurance Company, guarantee company, sharia guarantee company, reinsurance company, or sharia reinsurance company in conducting reinsurance or sharia reinsurance placement and/or claim settlement.

28. Insurance Agent is a person who works independently or works at a business entity, who acts for and on behalf of an Insurance Company or Sharia Insurance Company and meets the requirements to represent the Insurance Company or Sharia Insurance Company in marketing insurance products or sharia insurance products.

29. Premium is a sum of money determined by an Insurance Company or reinsurance company and approved by the Policyholder to be paid based on an Insurance agreement or reinsurance agreement, or a sum of money determined based on the provisions of laws and regulations underlying a mandatory insurance program to obtain benefits.

30. Kontribusi . . .

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30. Contribution is a sum of money determined by a Sharia Insurance Company or sharia reinsurance company and approved by the Policyholder to be paid based on a Sharia Insurance agreement or sharia reinsurance agreement to obtain benefits from the Tabarru’ Fund and/or Participant investment fund and to pay management costs or a sum of money determined based on the provisions of laws and regulations underlying a mandatory insurance program to obtain benefits.

31. Affiliation is a relationship between a person or legal entity and one or more persons, or another legal entity, such that one of them can influence the management or policies of the other person or other legal entity or vice versa.

32. Mandatory Insurance Program is a program required by laws and regulations for all or a certain group in society to obtain protection from certain risks, excluding programs required by law to provide basic protection for society with a cross-subsidy mechanism in determining benefits and Premiums or Contributions.

33. Statutory Manager is a Party appointed by the Financial Services Authority to take over the management of an Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company.

34. Every Person is an individual or corporation.

35. Financial Services Authority is the regulatory and supervisory institution for the financial services sector as referred to in the law regarding the financial services authority.

36. Financial Services Authority Regulation is a written regulation stipulated by the Board of Commissioners of the Financial Services Authority as referred to in the law regarding the financial services authority.

37. Government is the government of the Republic of Indonesia.

38. Menteri . . .

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38. Minister is the minister who administers government affairs in the field of finance.

BAB II RUANG LINGKUP USAHA PERASURANSIAN

Pasal 2

(1) A general insurance company may only conduct:

a. General Insurance Business, including the health insurance line of business and the personal accident insurance line of business; and b. Reinsurance Business for the risks of other General Insurance Companies.

(2) A life insurance company may only conduct Life Insurance Business including the annuity line of business, the health insurance line of business, and the personal accident insurance line of business.

(3) A reinsurance company may only conduct Reinsurance Business.

Article 3

(1) A sharia general insurance company may only conduct:

a. Sharia General Insurance Business, including the health insurance line of business based on Sharia Principles and the personal accident insurance line of business based on Sharia Principles; and b. Sharia Reinsurance Business for the risks of other Sharia General Insurance Companies.

(2) A sharia life insurance company may only conduct Sharia Life Insurance Business including the annuity line of business based on Sharia Principles, the health insurance line of business based on Sharia Principles, and the personal accident insurance line of business based on Sharia Principles.

(3) A sharia reinsurance company may only conduct Sharia Reinsurance Business.

Article 4 . . .

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Article 4

(1) An insurance brokerage company may only conduct Insurance Brokerage Business.

(2) A reinsurance brokerage company may only conduct Reinsurance Brokerage Business.

(3) An insurance loss adjuster company may only conduct Insurance Loss Adjuster Business.

Article 5

(1) The scope of General Insurance Business and Life Insurance Business as referred to in Article 2 paragraph

(1) and paragraph (2) as well as Sharia General Insurance Business and Sharia Life Insurance Business as referred to in Article 3 paragraph (1) and paragraph (2) may be expanded in accordance with the needs of society.

(2) The expansion of the scope of General Insurance Business, Life Insurance Business, Sharia General Insurance Business, and Sharia Life Insurance Business as referred to in paragraph (1) may be in the form of additional benefits the amount of which is based on the results of fund management.

(3) Further provisions regarding the expansion of the scope of General Insurance Business, Life Insurance Business, Sharia General Insurance Business, and Sharia Life Insurance Business as referred to in paragraph (1) and paragraph (2) are stipulated in a Financial Services Authority Regulation.

CHAPTER III LEGAL ENTITY FORM AND OWNERSHIP OF INSURANCE COMPANIES

Article 6

(1) The legal entity forms of an Insurance Business operator are:

a. limited liability company;

b. cooperative; or

c. mutual business that already existed at the time this Law was promulgated.

(2) Business . . .

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(2) The mutual business as referred to in paragraph (1)

letter c is declared as a legal entity based on this Law.

(3) Further provisions regarding the legal entity of mutual business as referred to in paragraph (2) are stipulated in a Government Regulation.

Article 7

(1) An Insurance Company may only be owned by:

a. Indonesian citizens and/or Indonesian legal entities that are directly or indirectly wholly owned by Indonesian citizens;

or b. Indonesian citizens and/or Indonesian legal entities as referred to in letter a, together with foreign citizens or foreign legal entities that must be Insurance Companies that have a similar business or a parent company one of whose subsidiaries is engaged in a similar Insurance Business.

(2) Foreign citizens as referred to in paragraph (1)

letter b may become owners of an Insurance Company only through transactions on the stock exchange.

(3) Further provisions regarding the criteria for foreign legal entities and ownership by foreign legal entities as referred to in paragraph (1) letter b and ownership by foreign citizens as referred to in paragraph (2) in an Insurance Company are stipulated in a Government Regulation.

CHAPTER IV BUSINESS LICENSING

Article 8

(1) Every Party conducting Insurance Business must first obtain a business license from the Financial Services Authority.

(2) To . . .

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(2) To obtain a business license as referred to in paragraph (1), requirements must be met regarding:

a. articles of association;

b. organizational structure;

c. paid-up capital;

d. Guarantee Fund;

e. ownership;

f. fit and proper test of shareholders and Controllers;

g. capability and propriety of the board of directors and board of commissioners, or the equivalent of the board of directors and board of commissioners in a legal entity in the form of a cooperative or mutual business as referred to in Article 6 paragraph (1) letter c, sharia supervisory board, company actuary, and internal auditor;

h. experts;

i. feasibility of the work plan;

j. feasibility of the risk management system;

k. products to be marketed;

l. engagement with affiliated parties, if any, and policy on the transfer of part of the functions in conducting the business;

m. infrastructure for preparing and submitting reports to the Financial Services Authority;

n. confirmation from the supervisory authority in the country of origin of the foreign party, in the event that there is direct participation by a foreign party; and o. other matters necessary to support sound business growth.

(3) The business license requirements as referred to in paragraph

(2) apply in accordance with the type of business to be carried out.

(4) Further provisions regarding the requirements and procedures for business licensing as referred to in paragraph

(2) is regulated in the Financial Services Authority Regulation.

Article 9

(1) The Financial Services Authority approves or rejects an application for a business license of an Insurance Company within a maximum of 30 (thirty) working days from the receipt of a complete application.

(2) In . . .

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(2) In the event that the Financial Services Authority rejects an application for a business license as referred to in paragraph (1), the rejection must be made in writing accompanied by its reasons.

Article 10

(1) An Insurance Company must report every opening of an office outside its head office to the Financial Services Authority.

(2) Offices of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies outside their head office that have the authority to make decisions regarding the acceptance or rejection of underwriting and/or decisions regarding the acceptance or rejection of claims must at all times meet the requirements set by the Financial Services Authority.

(3) Insurance Companies are fully responsible for every office that they own or manage, or whose owner or manager is granted permission to use the name of the relevant Insurance Company.

(4) Further provisions regarding the form and procedures for reporting as referred to in paragraph (1) are regulated in Financial Services Authority Regulations.

CHAPTER V CONDUCT OF BUSINESS

Article 11

(1) Insurance Companies must apply good corporate governance.

(2) Further provisions regarding corporate governance as referred to in paragraph (1) are regulated in Financial Services Authority Regulations.

Article 12 . . .

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Article 12

(1) Members of the board of directors, members of the board of commissioners, or those equivalent to members of the board of directors and members of the board of commissioners in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph (1) letter c, members of the sharia supervisory board, the company's actuaries, internal auditors, and the Controlling Shareholder must at all times meet the fit and proper requirements.

(2) Further provisions regarding the requirements and procedures for the assessment of fitness and propriety as referred to in paragraph (1) are regulated in Financial Services Authority Regulations.

Article 13

(1) Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies must appoint at least 1 (one)

Controlling Shareholder.

(2) In the event that there is another Controlling Shareholder that has not been appointed by an Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company, the Financial Services Authority is authorized to appoint a Controlling Shareholder other than the Controlling Shareholder as referred to in paragraph (1).

(3) Further provisions regarding the criteria for the Controlling Shareholder as referred to in paragraph (1) and paragraph (2) are regulated in Financial Services Authority Regulations.

Article 14

(1) Every Party designated as a Controlling Shareholder as referred to in Article 13 paragraph (1) must be reported to the Financial Services Authority.

(2) Changes in the Controlling Shareholder must be reported to the Financial Services Authority.

(3) A Party that has been designated as a Controlling Shareholder cannot cease to be a Controlling Shareholder without the approval of the Financial Services Authority.

(4) Provisions . . .

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(4) Further provisions regarding the requirements and procedures for obtaining approval to cease being a Controlling Shareholder as referred to in paragraph (3) are regulated in Financial Services Authority Regulations.

Article 15 The Controlling Shareholder must jointly bear responsibility for the losses of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies caused by Parties under its control.

Article 16

(1) Every Party may only be a controlling shareholder in 1 (one) life insurance company, 1 (one) general insurance company, 1 (one) reinsurance company, 1 (one) sharia life insurance company, 1 (one) sharia general insurance company, and 1 (one)

sharia reinsurance company.

(2) The provisions as referred to in paragraph (1) do not apply if the controlling shareholder is the State of the Republic of Indonesia.

(3) Further provisions regarding the controlling shareholder as referred to in paragraph (1) are regulated in Financial Services Authority Regulations.

Article 17

(1) Insurance Companies must employ a sufficient number of experts in accordance with the type and lines of business they conduct, in order to ensure the application of sound insurance management.

(2) Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies must employ a sufficient number of actuaries in accordance with the type and lines of business they conduct, to independently and in accordance with applicable practice standards manage the financial impact of the risks faced by the company.

(3) Provisions . . .

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(3) Further provisions regarding the type, number, and requirements of experts as referred to in paragraph (1) and actuaries as referred to in paragraph

(2) are regulated in Financial Services Authority Regulations.

Article 18

(1) Insurance Companies may cooperate with other parties in order to obtain business or carry out part of the functions in the conduct of their business.

(2) Insurance Companies must ensure that the other parties as referred to in paragraph (1) have a license to carry out their business from the authorized agency.

(3) Insurance Companies must have and apply selection and accountability standards in the implementation of the cooperation as referred to in paragraph (1).

(4) Further provisions regarding the cooperation as referred to in paragraph (1) are regulated in Financial Services Authority Regulations.

Article 19

(1) Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies must comply with the provisions regarding financial soundness.

(2) Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies must periodically evaluate the ability of the Insurance Fund or Tabarru' Fund to meet claims or other obligations arising from policies.

(3) Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies must plan and apply risk mitigation methods to maintain their financial soundness.

(4) Provisions . . .

