- The Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) is currently preparing a Draft Circular on the Amendment to Draft Circular of the OJK No. 32/SEOJK.05/2016 (“Circular 32/2016”) on Insurance Product Marketing Channels in Cooperation with Banks (Bancassurance) (“Draft Circular”).
- The Draft Circular revises several provisions originally set out under Circular 32/2016 in response to the issuance of Regulation of the OJK No. 13/POJK.03/2021 on the Organization of Commercial Bank Products. Broadly speaking, the Draft Circular contains six chapters that address the following matters: 1) General provisions; 2) Requirements for companies that will market insurance products through bancassurance; 3) Application procedure for bancassurance approvals; 4) Company risk management for bancassurance; 5) Consumer protection; and 6) Closing provisions.
- According to the Draft Circular, if any bancassurance cooperation is carried out in line with business models that apply within the context of banking products, then the relevant company will not be allowed to provide any acquisition costs in the form of commissions or intermediary fees.
- The Draft Circular also affirms that any marketing campaign that is conducted through telemarketing, including through letters, electronic media or bank websites, may only be undertaken for the purpose of providing an initial introduction to the relevant product.
- In the event that a bank uses a website/application as a part of any bancassurance cooperation mechanism, then the relevant company must ensure that the bank: 1) Has policies, systems, procedures and authorities in place that are capable of handling digital bancassurance products; 2) Has sufficient information technology infrastructure in place to support digital bancassurance products; and 3) Is ready to implement risk management, particularly security controls aimed at ensuring the fulfillment of the principles of confidentiality, integrity, authentication, non-repudiation and availability.
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