Administration of the Insurance Industry

This Government Regulation is based on Law No. 2 of 1992 on the Insurance Industry and it amends Government Regulation No. 73 of 1992 as amended by Government Regulation No. 63 of 1999. The purpose of this second amendment is to address the developments to date in the insurance industry and to anticipate further developments. The future developments in the insurance industry will include a greater emphasis on Syariah-based insurance and re-insurance products.

The primary amendments to the Regulation reflect the current status of the sector and anticipate developments in Syariah-based insurance products.

Article 1 has been amended to synchronize prevailing language and to define what constitutes an insurance company and provide a definition for Syariah insurance.

The insertion of Articles 2A and 2B deal with Syariah-based insurance and re-insurance respectively.

Article 3 has been amended to ensure the implementation and subsequent application of good governance principles.

Article 6 has been amended to increase the capital levels required for insurance and re-insurance companies to IDR 100 billion and IDR 200 billion respectively.

There have also been an additional 7 articles inserted between Article 6 and Article 7, namely: Articles 6A – 6G. These additional provisions detail additional capital requirements for the various types of insurance companies and then stipulates dates of compliance ranging through 31 December 2008, 31 December 2009, and 31 December 2010.

The insertion of Article 11A provides the Minister with the necessary power and authority to transfer insurance portfolios from an insurance company in financial distress to another company.

Article 13A has been inserted to explicitly state the prohibition against certain business relationships with company shareholders and their affiliates. This includes such things as providing guarantees for loans.

The provisions contained in Article 38 as they relate to sanctions have been amended to provide for administrative fines up to IDR 180 million and IDR 360 million. Article 40 has been repealed. This Article related to time limits with respect to failure to report.

The Regulation has been in force since 19 May 2008.