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(4) Further provisions regarding financial soundness as referred to in paragraph (1) and risk mitigation methods as referred to in paragraph (3) are regulated in Financial Services Authority Regulations.

Article 20

(1) Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies are obliged to establish a Guarantee Fund in the form and amount determined by the Financial Services Authority.

(2) The Guarantee Fund as referred to in paragraph (1)

must have its amount adjusted to the development of the business, with the provision that it shall not be less than what was required at the time of establishment.

(3) The Guarantee Fund as referred to in paragraph (1)

is prohibited from being pledged or encumbered with any rights.

(4) The Guarantee Fund as referred to in paragraph (1)

may only be transferred or disbursed after obtaining the approval of the Financial Services Authority.

(5) Further provisions regarding the Guarantee Fund as referred to in paragraph (1), paragraph (2), paragraph (3), and paragraph (4) shall be regulated in Financial Services Authority Regulations.

Article 21

(1) Assets and liabilities related to the rights of Policyholders, the Insured, or Participants must be separated from other assets and liabilities of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies.

(2) For sharia life insurance companies, the assets and liabilities of Participants for the purpose of mutual assistance in facing risks must be separated from the assets and liabilities of Participants for the purpose of investment.

(3) Companies . . .

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(3) Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies must apply the principles of prudence and the suitability between assets and liabilities in investing the assets of Policyholders, the Insured, or Participants.

(4) Further provisions regarding the separation of assets and liabilities as referred to in paragraph (1) and paragraph (2), and the investment of assets of Policyholders, the Insured, or Participants as referred to in paragraph (3) shall be regulated in Financial Services Authority Regulations.

Article 22

(1) Insurance Companies must submit reports, information, data, and/or documents to the Financial Services Authority.

(2) The submission of reports as referred to in paragraph

(1) may be carried out through an electronic data system.

(3) Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies must announce their financial position, financial performance, and financial soundness condition in Indonesian-language daily newspapers circulated nationally and electronic media.

(4) Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies must provide information regarding their financial position, financial performance, and the risks they face to interested parties in a manner consistent with the provisions of legislation.

(5) Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies must announce audited financial statements no later than 1 (one) month after the deadline for submission of such financial statements to the Financial Services Authority.

(6) Provisions . . .

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(6) Further provisions regarding the submission of reports to the Financial Services Authority as referred to in paragraph (1) and announcements as referred to in paragraph (3) are stipulated in a Financial Services Authority Regulation.

Article 23

(1) Certain reports and the results of analysis of reports as referred to in Article 22 paragraph (1) cannot be disclosed by the Financial Services Authority to other parties, except to:

a. police and prosecutors for investigation purposes;

b. judges for judicial purposes;

c. tax officials for taxation purposes;

d. Bank Indonesia for the implementation of its duties; or e. other parties based on laws and regulations.

(2) Further provisions regarding the requirements and procedures for obtaining certain reports and the results of analysis of reports as referred to in paragraph (1) are stipulated in a Financial Services Authority Regulation.

Article 24

(1) The closing of insurance on an Insurance Object must be based on the principle of freedom to choose an Insurance Company or Sharia Insurance Company.

(2) The closing of an Insurance Object as referred to in paragraph (1) must be carried out by taking into account the capacity of Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies domestically.

(3) Further provisions regarding the closing of an Insurance Object as referred to in paragraph (2) are stipulated in a Financial Services Authority Regulation.

Article 25 . . .

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Article 25 Insurance Objects in Indonesia may only be insured with Insurance Companies and Sharia Insurance Companies that obtain business licenses from the Financial Services Authority, except in the case of:

a. there is no Insurance Company and Sharia Insurance Company in Indonesia, either individually or jointly, that has the ability to retain or manage insurance risks or sharia insurance risks from the relevant Insurance Object; or b. there is no Insurance Company and Sharia Insurance Company in Indonesia willing to close insurance or sharia insurance on the relevant Insurance Object.

Article 26

(1) Insurance Companies must comply with business conduct standards that include provisions regarding:

a. policy;

b. Premium or Contribution;

c. underwriting and identification of Policyholders, Insureds, or Participants;

d. claim settlement;

e. expertise in the field of insurance;

f. distribution or marketing of products;

g. handling of complaints from Policyholders, Insureds, or Participants; and h. other standards related to the conduct of business.

(2) Further provisions regarding the standards of business conduct as referred to in paragraph (1) shall be stipulated in a Financial Services Authority Regulation.

Article 27

(1) Insurance Brokers, Reinsurance Brokers, and Insurance Agents must be registered with the Financial Services Authority.

(2) Broker . . .

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(2) Insurance Brokers, Reinsurance Brokers, and Insurance Agents must possess sufficient knowledge and capability and have a good reputation.

(3) Further provisions regarding the requirements and procedures for registration of Insurance Brokers, Reinsurance Brokers, and Insurance Agents as referred to in paragraph (1)

and paragraph (2) shall be stipulated in a Financial Services Authority Regulation.

Article 28

(1) Premiums or Contributions may be paid directly by the Policyholder or Participant to the Insurance Company or Sharia Insurance Company, or paid through an Insurance Agent.

(2) Insurance Agents may only receive payment of Premiums or Contributions from the Policyholder or Participant after obtaining approval from the Insurance Company or Sharia Insurance Company.

(3) Coverage shall be declared effective and binding on the Parties as of the time the Premium or Contribution is received by the Insurance Agent.

(4) Insurance Agents are prohibited from holding or managing Premiums or Contributions.

(5) Insurance Agents are prohibited from embezzling Premiums or Contributions.

(6) In the event that Premiums or Contributions are paid through an Insurance Agent as referred to in paragraph (1) and paragraph (2), the Insurance Agent must submit such Premiums or Contributions to the Insurance Company or Sharia Insurance Company within the period stipulated in a Financial Services Authority Regulation.

(7) The Insurance Company or Sharia Insurance Company must be responsible for the payment of claims that arise if the Insurance Agent has received the Premium or Contribution, but has not submitted it to the Insurance Company and Sharia Insurance Company.

(8) Company . . .

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(8) The Insurance Company or Sharia Insurance Company must pay brokerage service fees to the Insurance Agent immediately upon receiving the Premium or Contribution.

Article 29

(1) Premiums or Contributions may be paid directly by the Policyholder or Participant to the Insurance Company or Sharia Insurance Company, or paid through an insurance brokerage company.

(2) Premiums or Contributions may be paid directly by the Insurance Company or Sharia Insurance Company to the reinsurance company or sharia reinsurance company, or paid through a reinsurance brokerage company.

(3) Insurance brokerage companies and reinsurance brokerage companies are prohibited from holding or managing Premiums or Contributions.

(4) Insurance brokerage companies and reinsurance brokerage companies are prohibited from embezzling Premiums or Contributions.

(5) In the event that Premiums or Contributions are paid through an insurance brokerage company as referred to in paragraph (1) or through a reinsurance brokerage company as referred to in paragraph (2), the insurance brokerage company or reinsurance brokerage company must submit such Premiums or Contributions to the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company within the period stipulated in a Financial Services Authority Regulation.

(6) In the event that the submission of Premiums or Contributions is carried out by the insurance brokerage company or reinsurance brokerage company after the expiry of the period as referred to in paragraph (5), the insurance brokerage company or reinsurance brokerage company must be responsible for the payment of claims arising from losses that occur after the expiry of such period.

(7) Company . . .

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(7) Insurance brokerage companies and reinsurance brokerage companies receive brokerage service fees from the Policyholder for their brokerage services.

Article 30

(1) Insurance brokerage companies are prohibited from placing insurance coverage or sharia insurance coverage with an Insurance Company or Sharia Insurance Company that is an Affiliate of the Insurance Broker or the relevant insurance brokerage company.

(2) Reinsurance brokerage companies are prohibited from placing reinsurance coverage or sharia reinsurance coverage with a reinsurance company or sharia reinsurance company that is an Affiliate of the Reinsurance Broker or the relevant reinsurance brokerage company.

(3) Insurance brokerage companies and reinsurance brokerage companies are responsible for the actions of Insurance Brokers and Reinsurance Brokers who provide recommendations to Policyholders regarding insurance coverage or reinsurance coverage.

Article 31

(1) Insurance Agents, Insurance Brokers, Reinsurance Brokers, and Insurance Companies must apply all expertise, care, and prudence in serving or transacting with Policyholders, Insureds, or Participants.

(2) Insurance Agents, Insurance Brokers, Reinsurance Brokers, and Insurance Companies must provide information that is true, not false, and/or not misleading to Policyholders, Insureds, or Participants regarding risks, benefits, obligations and cost charges related to insurance products or sharia insurance products offered.

(3) Company . . .

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(3) Insurance Companies, Sharia Insurance Companies, reinsurance companies, sharia reinsurance companies, insurance brokerage companies, and reinsurance brokerage companies must handle claims and complaints through a process that is fast, simple, easily accessible, and fair.

(4) Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies are prohibited from taking actions that may delay the settlement or payment of claims, or failing to take actions that should be taken resulting in delay in the settlement or payment of claims.

(5) Further provisions regarding the handling of claims and complaints through a process that is fast, simple, easily accessible, and fair as referred to in paragraph (3)

shall be stipulated in a Financial Services Authority Regulation.

Article 32

(1) Insurance Companies, Sharia Insurance Companies, and insurance brokerage companies must implement anti-money laundering and counter-terrorism financing policies.

(2) Insurance Companies, Sharia Insurance Companies, and insurance brokerage companies must obtain sufficient information regarding prospective Policyholders, Insureds, Participants, or other parties related to the closing of insurance or sharia insurance in order to implement anti-money laundering and counter-terrorism financing policies.

(3) Further provisions regarding the implementation of anti-money laundering and counter-terrorism financing policies for Insurance Companies, Sharia Insurance Companies, and insurance brokerage companies as referred to in paragraph (1) and paragraph (2) shall be stipulated in a Financial Services Authority Regulation.

Article 33 . . .

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Article 33 Every Person is prohibited from falsifying documents of an Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company.

Article 34 Members of the board of directors and/or parties authorized to sign policies of an Insurance Company or Sharia Insurance Company that is subject to a business activity restriction sanction are prohibited from signing new policies.

CHAPTER VI GOVERNANCE OF INSURANCE BUSINESS IN THE FORM OF COOPERATIVES AND MUTUAL BUSINESS

Article 35

(1) Insurance Companies and Sharia Insurance Companies in the form of cooperatives or mutual business as referred to in Article 6 paragraph (1) letter c may only provide insurance services or sharia insurance services to their members.

(2) Every member of an Insurance Company and Sharia Insurance Company in the form of a cooperative or member of a mutual business as referred to in

Article 6 paragraph (1) letter c must become a Policyholder of the company concerned.

(3) Membership in an Insurance Company and Sharia Insurance Company in the form of a cooperative or membership in a mutual business as referred to in Article 6 paragraph (1) letter c shall terminate if:

a. the member dies;

b. the member no longer holds an insurance policy from the Insurance Company or Sharia Insurance Company concerned for 6 (six) consecutive months; or

c. in accordance with the provisions of laws and regulations, the membership must terminate.

(4) Members . . .

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(4) Members of an Insurance Company and Sharia Insurance Company in the form of a cooperative or members of a mutual business as referred to in Article 6 paragraph (1) letter c are entitled to all profits and must bear all losses from business activities in accordance with the provisions of laws and regulations.

