- The Financial Services Authority (Otoritas Jasa Keuangan – "OJK") has issued Regulation No. 11 of 2023 on the Spin-off of Sharia Unit of the Insurance and Reinsurance Company ("Regulation 11/2023"), which expected to establish a sustainable sharia insurance and reinsurance industry as well as protecting the interest of policy holders.
- Essentially, Regulation 11/2023 require for insurance and reinsurance company to conducted spin-off of their sharia unit of such unit has fulfill the following criteria 1) value of tabarru’ funds and investment fund of sharia unit participants has reach at least 50% from thet tonal insurance funds, tabarru’ funds and participant investment funds of its’ parent company; and 2) minimum equity of sharia units has reached at least IDR 100 billion for sharia units of insurance companies and IDR 200 billion for sharia units of reinsurance companies.
- The spin-off could be conducted through two main methods, which are: 1) establishing new sharia insurance/reinsurance company; or 2) Transferred all of the participant’s portfolio of the sharia unit to the existing sharia insurance/reinsurance company which has secure business license.
- Insurance and reinsurance companies that have sharia units is required to conduct the spin-off at the latest on 31 December 2026. However, the work plans for spin-off must be submitted to OJK for approval no later than 31 December 2023.
- For more information on this story, see Hukumonline’s article titled “Ini Poin Penting Aturan Spin-Off Perusahaan Asuransi Syariah”
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