- The Financial Services Authority (Otoritas Jasa Keuangan – "OJK") has issued Regulation No. 20 of 2023 ("Regulation 20/2023"), which introduces various rules for the marketing of insurance products linked to credit and sharia financing, as well as products that are offered through the suretyship and sharia suretyship business lines.
- General insurance companies are permitted to market insurance products that are linked to credit and/or sharia financing and suretyships and/or sharia suretyships, provided that said companies are able to satisfy the following requirements: 1) Must have a lowest liquidity ratio of 150%; 2) Must be in possession of equity amounting to at least Rp. 250 billion or the applicable minimum equity requirement, whichever is higher, until 31 December 2028 or Rp. 1 trillion after 31 December 2028.
- Similar requirements also apply to sharia general insurance companies that market products within the sharia financing insurance and/or sharia suretyship lines. However, these types of companies require total company funding equity, after taking into account the requirement to provide qardh to tabarru’ funds, amounting to at least Rp. 100 billion or the applicable minimum equity requirement, whichever is higher, until 31 December 2028 or Rp. 500 billion after 31 December 2028.
- It should be noted that sharia suretyship products must utilize kafalah bil ujrah contracts that are in line with the following provisions: 1) Sharia insurance companies that act as sureties; 2) Sharia insurance companies may not guarantee transactions and objects that are not in accordance with sharia law; 3) Payments of claims must only be sourced from company funds.
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