(5) Further provisions regarding the financial requirements to become a member as referred to in paragraph

(1) and paragraph (2) as well as the utilization of profits by members and the allocation of losses among members as referred to in paragraph (4) of an Insurance Company and Sharia Insurance Company in the form of a cooperative or members of a mutual business as referred to in Article 6 paragraph (1) letter c shall be stipulated in a Financial Services Authority Regulation.

CHAPTER VII CAPACITY ENHANCEMENT OF DOMESTIC INSURANCE, SHARIA INSURANCE, REINSURANCE, AND SHARIA REINSURANCE

Article 36 Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies must optimize the utilization of domestic insurance, sharia insurance, reinsurance, and/or sharia reinsurance capacity.

Article 37 The Government and/or the Financial Services Authority shall encourage the enhancement of domestic insurance, sharia insurance, reinsurance, and/or sharia reinsurance capacity in order to meet domestic insurance, sharia insurance, reinsurance, and/or sharia reinsurance coverage needs.

Article 38 . . .

• 26 -

Article 38 The Government may provide fiscal facilities to individuals, households, and/or micro, small, and medium enterprises to encourage the utilization of insurance, sharia insurance, reinsurance, and/or sharia reinsurance services in risk management in accordance with the provisions of laws and regulations.

CHAPTER VIII MANDATORY INSURANCE PROGRAM

Article 39

(1) The Mandatory Insurance Program must be implemented competitively.

(2) The regulation of the Mandatory Insurance Program as referred to in paragraph (1) shall at least contain:

a. scope of participation;

b. rights and obligations of the Insured or Participant;

c. Premium or Contribution;

d. benefits or compensation;

e. procedures for claims and payment of benefits or compensation;

f. criteria for organizers;

g. rights and obligations of organizers; and h. information disclosure.

(3) Parties that may organize the Mandatory Insurance Program as referred to in paragraph (1) must meet the requirements stipulated by the Financial Services Authority.

(4) Organizers of the Mandatory Insurance Program as referred to in paragraph (3) may offer additional benefits with an additional Premium or Contribution.

(5) Organizers of the Mandatory Insurance Program as referred to in paragraph (3) are prohibited from forcing Policyholders to accept the offer of additional benefits as referred to in paragraph (4).

CHAPTER IX . . .

• 27 -

CHAPTER IX CHANGE OF OWNERSHIP, MERGER, AND CONSOLIDATION

Article 40

(1) Every change of ownership of an Insurance Company must first obtain approval from the Financial Services Authority.

(2) In the event that the change of ownership as referred to in paragraph (1) is a change of ownership that results in direct participation by a foreign party in the Insurance Company, such foreign party must be an Insurance Company engaged in a similar business or a parent company one of whose subsidiaries is engaged in a similar Insurance Business.

(3) The provisions regarding an Insurance Company engaged in a similar business or the ownership by a parent company of a subsidiary engaged in a similar Insurance Business as referred to in paragraph (2) must continue to be fulfilled as long as such foreign party holds participation in the Insurance Company.

(4) Changes in ownership of an Insurance Company through transactions on the stock exchange are exempted from the provisions referred to in paragraph (1)

as long as they do not cause a change in control of the Insurance Company.

(5) To obtain approval, changes in ownership of an Insurance Company as referred to in paragraph (1) must meet the following conditions:

a. the change in ownership does not reduce the rights of Policyholders, Insureds, or Participants, for an Insurance Company or Sharia Insurance Company; and b. the change in ownership does not reduce the rights of the insurer, reinsurer, or manager, for a reinsurance company, or sharia reinsurance company.

(6) Provisions . . .

• 28 -

(6) Further provisions regarding the procedures and requirements for changes in ownership of an Insurance Company as referred to in paragraph (1), paragraph (2), paragraph (3), paragraph (4), and paragraph (5) are stipulated in a Financial Services Authority Regulation.

Article 41

(1) An Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company that carries out a merger or consolidation must first obtain approval from the Financial Services Authority.

(2) A merger or consolidation as referred to in paragraph (1) may only be carried out between Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies whose line of business is of the same type.

(3) To obtain approval, a merger or consolidation as referred to in paragraph (1) must meet the following conditions:

a. the merger or consolidation does not reduce the rights of Policyholders, Insureds, or Participants, for an Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company; and b. the financial condition of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company resulting from the merger or consolidation must continue to meet the provisions on the financial soundness level.

(4) Further provisions regarding a merger or consolidation as referred to in paragraph (1), paragraph (2), and paragraph (3) are stipulated in a Financial Services Authority Regulation.

CHAPTER X . . .

• 29 -

CHAPTER X DISSOLUTION, LIQUIDATION, AND BANKRUPTCY

Article 42

(1) An Insurance Company that ceases its business activities must first report the plan to cease business activities to the Financial Services Authority.

(2) An Insurance Company as referred to in paragraph (1) must first settle all of its obligations.

(3) In the event that the Insurance Company as referred to in paragraph (1) has settled all of its obligations, the Financial Services Authority revokes the business license of the Insurance Company concerned.

(4) Further provisions regarding the cessation of business activities as referred to in paragraph (1) and the settlement of obligations of an Insurance Company as referred to in paragraph (2) are stipulated in a Financial Services Authority Regulation.

Article 43

(1) An Insurance Company whose business license has been revoked must cease its business activities.

(2) Shareholders, the board of directors, the board of commissioners, or those equivalent to shareholders, the board of directors, and the board of commissioners in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph (1) letter c, and employees of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies are prohibited from transferring, pledging, mortgaging, or using assets, or carrying out other actions that can reduce assets or decrease the value of assets of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies since the revocation of their business license.

Article 44 . . .

• 30 -

Article 44

(1) At the latest 30 (thirty) days from the date of revocation of the business license, Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies whose business licenses have been revoked are obliged to hold a general meeting of shareholders or the equivalent of a general meeting of shareholders in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph (1) letter c to decide on the dissolution of the company's legal entity and to form a liquidation team.

(2) If within the period as referred to in paragraph (1) the general meeting of shareholders or the equivalent of a general meeting of shareholders in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph (1) letter c cannot be held, or the general meeting of shareholders or the equivalent of a general meeting of shareholders in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph (1) letter c can be held but fails to decide on the dissolution of the company's legal entity and fails to form a liquidation team, the Financial Services Authority:

a. decides on the dissolution of the company's legal entity and forms a liquidation team;

b. registers and notifies the dissolution of the company's legal entity to the competent authority, and announces it in the State Gazette of the Republic of Indonesia and 2 (two) widely circulated daily newspapers;

c. orders the liquidation team to carry out liquidation in accordance with the provisions of this Law; and d. orders the liquidation team to report the results of the liquidation implementation.

(3) Further provisions regarding the formation of the liquidation team and the reporting of the results of the liquidation implementation by the liquidation team as referred to in paragraph (1) and paragraph (2) shall be regulated in a Financial Services Authority Regulation.

Article 45 . . .

• 31 -

Article 45

(1) From the formation of the liquidation team as referred to in Article 44 paragraph (1) and paragraph (2), the responsibility and management of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies in liquidation are carried out by the liquidation team.

(2) The liquidation team is authorized to represent Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies in liquidation in all matters related to the settlement of the rights and obligations of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies.

(3) Further provisions regarding the implementation of liquidation of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies as referred to in paragraph (1) and paragraph (2)

shall be regulated in a Financial Services Authority Regulation.

Article 46

(1) From the formation of the liquidation team, the board of directors and the board of commissioners, or those equivalent to the board of directors and the board of commissioners in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph (1) letter c, of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies in liquidation no longer have authority as the board of directors and the board of commissioners, or those equivalent to the board of directors and the board of commissioners in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph (1) letter c, of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies.

(2) Shareholders . . .

• 32 -

(2) Shareholders, the board of directors, the board of commissioners, or those equivalent to shareholders, the board of directors, and the board of commissioners in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph (1) letter c, and employees of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies in liquidation are obliged to provide the data, information, and documents required by the liquidation team.

(3) Shareholders, the board of directors, the board of commissioners, or those equivalent to shareholders, the board of directors, and the board of commissioners in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph (1) letter c, and employees of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies in liquidation are prohibited from obstructing the liquidation process.

Article 47

(1) All costs of liquidation implementation listed in the list of liquidation costs become a charge on the assets of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies in liquidation and are paid first from every realization of proceeds.

(2) In the event that there is a remaining liquidation result after payment of all obligations of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies in liquidation, such remaining liquidation result is the right of shareholders or those equivalent to shareholders in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph (1) letter c.

Article 48 . . .

• 33 -

Article 48

(1) In the event that there is a remaining liquidation result as referred to in Article 47 paragraph (2), claims arising within 2 (two) years from the completion of the liquidation process shall be submitted through the Financial Services Authority to shareholders or those equivalent to shareholders in a legal entity in the form of a cooperative or joint business as referred to in Article 6 paragraph (1) letter c.

(2) Claims as referred to in paragraph (1)

shall be charged against the remaining liquidation result which is the right of shareholders or those equivalent to shareholders in a legal entity in the form of a cooperative or joint business as referred to in Article 6 paragraph (1) letter c.

Article 49

(1) The liquidation team must act fairly and objectively in carrying out its duties.

(2) In the event of a conflict of interest between the interests of shareholders or those equivalent to shareholders in a legal entity in the form of a cooperative or joint business as referred to in Article 6 paragraph (1) letter c and the interests of Policyholders, the Insured, or Participants, the liquidation team must prioritize the interests of Policyholders, the Insured, or Participants.

Article 50

(1) An application for a declaration of bankruptcy against an Insurance Company, a Sharia Insurance Company, a reinsurance company, or a sharia reinsurance company based on this Law may only be submitted by the Financial Services Authority.

(2) Proce . . .

• 34 -

(2) The procedures and requirements for an application for a declaration of bankruptcy against an Insurance Company, a Sharia Insurance Company, a reinsurance company, or a sharia reinsurance company as referred to in paragraph (1)

shall be carried out in accordance with the provisions of laws and regulations.

(3) An application for a declaration of bankruptcy against an Insurance Company, a Sharia Insurance Company, a reinsurance company, or a sharia reinsurance company as referred to in paragraph (1) may not be submitted for the purpose of executing a court decision.

Article 51

(1) Creditors submit an application to the Financial Services Authority to file an application for a declaration of bankruptcy with the commercial court.

(2) The Financial Services Authority approves or rejects the application submitted by the creditor as referred to in paragraph (1) at the latest 30 (thirty) days from the date the application is received in full.

(3) In the event that the Financial Services Authority rejects the application submitted by the creditor as referred to in paragraph (2), the rejection must be made in writing accompanied by the reasons therefor.

(4) Further provisions regarding the procedures and requirements for applications from creditors as referred to in paragraph (1), paragraph (2), and paragraph (3) shall be regulated in Financial Services Authority Regulations.

Article 52

(1) In the event that an Insurance Company, a Sharia Insurance Company, a reinsurance company, or a sharia reinsurance company is declared bankrupt or liquidated, the rights of Policyholders, the Insured, or Participants to the distribution of its assets shall have a higher position than the rights of other parties.

(2) In . . .

• 35 -

(2) In the event that an Insurance Company or a reinsurance company is declared bankrupt or liquidated, the Insurance Fund must be used first to fulfill obligations to Policyholders, the Insured, or other parties entitled to insurance benefits.

