Fintech in Indonesia – Insurance Products, Credit References

In principle, the selling and marketing of insurance products in Indonesia is regulated and licensed by the Financial Services Authority (OJK), although there seems to be no differentiation yet between fintech companies and companies that engage in the conventional selling and marketing of insurance products.

In practice, licensed insurance companies in Indonesia have been selling their products over the internet, through their own platforms or by cooperating with other parties (eg, e-commerce platforms or e-money platforms) to assist in facilitating the selling and marketing of their insurance products.

The OJK is still in discussions over whether unit-linked products can continue to be sold without a face-to-face meeting with the potential insured party. The prevailing regulations require unit-linked products to be sold with a face-to-face meeting that is used to explain the product to the potential insured party.

Credit References

There are restrictions on providing credit information services. In Indonesia, credit reports can only be issued by a credit bureau licensed by the OJK. A credit report is defined under OJK Regulation 42/POJK.03/2019 regarding Credit Information Management Agencies dated 31 December 2019 and Bank Indonesia Circular Letter No. 15/49/DPKL regarding Credit Information Management Agencies dated 5 December 2013 (together, the Credit Bureau Regulation) as a product or service generated by a credit bureau in writing, verbally or by some other method, sourced from credit data and other data owned by the credit bureau.

The credit report generated by the credit bureau, among other things, contains information on:

• the feasibility of the debtor or customer to obtain funds;
• the track record of the debtor or customer in fulfilling its fund provision obligations;
• the ability of the debtor or customer to fulfil its fund provision obligations;
• the character of the debtor or customer; and
• other information that may be utilized to assess the abilities of the debtor or customer.

Pursuant to the Credit Bureau Regulation, a credit bureau engages in the business activities of collecting credit data and other data, and processing credit data and other data to generate a credit report.

The Credit Bureau Regulation also specifically mentions that a credit bureau must be in the form of an Indonesian limited liability company and is subject to applicable foreign shareholding restrictions. In addition, a credit bureau must obtain a business license from the OJK to conduct its business activities. While the total ownership of one or more foreign parties in a credit bureau is limited to 20%, if one foreign party owns more than one credit bureau that foreign party's total ownership in all the credit bureaus combined is limited to 20%.

In collecting and processing credit information, a licensed Indonesian credit bureau obtains credit data from the OJK. The credit data from the OJK consists of data submitted to it by financial institutions. A licensed Indonesian credit bureau may also cooperate with financial institutions to obtain credit data or financial institutions and non-financial institutions for other data, or both. A credit bureau must make an effort to ensure that the source of the data informs the relevant debtor or customer of how the credit data and other data will be utilized.

Credit data is defined as data regarding the condition of funding facility, funding from nonbank institutions and other facilities that can be deemed similar to the foregoing.

Other data in relation to a credit bureau is defined as data other than credit data that can be used to describe the capability of a certain party in fulfilling the party's financial obligations.

This first appeared in Lexology GTDT Fintech 2021. 

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