(3) In the event that there is a surplus of the Insurance Fund after the fulfillment of obligations as referred to in paragraph (2), such surplus of the Insurance Fund may be used to fulfill obligations to third parties other than Policyholders, Insureds, or other parties entitled to insurance benefits.

(4) In the event that a Sharia Insurance Company or sharia reinsurance company is declared bankrupt or liquidated, the Tabarru' Fund and participant investment funds cannot be used to pay obligations other than to Participants.

CHAPTER XI PROTECTION OF POLICYHOLDERS, INSUREDS, OR PARTICIPANTS

Article 53

(1) Insurance Companies and Sharia Insurance Companies are required to become participants in the policy guarantee program.

(2) The implementation of the policy guarantee program as referred to in paragraph (1) shall be regulated by law.

(3) At the time the policy guarantee program takes effect based on the law as referred to in paragraph (2), the provisions regarding the Guarantee Fund as referred to in Article 8 paragraph (2) letter d and Article 20 shall be declared not applicable to Insurance Companies and Sharia Insurance Companies.

(4) The law as referred to in paragraph (2)

shall be enacted at the latest 3 (three) years after this Law is promulgated.

Article 54 . . .

• 36 -

Article 54

(1) Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies are required to become members of a mediation institution that functions to conduct dispute resolution between Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies and Policyholders, Insureds, Participants, or other parties entitled to obtain insurance benefits.

(2) The mediation institution as referred to in paragraph (1)

shall be independent and impartial.

(3) The mediation institution as referred to in paragraph (1)

must obtain written approval from the Financial Services Authority.

(4) The mediation agreement is final and binding on the Parties.

(5) Further provisions regarding the mediation institution as referred to in paragraph (1), paragraph (2), paragraph (3), and paragraph (4) shall be regulated in a Financial Services Authority Regulation.

CHAPTER XII PROFESSIONS PROVIDING SERVICES FOR INSURANCE COMPANIES

Article 55

(1) Professions providing services for Insurance Companies consist of:

a. actuarial consultants;

b. public accountants;

c. appraisers; and d. other professions determined by a Financial Services Authority Regulation.

(2) To be able to provide services for Insurance Companies, the service-providing professions as referred to in paragraph (1) must first be registered with the Financial Services Authority.

(3) Provisions . . .

• 37 -

(3) Further provisions regarding the requirements and procedures for registration of service-providing professions as referred to in paragraph (1) and paragraph (2) shall be regulated in a Financial Services Authority Regulation.

Article 56

(1) The registration of a service-providing profession as referred to in Article 55 paragraph (2) shall be canceled if the professional license of the relevant profession is revoked by the competent authority.

(2) Services from the service-providing profession as referred to in paragraph (1) provided before the cancellation of the profession's registration shall be declared to remain valid, unless the services provided are the cause of the cancellation of the registration or the revocation of the professional license of the relevant profession.

(3) In the event that the registration of a service-providing profession is canceled as referred to in paragraph (1), the Financial Services Authority may conduct an examination or assessment of other services provided by such service-providing profession to Insurance Companies to determine whether such services remain valid or not.

(4) In the event that the Financial Services Authority decides that the services provided by the service-providing profession as referred to in paragraph (3) are not valid, the Financial Services Authority may order the Insurance Company using the services of such service-providing profession to appoint another service provider to perform the same services again.

CHAPTER XIII REGULATION AND SUPERVISION

Article 57

(1) The regulation and supervision of Insurance Business activities shall be carried out by the Financial Services Authority.

(2) The Minister . . .

• 38 -

(2) The Minister shall establish general policies in the context of developing the utilization of insurance and reinsurance to support the national economy.

Article 58 The Financial Services Authority must strive to create healthy business competition in the field of Insurance Business.

Article 59

(1) The Financial Services Authority may assign certain parties to and on behalf of the Financial Services Authority to carry out part of the regulatory and supervisory functions.

(2) Further provisions regarding the procedures for assignment and implementation of part of the regulatory and supervisory functions by certain parties as referred to in paragraph (1) shall be regulated in a Financial Services Authority Regulation.

Article 60

(1) In the context of implementing the regulatory function as referred to in Article 57 paragraph (1), the Financial Services Authority shall establish laws and regulations in the field of insurance.

(2) In the context of implementing the supervisory function as referred to in Article 57 paragraph (1), the Financial Services Authority is authorized to:

a. approve or reject the granting of Insurance Business licenses;

b. revoke Insurance Business licenses;

c. approve or reject the granting of registration statements for actuarial consultants, public accountants, appraisers, or other parties providing services to Insurance Companies;

d. cancel registration statements for actuarial consultants, public accountants, appraisers, or other parties providing services to Insurance Companies;

e. require . . .

• 39 e. require Insurance Companies to submit periodic reports;

f. conduct examinations of Insurance Companies and other parties that are or have been affiliated parties or provide services to Insurance Companies;

g. determining the Controller of an Insurance Company, a Sharia Insurance Company, a reinsurance company, or a sharia reinsurance company;

h. approving or revoking the approval of a Party to become the Controller of an Insurance Company, a Sharia Insurance Company, a reinsurance company, or a sharia reinsurance company;

i. requiring a Party to cease being the Controller of an Insurance Company, a Sharia Insurance Company, a reinsurance company, or a sharia reinsurance company;

j. conducting fit and proper assessments on the board of directors, board of commissioners, or the equivalent of the board of directors and board of commissioners in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph (1) letter c, the sharia supervisory board, the company actuary, the internal auditor, and the Controller;

k. suspending the board of directors, board of commissioners, or the equivalent of the board of directors and board of commissioners in a legal entity in the form of a cooperative or joint venture as referred to in Article 6 paragraph

(1) letter c, and/or the sharia supervisory board, and appointing the Statutory Manager;

l. give written orders to:

1. certain parties to make reports on certain matters, at the expense of the Insurance Company and submitted to the Financial Services Authority;

2. Perusahaan . . .

• 40 -

2. Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies to transfer part or all of their underwriting portfolio to other Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies;

3. Insurance Companies to do or not do certain things in order to comply with the provisions of legislation in the field of insurance;

4. Insurance Companies to improve or perfect the internal control system to identify and prevent the use of Insurance Companies for financial crimes;

5. Insurance Companies or Sharia Insurance Companies to stop the marketing of certain insurance products; and

6. Insurance Company to replace a person from a certain position or office, or appoint a person with certain qualifications to occupy a certain position or office, in the event that such person is incompetent, does not meet certain qualifications, is inexperienced, or violates the provisions of laws and regulations in the field of insurance;

m. impose sanctions on Insurance Companies, shareholders, directors, boards of commissioners, or their equivalents to shareholders, directors, and boards of commissioners in legal entities in the form of cooperatives or mutual businesses as referred to in Article 6 paragraph (1) letter c, sharia supervisory boards, company actuaries, and/or internal auditors; and n. exercise other authorities based on laws and regulations.

Pasal 61 . . .

• 41 -

Pasal 61

(1) Examination as referred to in Article 60 paragraph

(2) letter f is conducted periodically and/or at any time.

(2) The Financial Services Authority may assign another party for and on behalf of the Financial Services Authority to conduct examinations as referred to in paragraph (1).

(3) For examination purposes, members of the board of directors, members of the board of commissioners, or their equivalents to members of the board of directors and members of the board of commissioners in legal entities in the form of cooperatives or mutual businesses as referred to in Article 6 paragraph (1) letter c, sharia supervisory boards, company actuaries, internal auditors, other employees, shareholders, Controllers, affiliated parties, and parties receiving the transfer of part of functions in the operation of the business for the benefit of the Insurance Company must provide information and/or data, the opportunity to view all books, records, documents, and physical facilities related to their business activities and other matters required by the examiner.

(4) For examination purposes, parties who have been members of the board of directors, members of the board of commissioners, or their equivalents to members of the board of directors and members of the board of commissioners in legal entities in the form of cooperatives or mutual businesses as referred to in Article 6 paragraph (1) letter c, sharia supervisory boards, company actuaries, internal auditors, other employees, shareholders, Controllers, affiliated parties, and parties receiving the transfer of part of functions in the operation of the business for the benefit of the Insurance Company, must provide information and/or data, the opportunity to view all books, records, documents, and physical facilities related to Insurance Business activities required by the examiner.

(5) Ketentuan . . .

• 42 -

(5) Further provisions regarding the procedures and methods of examination as referred to in paragraph (1) as well as the criteria and procedures for assigning other parties as referred to in paragraph (2) are stipulated in the Financial Services Authority Regulation.

Pasal 62

(1) The Financial Services Authority may deactivate the board of directors, board of commissioners, or their equivalents to the board of directors and board of commissioners in legal entities in the form of cooperatives or mutual businesses as referred to in Article 6 paragraph (1) letter c, and/or sharia supervisory board, and appoint a Statutory Manager to take over the management of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company, in the event that:

a. The Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company has been subject to a sanction of restriction of business activities;

b. The Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company provides information to the Financial Services Authority that in its judgment the company is estimated to be unable to fulfill its obligations or will cease payment of matured obligations;

c. according to the consideration of the Financial Services Authority, the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company is estimated to be unable to fulfill its obligations or will cease payment of obligations that have fallen due;

d. according to the consideration of the Financial Services Authority, the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company conducts business activities that are not in accordance with the provisions of laws and regulations in the field of insurance or is financially assessed as unsound; or e. according to . . .

• 43 e. according to the consideration of the Financial Services Authority, the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company is utilized to facilitate and/or commit financial crimes.

(2) The Statutory Manager appointed by the Financial Services Authority has the duties:

a. rescue the assets and/or pool of funds of participants of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company;

b. control and manage the business activities of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company in accordance with this Law;

c. formulate measures if the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company can still be rescued;

d. submit a proposal for the Financial Services Authority to revoke the business license of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company if the company is assessed as unable to be rescued; and e. report its activities to the Financial Services Authority.

(3) At the time the Statutory Manager begins to take over the management of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company, then:

a. the board of directors, board of commissioners, or the equivalent of the board of directors and board of commissioners in a legal entity in the form of a cooperative or joint business as referred to in Article 6 paragraph (1) letter c, and/or the sharia supervisory board cannot perform actions as the board of directors, board of commissioners, or the equivalent of the board of directors and board of commissioners in a legal entity in the form of a cooperative or joint business as referred to in Article 6 paragraph

(1) letter c, and/or the sharia supervisory board; and b. the board of directors . . .

• 44 b. the board of directors, board of commissioners, or the equivalent of the board of directors and board of commissioners in a legal entity in the form of a cooperative or joint business as referred to in Article 6 paragraph (1) letter c, and/or the sharia supervisory board that is inactive must assist the Statutory Manager in carrying out the management function.

(4) The board of directors, board of commissioners, or the equivalent of the board of directors and board of commissioners in a legal entity in the form of a cooperative or joint business as referred to in Article 6 paragraph (1) letter c, and/or the sharia supervisory board that is inactive are prohibited from resigning during the period the management function is taken over by the Statutory Manager.

(5) The Financial Services Authority may at any time dismiss the Statutory Manager.

(6) Further provisions regarding the appointment, duties, term of office, and dismissal of the Statutory Manager as referred to in paragraph (1), paragraph (2), and paragraph

(5) as well as the rights and obligations of the board of directors, board of commissioners, or the equivalent of the board of directors and board of commissioners in a legal entity in the form of a cooperative or joint business as referred to in Article 6 paragraph (1)

letter c, and/or the sharia supervisory board that is inactive as referred to in paragraph (3) and paragraph (4) are regulated in a Financial Services Authority Regulation.

Article 63

(1) The Statutory Manager in carrying out its duties must comply with the laws and regulations in the field of insurance.

(2) The Statutory Manager must comply with every written order from the Financial Services Authority regarding the control and management of the business activities of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company.

(3) The Statutory . . .

• 45 -

(3) The Statutory Manager takes over the control and management of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company from the date of appointment as Statutory Manager.

(4) The Statutory Manager has all the authority and functions of the board of directors, board of commissioners, or the equivalent of the board of directors and board of commissioners in a legal entity in the form of a cooperative or joint business as referred to in Article 6 paragraph (1) letter c, and/or the sharia supervisory board of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company.

(5) In addition to the authority as referred to in paragraph (4), the Statutory Manager also has the authority:

a. cancel or terminate agreements made by the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company with third parties, which according to the Statutory Manager may harm the interests of the company and Policyholders, Insured, or Participants; and b. transfer part or all of the insurance portfolio of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company, which according to the Statutory Manager may prevent greater losses for Policyholders, Insured, or Participants.

Article 64 The Statutory Manager is responsible for losses of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company and/or third parties if such losses are caused by fraud, dishonesty, or intentional failure to comply with the provisions of laws and regulations in the field of insurance.

Article 65 . . .

• 46 -

Article 65

(1) The control and management of an Insurance Company, a Sharia Insurance Company, a reinsurance company, or a sharia reinsurance company by a Statutory Manager shall end if the Financial Services Authority decides:

a. the control and management of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company by the Statutory Manager is no longer required; or b. the business license of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company has been revoked.

(2) The Statutory Manager shall be accountable for all decisions and actions in controlling and managing the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company to the Financial Services Authority.

Article 66

(1) The written order as referred to in Article 60 paragraph (2) letter l shall be given in the event that the Financial Services Authority concludes that the Insurance Company:

a. conducts its business activities in an imprudent and unfair manner or is financially unsound;

b. is estimated to experience an unsound financial condition or will fail to fulfill its obligations;

c. violates laws and regulations in the field of insurance; and/or d. is involved in financial crime.

(2) The order . . .

• 47 -

(2) The written order as referred to in paragraph (1)

may also be given to the Controller of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company.

(3) The Insurance Company and/or the Controller of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company shall comply with the written order as referred to in paragraph (1) and paragraph (2).

(4) The written order as referred to in paragraph (1)

and paragraph (2) cannot be used as a reason by a party entering into an agreement with the Insurance Company to cancel or reject the agreement, avoid obligations stipulated in the agreement, or perform any act that may result in a loss to the Insurance Company.

(5) The party as referred to in paragraph (4) is entitled to obtain compensation from the Insurance Company if it suffers a loss caused by the written order given to the Insurance Company.

(6) The provision as referred to in paragraph (5) shall not apply if the party concerned is an affiliated party or a party related to the circumstances that caused the issuance of the written order by the Financial Services Authority.

Article 67 Other parties appointed or assigned by the Financial Services Authority as referred to in Article 59 paragraph (1) and

Article 61 paragraph (2) are prohibited from using or disclosing any confidential information to other parties, except in the context of implementing their functions, duties, and authority based on a decision of the Financial Services Authority or as required by law.

CHAPTER XIV . . .

• 48 -

CHAPTER XIV INSURANCE BUSINESS ASSOCIATION

Article 68

(1) Every Insurance Company shall become a member of one Insurance Business association appropriate to its type of business.

(2) The Insurance Business association as referred to in paragraph (1) must obtain written approval from the Financial Services Authority.

Article 69

(1) The Financial Services Authority may assign or delegate certain authority to the Insurance Business association in the context of regulation and/or supervision of the Insurance Business.

(2) Further provisions regarding the assignment or delegation of authority as referred to in paragraph (1) shall be stipulated in a Financial Services Authority Regulation.

CHAPTER XV ADMINISTRATIVE SANCTIONS

Article 70 The Financial Services Authority is authorized to impose administrative sanctions on any Person who violates the provisions in this Law and its implementing regulations.

Article 71 . . .

• 49 -

Article 71

(1) Any Person who violates the provisions as referred to in Article 2 paragraph (1), paragraph (2), and paragraph (3),

Article 3 paragraph (1), paragraph (2), and paragraph (3), Article 4 paragraph (1), paragraph (2), and paragraph (3), Article 7 paragraph (1), Article 10 paragraph (1)

and paragraph (2), Article 11 paragraph (1), Article 12 paragraph (1), Article 13 paragraph (1), Article 14 paragraph (1), paragraph (2), and paragraph (3), Article 15,

Article 16 paragraph (1), Article 17 paragraph (1) and paragraph (2), Article 18 paragraph (2) and paragraph (3), Article 19 paragraph (1), paragraph (2), and paragraph (3), Article 20 paragraph (1), paragraph (2), paragraph (3), and paragraph (4), Article 21 paragraph (1), paragraph (2), and paragraph (3), Article 22 paragraph (1), paragraph (3), paragraph (4), and paragraph (5), Article 26 paragraph (1), Article 27 paragraph

(1) and paragraph (2), Article 28 paragraph (2), paragraph (4), paragraph (6), paragraph (7), and paragraph (8), Article 29 paragraph (3), paragraph (5), and paragraph (6),

Article 30 paragraph (1) and paragraph (2), Article 31 paragraph (1), paragraph (3), and paragraph (4), Article 32 paragraph (1) and paragraph (2), Article 35 paragraph

(1) and paragraph (2), Article 36, Article 39 paragraph (5), Article 40 paragraph

(1) and paragraph (3), Article 41 paragraph (1), Article 42 paragraph (1) and paragraph (2), Article 46 paragraph (2) and paragraph (3), Article 53 paragraph (1),

Article 54 paragraph (1), Article 55 paragraph (2), Article 68 paragraph (1), and

Article 86 shall be subject to administrative sanctions.

(2) The administrative sanctions as referred to in paragraph

(1) shall be in the form of:

a. written warning;

b. restriction of business activities, for part or all of business activities;

c. prohibition to market insurance products or sharia insurance products for certain lines of business;

d. revocation of business license;

e. cancellation of registration statement for Insurance Brokers, Reinsurance Brokers, and Insurance Agents;

f. cancellation of registration statement for actuarial consultants, public accountants, appraisers, or other parties providing services for Insurance Companies;

g. cancellation of approval for mediation institutions or associations;

h. administrative fine; and/or

i. prohibition . . .

• 50 -

i. prohibition to become a shareholder, Controller, director, board of commissioners, or the equivalent of a shareholder, Controller, director, and board of commissioners in a legal entity in the form of a cooperative or joint business as referred to in

Article 6 paragraph (1) letter c, sharia supervisory board, or hold an executive position below the board of directors, or the equivalent of an executive position below the board of directors in a legal entity in the form of a cooperative or joint enterprise as referred to in Article 6 paragraph (1) letter c, at an Insurance Company.

(3) In the event that the Financial Services Authority assesses that the condition of an Insurance Company endangers the interests of Policyholders, Insureds, or Participants, the Financial Services Authority may impose a sanction of revocation of business license without being preceded by the imposition of other administrative sanctions.

(4) Further provisions regarding the procedure and mechanism for imposing administrative sanctions as referred to in paragraph (1), paragraph (2), and paragraph (3), as well as the amount of fines for administrative sanctions as referred to in paragraph (2)

letter h shall be stipulated in a Financial Services Authority Regulation.

Article 72

(1) In the event that an Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company is subject to a sanction of written warning or restriction of business activities, the Financial Services Authority may order:

a. capital addition;

b. replacement of the board of directors, board of commissioners, or the equivalent of the board of directors and board of commissioners in a legal entity in the form of a cooperative or joint enterprise as referred to in Article 6 paragraph

(1) letter c, sharia supervisory board, company actuary, or internal auditor;

c. board of directors . . .

• 51 -

c. the board of directors, board of commissioners, or the equivalent of the board of directors and board of commissioners in a legal entity in the form of a cooperative or joint enterprise as referred to in Article 6 paragraph (1) letter c, and/or sharia supervisory board surrender control and management of the activities of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company to the Statutory Manager;

d. the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company transfers part or all of its underwriting portfolio to another Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company;

and/or e. the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company takes actions deemed capable of overcoming difficulties or does not take actions deemed capable of worsening the condition of the company.

(2) In the event that the actions as referred to in paragraph (1)

cannot overcome the difficulties faced by the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company, the Financial Services Authority may revoke the business license of the Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company.

(3) The Financial Services Authority may request the competent authority to block part or all of the assets of an Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company that is currently subject to a sanction of restriction of business activities for failing to meet the solvency level requirements or whose business license has been revoked.

(4) Revocation . . .

• 52 -

(4) Revocation of the blocking of part or all of the assets as referred to in paragraph (3)

shall be carried out after obtaining approval from the Financial Services Authority.

(5) Further provisions regarding the procedure and mechanism for blocking as referred to in paragraph (3) and revocation of blocking as referred to in paragraph (4)

shall be stipulated in a Financial Services Authority Regulation.

CHAPTER XVI CRIMINAL PROVISIONS

Article 73

(1) Any Person who carries out insurance business activities, sharia insurance business, Reinsurance Business, or Sharia Reinsurance Business without a business license as referred to in Article 8 paragraph (1) shall be punished with imprisonment for a maximum of 15 (fifteen) years and a fine of at most Rp200.000.000.000,00 (two hundred billion rupiah).

(2) Any Person who carries out Insurance Broker Business activities or Reinsurance Broker Business without a business license as referred to in Article 8 paragraph (1)

shall be punished with imprisonment for a maximum of 10 (ten)

years and a fine of at most Rp3.000.000.000,00 (three billion rupiah).

(3) Any . . .

• 53 -

(3) Any Person who carries out Insurance Loss Adjuster Business activities without a business license as referred to in Article 8 paragraph (1) shall be punished with imprisonment for a maximum of 3 (three) years and a fine of at most Rp1.000.000.000,00 (one billion rupiah).

Article 74

(1) A member of the board of directors, a member of the board of commissioners, or the equivalent of a member of the board of directors and a member of the board of commissioners in a legal entity in the form of a cooperative or joint enterprise as referred to in Article 6 paragraph (1) letter c, a member of the sharia supervisory board, company actuary, internal auditor, Controller, or other employee of an Insurance Company who intentionally provides reports, information, data, and/or documents to the Financial Services Authority as referred to in Article 22 paragraph (1) that are untrue, false, and/or misleading shall be punished with imprisonment for a maximum of 5 (five) years and a fine of at most Rp10.000.000.000,00 (ten billion rupiah).

(2) A member of the board of directors, a member of the board of commissioners, or the equivalent of a member of the board of directors and a member of the board of commissioners in a legal entity in the form of a cooperative or joint enterprise as referred to in Article 6 paragraph (1) letter c, a member of the sharia supervisory board, company actuary, internal auditor, Controller, or other employee of an Insurance Company who intentionally provides information, data, and/or documents to interested parties as referred to in Article 22 paragraph (4) and Article 46 paragraph (2)

that are untrue, false, and/or misleading shall be punished with imprisonment for a maximum of 5 (five) years and a fine of at most Rp20.000.000.000,00 (twenty billion rupiah).

Article 75 . . .

• 54 -

Article 75 Any Person who intentionally does not provide information or provides incorrect, false, and/or misleading information to a Policyholder, Insured, or Participant as referred to in Article 31 paragraph (2)

shall be punished with imprisonment for a maximum period of 5 (five) years and a fine of a maximum amount of Rp5.000.000.000,00 (five billion rupiah).

Article 76 Any Person who embezzles Premiums or Contributions as referred to in Article 28 paragraph (5) and Article 29 paragraph (4) shall be punished with imprisonment for a maximum period of 5 (five)

years and a fine of a maximum amount of Rp5.000.000.000,00 (five billion rupiah).

Article 77 Any Person who embezzles by transferring, pledging, collateralizing, or using assets, or committing other actions that can reduce the assets or decrease the value of the assets of an Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company as referred to in

Article 43 paragraph (2) without right shall be punished with imprisonment for a maximum period of 8 (eight) years and a fine of a maximum amount of Rp50.000.000.000,00 (fifty billion rupiah).

Article 78 Any Person who falsifies documents of an Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company as referred to in Article 33 shall be punished with imprisonment for a maximum period of 6 (six) years and a fine of a maximum amount of Rp5.000.000.000,00 (five billion rupiah).

Article 79 . . .

• 55 -

Article 79 Members of the board of directors and/or parties who sign new policies of an Insurance Company or Sharia Insurance Company that is currently subject to a sanction of restriction of business activities as referred to in Article 34 shall be punished with imprisonment for a maximum period of 5 (five) years and a fine of a maximum amount of Rp15.000.000.000,00 (fifteen billion rupiah).

Article 80 Any Person, appointed or assigned by the Financial Services Authority, who uses or discloses any information of a confidential nature to another party, except in the context of carrying out its functions, duties, and authority based on a decision of the Financial Services Authority or required by law as referred to in Article 67, shall be punished with imprisonment for a maximum period of 5 (five) years and a fine of a maximum amount of Rp20.000.000.000,00 (twenty billion rupiah).

Article 81

(1) In the event that a criminal act as referred to in

Article 73, Article 75, Article 76, Article 77, Article 78, or

Article 80 is committed by a corporation, the punishment shall be imposed on the corporation, the Controller, and/or the management acting for and on behalf of the corporation.

(2) Punishment shall be imposed on the corporation if the criminal act:

a. is committed or ordered by the Controller and/or management acting for and on behalf of the corporation;

b. is committed in the context of fulfilling the aims and objectives of the corporation;

c. is committed in accordance with the duties and functions of the perpetrator or the person giving the order; and d. is committed . . .

• 56 d. is committed with the intention of providing benefits to the corporation.

Article 82 The punishment imposed on a corporation is a fine of a maximum amount of Rp600.000.000.000,00 (six hundred billion rupiah).

CHAPTER XVII TRANSITIONAL PROVISIONS

Article 83

(1) Insurance Companies that have obtained a business license at the time of the promulgation of this Law are declared to have obtained a business license based on this Law.

(2) Insurance agent companies that have obtained a business license at the time of the promulgation of this Law may continue to run their business.

(3) Licenses or approvals that have been granted to Insurance Companies in relation to the institutional aspects and operation of Insurance Business at the time of the promulgation of this Law are declared to remain valid based on this Law.

Article 84

(1) Actuarial consulting companies that have obtained a business license at the time of the promulgation of this Law may continue to carry out their business activities.

(2) With the promulgation of this Law, business licensing, development, and supervision of actuarial consulting companies shall be carried out by the Minister.

Article 85 . . .

• 57 -

Article 85

(1) At the time of the promulgation of this Law, any Party that becomes a controlling shareholder in more than 1 (one) life insurance company, 1 (one)

general insurance company, 1 (one) reinsurance company, 1 (one) sharia life insurance company, 1 (one) sharia general insurance company, and 1 (one)

sharia reinsurance company must comply with the provisions in Article 16 paragraph (1) no later than 3 (three) years after the promulgation of this Law.

(2) Further provisions regarding the procedure for adjusting controlling shareholders as referred to in paragraph (1) and sanctions for Parties that do not adjust controlling shareholders shall be stipulated in a Financial Services Authority Regulation.

Article 86 Joint business as referred to in Article 6 paragraph (1)

letter c must comply with the provisions in this Law and its implementing regulations no later than 3 (three) years after the promulgation of this Law.

Article 87

(1) In the event that an Insurance Company or reinsurance company has a sharia unit with a value of Tabarru’ Fund and participant investment funds that have reached at least 50% (fifty percent) of the total value of the Insurance Fund, Tabarru’ Fund, and participant investment funds at its parent company or 10 (ten)

years after the promulgation of this Law, such Insurance Company or reinsurance company must separate the sharia unit into a Sharia Insurance Company or sharia reinsurance company.

(2) Provisions . . .

• 58 -

(2) Further provisions regarding the separation of sharia units and sanctions for Insurance Companies and reinsurance companies that do not separate sharia units as referred to in paragraph (1) shall be stipulated in a Financial Services Authority Regulation.

Article 88

(1) An Insurance Company that has not complied with the provisions in Article 7 paragraph (1) letter a must adjust to such provisions by transferring its share ownership to Indonesian citizens or changing ownership through an initial public offering mechanism within a maximum of 5 (five) years from the promulgation of this Law.

(2) Further provisions regarding the procedures for adjusting ownership as referred to in paragraph (1) and sanctions for Insurance Companies that do not adjust ownership shall be regulated in a Financial Services Authority Regulation.

CHAPTER XVIII CLOSING PROVISIONS

Article 89 Provisions in laws and regulations that require the closing of insurance or sharia insurance by all or certain groups in society must be adjusted to the provisions in this Law.

Article 90 . . .

• 59 -

Article 90 At the time this Law comes into force:

a. Law Number 2 of 1992 concerning Insurance Business (State Gazette of the Republic of Indonesia of 1992 Number 13, Supplement to the State Gazette of the Republic of Indonesia Number 3467) is revoked and declared no longer valid;

b. provisions regarding the application for a declaration of bankruptcy by the Minister of Finance as regulated in Article 2 paragraph

(5) of Law Number 37 of 2004 concerning Bankruptcy and Suspension of Debt Payment Obligations (State Gazette of the Republic of Indonesia of 2004 Number 131, Supplement to the State Gazette of the Republic of Indonesia Number 4443) is declared no longer valid for Insurance Companies and reinsurance companies; and

c. all laws and regulations that constitute implementing regulations of Law Number 2 of 1992 concerning Insurance Business (State Gazette of the Republic of Indonesia of 1992 Number 13, Supplement to the State Gazette of the Republic of Indonesia Number 3467), are declared to remain in force as long as they do not conflict with the provisions in this Law.

Article 91 Implementing regulations of this Law must be enacted within a maximum of 2 (two) years 6 (six) months from the promulgation of this Law.

Article 92 This Law comes into force on the date of promulgation.

In order . . .

• 60 - In order that everyone may know it, it is ordered to promulgate this Law by placing it in the State Gazette of the Republic of Indonesia.

Enacted in Jakarta On 17 October 2014 PRESIDENT OF THE REPUBLIC OF INDONESIA, signed.

DR. H. SUSILO BAMBANG YUDHOYONO Promulgated in Jakarta On 17 October 2014 MINISTER OF LAW AND HUMAN RIGHTS, REPUBLIC OF INDONESIA, signed.

AMIR SYAMSUDIN

STATE GAZETTE OF THE REPUBLIC OF INDONESIA OF 2014 NUMBER 337 Copy in accordance with the original MINISTRY OF STATE SECRETARIAT OF THE REPUBLIC OF INDONESIA Assistant Deputy for Legislation in the Economic Sector, signed.

Lydia Silvanna Djaman

ELUCIDATION OF THE LAW OF THE REPUBLIC OF INDONESIA NUMBER 40 OF 2014 CONCERNING INSURANCE

I. GENERAL

National development requires and necessitates adjustments in various matters to the development of conditions and aspirations of society. In the insurance industry, both nationally and globally, rapid development has occurred, marked by increasing business volume and increasing utilization of insurance services by society. Insurance services are also increasingly varied in line with the development of society's needs for risk management and investment management that are increasingly inseparable, both in personal life and in business activities.

In addition to developments within the insurance industry, developments have also occurred in other financial services industries. Developments in various financial services industries have resulted in the increasingly thinning boundaries and differences in the types of services provided by the financial services industry.

Such developments demand a better and more integrated system of regulation and supervision of the financial sector.

The provisions in Law Number 2 of 1992 concerning Insurance Business (State Gazette of the Republic of Indonesia of 1992 Number 13; Supplement to the State Gazette of the Republic of Indonesia Number 3467)

are no longer sufficient to serve as the basis for the regulation and supervision of the insurance industry that has developed. Improvements to the laws and regulations concerning insurance must be carried out to create a healthier, more reliable, trustworthy, and competitive insurance industry and to enhance its role in driving national development.

Efforts to create a healthier, more reliable, trustworthy, and competitive insurance industry are generally carried out, both by establishing new provisions and by improving existing provisions. These efforts are realized, among others, in the form of:

1. establishment of a legal foundation for the operation of Sharia Insurance Business and Sharia Reinsurance Business;

2. establishment . . .

• 2 -

2. establishment of legal entity status for Insurance Companies in the form of mutual business that already existed at the time this Law was promulgated;

3. improvement of regulations regarding ownership of insurance companies that support national interests;

4. granting a greater mandate to Insurance Companies and Sharia Insurance Companies to manage cooperation with other parties in the context of marketing insurance and sharia insurance services, including agency cooperation; and

5. improvement of provisions regarding the obligation to maintain good corporate governance, financial health, and sound business conduct.

The enhancement of the role of the insurance industry in driving national development occurs when the insurance industry can better support society in facing the risks it faces daily and when they start and run business activities. For this reason, this Law stipulates that Insurance Objects in Indonesia can only be insured with an Insurance Company or Sharia Insurance Company in Indonesia and the coverage of such Insurance Objects must take into account the optimization of the capacity of Insurance Companies, Sharia Insurance Companies, reinsurance companies, and domestic sharia reinsurance companies. To offset this policy, the Government and/or the Financial Services Authority shall make efforts to encourage the increase of domestic insurance and reinsurance capacity. This Law also requires the implementation of the Mandatory Insurance Program, for example legal liability insurance to third parties for motor vehicle drivers, competitively and enables the provision of fiscal facilities to individuals, households, and/or micro, small, and medium enterprises to encourage increased utilization of Insurance or Sharia Insurance in the context of risk management.

The increase in the role of the insurance industry in encouraging national development also occurs through the accumulation of large amounts of long-term funds, which subsequently become a source of development funds.

Further regulations mandated by this Law to the Financial Services Authority, especially in terms of regulating lines of business and products of Insurance and Sharia Insurance as well as regulating the management of assets and liabilities of Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies, will determine the size of the role of the insurance industry.

Regulation . . .

• 3 - The regulation in this Law also reflects great attention and support for efforts to protect consumers of insurance services, efforts to anticipate a more open environment for trade in services at the regional level, and adjustment to best practices at the international level for the implementation, regulation, and supervision of the insurance industry.

II. ARTICLE BY ARTICLE

Article 1 Sufficiently clear.

Article 2 Paragraph (1)

Based on the risk management mechanism, the health insurance line of business and the personal accident insurance line of business are more appropriately classified as General Insurance Business. However, considering that the Insurance Objects insured in the two lines of business concern human beings, the health insurance line of business and the personal accident insurance line of business can also be classified as Life Insurance Business. In practice, both lines of insurance business have been carried out by both general insurance companies and life insurance companies.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Article 3 Sharia insurance business and Sharia Reinsurance Business are different from conventional insurance business and conventional reinsurance business. Insurance business and Reinsurance Business managed conventionally apply the concept of risk transfer, while sharia insurance business and Sharia Reinsurance Business are the application of the concept of risk sharing. Given the conceptual differences underlying the implementation of their business, sharia insurance business and Sharia Reinsurance Business currently permitted in the form of units within conventional insurance companies and reinsurance companies will be encouraged to be carried out by separate entities.

Article 4 . . .

• 4 -

Article 4 Sufficiently clear.

Article 5 Sufficiently clear.

Article 6 Paragraph (1)

Letter a Sufficiently clear.

Letter b Sufficiently clear.

Letter c Parties intending to carry out General Insurance Business, Life Insurance Business, Sharia General Insurance Business, or Sharia Life Insurance Business in the form of a mutual business legal entity after this Law is promulgated, are encouraged to become a cooperative based on considerations of clarity of governance and the principle of mutual business based on the principle of kinship.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Matters regulated in the Government Regulation include, among others, governance, requirements and procedures for changing into a limited liability company or cooperative legal entity, as well as requirements and procedures for the dissolution of a mutual business legal entity.

Article 7 Paragraph (1)

In an increasingly open and rapidly developing economic life, increasingly diverse and quality insurance or risk management services are needed by Insurance Companies that are healthy, reliable, trustworthy, and competitive. For this reason, Insurance Companies need to be built with strong capital, sourced both domestically and from abroad.

Letter a Sufficiently clear.

Letter b . . .

• 5 - Letter b Ownership by foreign parties in Insurance Companies is restricted qualitatively. Qualitative restriction is carried out by requiring that at the time of establishment of an Insurance Company, foreign parties that can become owners are foreign legal entities that have a similar Insurance Business or a parent company one of whose subsidiaries is engaged in a similar Insurance Business. The requirement that a foreign legal entity must have a similar Insurance Business is intended so that the foreign partner that will become one of the owners of the Insurance Company in Indonesia is an Insurance Company that truly has business experience in its field so that transfer of capital and transfer of knowledge and technology to the Indonesian party is expected to occur.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Provisions regulated in the government regulation include, among others, quantitative restrictions on ownership by foreign legal entities. Such restriction may be in the form of a maximum percentage of foreign ownership in an Insurance Company.

Quantitative restriction requires flexibility to adjust to the dynamics of domestic needs and availability of funds.

The limit on ownership by foreign legal entities in an Insurance Company shall be consulted with the House of Representatives of the Republic of Indonesia and the Financial Services Authority.

Article 8 Paragraph (1)

Sufficiently clear.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Paragraph (4) . . .

• 6 - Paragraph (4)

Further provisions regarding the requirements and procedures for business licensing include, among others, competency or expertise requirements in the field of Insurance Business in accordance with standards set by the Financial Services Authority, including for foreign management and experts.

Article 9 Paragraph (1)

The period of 30 (thirty) working days includes time to clarify data or information in the documents required to obtain a business license.

Paragraph (2)

Clear enough.

Article 10 Clear enough.

Article 11 Clear enough.

Article 12 Paragraph (1)

Fulfillment of the fit and proper requirements for members of the sharia supervisory board includes integrity and competency related to the duties and functions of the sharia supervisory board as well as experience and expertise in the field of sharia insurance business.

Paragraph (2)

Clear enough.

Article 13 Paragraph (1)

The determination of the Controller is necessary so that the Financial Services Authority can determine the Party from whom accountability is requested, other than the directors and commissioners, in the event of a company's failure to fulfill obligations to Policyholders, Insureds, or Participants due to the influence of such Party in the management of the company.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Article 14 . . .

• 7 -

Article 14 Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3)

This approval is necessary, among other things, so that a Party who is no longer a Controller is confirmed to no longer have the obligation to be jointly responsible for losses of an Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company caused by a Party previously under its control.

Paragraph (4)

Clear enough.

Article 15 Clear enough.

Article 16 Paragraph (1)

Clear enough.

Paragraph (2)

The exception in this provision is intended so that the state may own and/or control more than one company with a similar business in order to provide insurance services for certain groups of society or certain regions, become a pioneer of insurance business activities that cannot yet be carried out by the private sector, or provide other strategic public benefits for society.

Paragraph (3)

Matters that will be further regulated in a Financial Services Authority Regulation include, among others, the size of share ownership and the procedures for company consolidation.

Article 17 Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3) . . .

• 8 - Paragraph (3)

Matters regulated in the Financial Services Authority Regulation include, among others, the types, number, requirements, duties, responsibilities, and authority of experts and actuaries.

Article 18 Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3)

What is meant by "selection standards" is the minimum requirements for a Party that will be made a cooperation partner by an Insurance Company.

What is meant by "accountability" is the Insurance Company's confidence in the capability and experience of the company invited to cooperate and the clarity of accountability by the Insurance Company for the activities or functions carried out by such other party.

Paragraph (4)

Provisions regulated in the Financial Services Authority Regulation include, among others, the type, value, and period of transfer of functions that can be carried out by an Insurance Company, including an insurance loss adjuster company, to another party, especially a foreign party.

Article 19 Paragraph (1)

Clear enough.

Paragraph (2)

This provision is intended so that the Insurance Fund or Tabarru' Fund can be managed properly, considering that the said Insurance Fund or Tabarru' Fund is a fund that will be used by the company to fulfill obligations to Policyholders, Insureds, or Participants. The obligation to evaluate the Insurance Fund or Tabarru' Fund is also carried out in other countries.

Paragraph (3)

Clear enough.

Paragraph (4)

Clear enough.

Article 20 . . .

• 9 -

Article 20 Paragraph (1)

The Guarantee Fund is established to provide a guarantee for the compensation of part or all of the rights of Policyholders, Insureds, or Participants in the event that the company must be liquidated. Thus, the Guarantee Fund constitutes part of the effort to protect Policyholders, Insureds, or Participants.

Paragraph (2)

In general, business development results in an increase in the company's obligations to Policyholders, Insureds, or Participants. This also means that the extent of the rights of Policyholders, Insureds, or Participants that need to be guaranteed for return in the event that the company is liquidated also increases.

Paragraph (3)

This provision is intended so that the use of the Guarantee Fund to return part or all of the rights of Policyholders, Insureds, or Participants at the time the company is liquidated can be ensured.

Paragraph (4)

This provision is intended to prevent misuse of the Guarantee Fund.

Paragraph (5)

Further provisions regarding the Guarantee Fund include the regulation of the types of assets that can be used as the Guarantee Fund, the minimum amount of the Guarantee Fund that must be owned by the company, the adjustment of the size of the Guarantee Fund based on business volume, the procedures for transferring or liquidating the Guarantee Fund, and its administration.

Article 21 Paragraph (1)

Sufficiently clear.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

The separation of assets and liabilities is carried out with due regard to the balance between business development and consumer protection.

Article 22 . . .

• 10 -

Article 22 Paragraph (1)

The reports that must be submitted by Insurance Companies to the Financial Services Authority include, among others, financial reports, business activity reports, and automatic reinsurance support program reports.

In addition, under certain circumstances or for certain purposes, Insurance Companies may also be required to submit thematic reports, for example risk profiles and the implementation of corporate governance.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

The financial position, financial performance, and financial soundness condition announced shall at least include financial soundness ratios in accordance with the provisions regarding the financial soundness of Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies. Announcement through electronic media is carried out on the company's website and the website of the Financial Services Authority.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Sufficiently clear.

Paragraph (6)

The provisions regulated in the Financial Services Authority Regulation include, among others, the type, form, and structure of reports or announcements, as well as the schedule and deadline for the submission of reports and announcements.

Article 23 Sufficiently clear.

Article 24 Sufficiently clear.

Article 25 Sufficiently clear.

Article 26 . . .

• 11 -

Article 26 Paragraph (1)

The provisions regarding business conduct standards for Sharia Insurance Companies and sharia reinsurance companies also refer to Sharia Principles.

Paragraph (2)

The regulation regarding business conduct standards in the Financial Services Authority Regulation is adjusted to the type of business of each Insurance Company.

Article 27 Sufficiently clear.

Article 28 Sufficiently clear.

Article 29 Paragraph (1)

Sufficiently clear.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Sufficiently clear.

Paragraph (6)

Sufficiently clear.

Paragraph (7)

Brokerage service remuneration may be paid directly by the Policyholder or become part of the Premium. In the event that the brokerage service remuneration is part of the Premium, the policy or document that constitutes a unity with it shall contain details regarding the portion of the premium forwarded to the Insurance Company and the brokerage service remuneration paid to the Insurance Brokerage Company.

Article 30 is sufficiently clear.

Article 31 . . .

• 12 -

Article 31 Paragraph (1)

Sufficiently clear.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

What is meant by "fast" is that the process of handling claims and complaints is carried out immediately, in the shortest possible time, and promptly.

What is meant by "simple" is that the process of handling claims and complaints is straightforward and not complicated.

What is meant by "easily accessible" is that the process of handling claims and complaints is carried out at the company's office or other places that are easy to visit, or is carried out by utilizing technology that makes it easy for people to submit claims or complaints and obtain responses.

What is meant by "fair" is that the process of handling claims and complaints is carried out by adhering to truth, impartiality, and not arbitrarily.

Paragraph (4)

Actions that can slow down the settlement or payment of claims include:

a. extending the claim settlement process by requesting the submission of certain documents, which is then followed by requesting the submission of other documents that essentially contain the same matters;

b. delaying the settlement and payment of claims because of waiting for the settlement and/or payment of its reinsurance claims;

c. not settling a claim that is part of an insurance coverage due to reasons of its connection with the settlement of a claim that is another part of the insurance coverage under 1 (one) same policy;

d. delaying the appointment of an insurance loss adjuster company, if the services of an insurance loss adjuster are needed in the claim settlement process; and e. applying claim settlement procedures that are not in accordance with generally accepted insurance business practices.

Paragraph (5) . . .

• 13 - Paragraph (5)

Sufficiently clear.

Article 32 is sufficiently clear.

Article 33 is sufficiently clear.

Article 34 is sufficiently clear.

Article 35 Paragraph (1)

This provision is based on the consideration that cooperatives or mutual ventures have limited ability to increase capital. However, on the other hand, cooperatives or mutual ventures must still ensure their ability to fulfill obligations to Policyholders, Insureds, or Participants.

Paragraph (2)

This provision is intended to affirm the concept of mutual coverage and risk sharing among members, and to avoid the existence of members who merely become capital providers for the insurance business run by Insurance Companies and Sharia Insurance Companies in the form of cooperatives or mutual ventures as referred to in Article 6 paragraph (1) letter c.

Paragraph (3)

This provision is also intended to affirm the concept of mutual coverage and risk sharing among members, and to avoid the existence of members who merely become capital providers.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

What is meant by "financial requirements" includes, among others, the amount of principal savings and mandatory savings that must be paid by members.

Article 36 This provision is intended to encourage Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies to truly carry out their functions as insurers and/or reinsurers.

Optimization . . .

• 14 - Optimization of the utilization of domestic reinsurance capacity is carried out by placing as much insurance reinsurance as possible with Insurance Companies and/or reinsurance companies within the country, either individually or jointly, while still taking into account the principles of risk management, especially risk spreading.

Article 37 The Government and/or the Financial Services Authority, either individually or jointly, may take steps, such as:

a. establishing a new reinsurance company;

b. merging several state-owned enterprises engaged in the insurance sector and assigning the merged company to become a reinsurance company;

c. providing facilities for the establishment of a pool or insurance consortium for certain risks, for example natural disaster risks; or d. avoiding the imposition of double taxation on the insurance industry.

Article 38 is sufficiently clear.

Article 39 Paragraph (1)

Sufficiently clear.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

The Financial Services Authority must establish requirements for parties that will organize the Mandatory Insurance Program, for example the amount of capital and the availability of business infrastructure.

Paragraph (4)

What is meant by "additional benefits" is the amount of benefits provided and not additional types of benefits.

Paragraph (5)

Sufficiently clear.

Article 40 Paragraph (1)

Changes in ownership include, among others, changes in share composition, takeovers, and the addition of new shareholders.

Paragraph (2) . . .

• 15 - Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Paragraph (4)

Clear enough.

Paragraph (5)

Clear enough.

Paragraph (6)

Clear enough.

Article 41 Clear enough.

Article 42 Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Paragraph (4)

Matters to be further regulated in the Financial Services Authority Regulation include, among others, the transfer of an insurance portfolio or the return of the rights of a Policyholder or Insured before the Insurance Company or Reinsurance Company ceases its business activities.

Article 43 Clear enough.

Article 44 Paragraph (1)

The liquidation of a company whose business license has been revoked needs to be carried out immediately to protect the interests of Policyholders, Insureds, or Participants.

Paragraph (2)

Clear enough.

Paragraph (3) . . .

• 16 - Paragraph (3)

Clear enough.

Article 45 Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3)

Matters regulated in the Financial Services Authority Regulation include, among others:

a. the mechanism for the dissolution of the legal entity of an Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company;

b. the number of members of the liquidation team;

c. the income of the liquidation team;

d. the procedures for carrying out liquidation;

e. the period of liquidation;

f. supervision of the implementation of liquidation by the Financial Services Authority;

g. the procedures for transferring the assets and liabilities of an Insurance Company, Sharia Insurance Company, reinsurance company, or sharia reinsurance company; and h. the accountability of the liquidation team.

Article 46 Clear enough.

Article 47 Clear enough.

Article 48 Paragraph (1)

Claims submitted through the Financial Services Authority are intended to facilitate the collection process, but the Financial Services Authority does not verify such claims.

Paragraph (2)

Clear enough.

Article 49 Clear enough.

Article 50 . . .

• 17 -

Article 50 Paragraph (1)

In line with the scope of duties of the Financial Services Authority, which functions to administer an integrated regulatory and supervisory system for all activities in the financial services sector, the authority to file for bankruptcy against Insurance Companies, Sharia Insurance Companies, reinsurance companies, and sharia reinsurance companies, which was originally exercised by the Minister of Finance based on Law Number 37 of 2004 concerning Bankruptcy and Suspension of Debt Payment Obligations, transfers to the authority of the Financial Services Authority based on this Law.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Article 51 Clear enough.

Article 52 Clear enough.

Article 53 Paragraph (1)

The policy guarantee program is intended to guarantee the return of part or all of the rights of Policyholders, Insureds, or Participants from an Insurance Company or Sharia Insurance Company whose business license has been revoked and which is liquidated.

In addition, the existence of the policy guarantee program is intended to increase public confidence in the insurance industry in general so that it is expected to increase public interest in using insurance services.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Article 54 . . .

• 18 -

Article 54 Paragraph (1)

Sufficiently clear.

Paragraph (2)

What is meant by "independent" is not being influenced by any other party.

What is meant by "impartial" is not taking sides with any party to a dispute.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Sufficiently clear.

Article 55 Paragraph (1)

Letter a Sufficiently clear.

Letter b Sufficiently clear.

Letter c What is meant by "appraiser" is an asset appraiser.

Letter d Sufficiently clear.

Paragraph (2)

This provision is based on the consideration that the Insurance Business has distinctive characteristics so that the profession of service provider for Insurance Companies must meet certain qualifications.

Paragraph (3)

Sufficiently clear.

Article 56 Sufficiently clear.

Article 57 . . .

• 19 -

Article 57 Paragraph (1)

The regulation and supervision of Insurance Business activities by the Financial Services Authority includes, among other things, aspects of governance, business conduct, and financial soundness.

What is meant by "supervision" includes, among other things, report analysis, examination, and investigation.

Paragraph (2)

The general policy in the context of developing the utilization of insurance and reinsurance to support the national economy covers matters of foreign ownership of Insurance Companies, increasing insurance capacity, sharia insurance, domestic reinsurance and sharia reinsurance, as well as the provision of fiscal facilities to individuals, households, and/or micro, small, and medium enterprises.

Article 58 Sufficiently clear.

Article 59 Sufficiently clear.

Article 60 Paragraph (1)

Sufficiently clear.

Paragraph (2)

Letter a Sufficiently clear.

Letter b Sufficiently clear.

Letter c Sufficiently clear.

Letter d Sufficiently clear.

Letter e Sufficiently clear.

Letter f Sufficiently clear.

Letter g . . .

• 20 - Letter g Sufficiently clear.

Letter h Sufficiently clear.

Letter i Sufficiently clear.

Letter j Sufficiently clear.

Letter k Sufficiently clear.

Letter l Number 1 Sufficiently clear.

Number 2 Sufficiently clear.

Number 3 Sufficiently clear.

Number 4 Sufficiently clear.

Number 5 What is meant by certain insurance products whose marketing may be discontinued are products that may harm Policyholders, Insureds, or Participants, products that conflict with the prevailing laws and regulations and norms in society, and/or products that may endanger the finances of Insurance Companies, Sharia Insurance Companies, reinsurance companies, or sharia reinsurance companies.

Number 6 Sufficiently clear.

Letter m Sufficiently clear.

Letter n Sufficiently clear.

Article 61 . . .

• 21 -

Article 61 Paragraph (1)

Examination may be conducted by way of examination at the office of the Insurance Company and/or examination at the office of the Financial Services Authority. Examination at the office of the Insurance Company may be conducted on all aspects of the implementation of the business activities of the Insurance Company and/or on certain aspects of the implementation of the business activities of the Insurance Company.

Meanwhile, examination at the office of the Financial Services Authority is conducted only on certain aspects of the implementation of the business activities of the Insurance Company.

Examination at the office of the Financial Services Authority may be followed up with examination at the office of the Insurance Company if:

a. data, documents, and/or information from the Insurance Company being examined cannot provide a sufficient basis for employees of the Financial Services Authority and/or other parties appointed by the Financial Services Authority conducting the examination at the office of the Financial Services Authority to make conclusions on the results of the examination at the office of the Financial Services Authority; and/or b. there is a response from the Insurance Company being examined to the conclusions of the results of the examination at the office of the Financial Services Authority.

Paragraph (2)

What is meant by “other parties” is bodies, institutions, institutions, or persons, both from within and outside the Financial Services Authority.

Such parties include, among others, public accountants, actuarial consultants, loss adjusters, civil servant investigators and/or investigators of the Indonesian National Police.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Sufficiently clear.

Article 62 Paragraph (1)

Sufficiently clear.

Paragraph (2) . . .

• 22 - Paragraph (2)

Letter a What is meant by “wealth” includes, among others, securities, land, buildings, and vehicles.

Letter b Sufficiently clear.

Letter c Sufficiently clear.

Letter d Sufficiently clear.

Letter e Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

This provision is based on the premise that the inactive directors and commissioners of the Insurance Company are considered the parties most aware of the financial and operational condition of the Insurance Company whose management is being taken over by the Statutory Manager.

Paragraph (5)

Sufficiently clear.

Paragraph (6)

Sufficiently clear.

Article 63 Paragraph (1)

Sufficiently clear.

Paragraph (2)

What is meant by “written order” is a written order to carry out or not carry out certain activities in order to comply with the provisions of laws and regulations in the financial services sector and/or prevent and reduce losses of Policyholders, Insureds, or Participants.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Paragraph (5) . . .

• 23 - Paragraph (5)

Sufficiently clear.

Article 64 Sufficiently clear.

Article 65 Sufficiently clear.

Article 66 Paragraph (1)

Sufficiently clear.

Paragraph (2)

This provision is based on the premise that the Controller has an important role, both directly and indirectly, that can influence the management or policies of an Insurance Company.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Sufficiently clear.

Paragraph (6)

Sufficiently clear.

Article 67 Information owned by the Financial Services Authority may be information of a confidential nature, including, among others, information related to national economic stability and information related to the interest of protecting the Insurance Business from unfair business competition.

Such confidential information may be accessed by employees of the Financial Services Authority or parties appointed and/or assigned by the Financial Services Authority.

Article 68 Paragraph (1)

This provision is intended to enhance the role of associations in regulating their members (self regulatory) and to facilitate coordination with the Financial Services Authority.

Paragraph (2) . . .

• 24 - Paragraph (2)

Sufficiently clear.

Article 69 Paragraph (1)

The assignment or delegation of certain authority from the Financial Services Authority to associations includes, among others, the formulation of business ethics and code of conduct standards, the establishment of risk profiles and mortality tables, and the implementation and determination of agency certification.

Paragraph (2)

Sufficiently clear.

Article 70 Sufficiently clear.

Article 71 Paragraph (1)

Sufficiently clear.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Examples of conditions that endanger the interests of Policyholders, Insured Persons, or Participants include, among others, conditions where the company's financial condition deteriorates drastically, shareholders are not cooperative, and/or the directors and commissioners, or their equivalents in a legal entity in the form of a cooperative or mutual business as referred to in Article 6 paragraph (1) letter c, do not have a way out to overcome the problems.

Paragraph (4)

Sufficiently clear.

Article 72 Sufficiently clear.

Article 73 Sufficiently clear.

Article 74 Sufficiently clear.

Article 75 . . .

• 25 -

Article 75 Sufficiently clear.

Article 76 Sufficiently clear.

Article 77 Sufficiently clear.

Article 78 Sufficiently clear.

Article 79 Sufficiently clear.

Article 80 Sufficiently clear.

Article 81 Sufficiently clear.

Article 82 Sufficiently clear.

Article 83 Paragraph (1)

Sufficiently clear.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

What is meant by "license" is a license other than a business license. Examples of licenses or approvals include, among others, a license to market insurance products and approval for bancassurance.

Article 84 Sufficiently clear.

Article 85 Sufficiently clear.

Article 86 Sufficiently clear.

Article 87 . . .

• 26 -

Article 87 Paragraph (1)

Sufficiently clear.

Paragraph (2)

The provisions stipulated in the Financial Services Authority Regulation include, among others, the obligation to prepare a work plan and the obligation of the company to inform Policyholders and Participants of a separation plan.

Article 88 Sufficiently clear.

Article 89 Provisions that must be adjusted include provisions regarding aspects of the Mandatory Insurance Program contained in the legislation regarding compulsory passenger accident insurance funds and road traffic accident funds.

Article 90 Sufficiently clear.

Article 91 Sufficiently clear.

Article 92 Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5618