Indonesia Legal Update: New OJK Regulation on Insurance Products and Marketing

A new Indonesian Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) regulation set to come into effect shortly will affect the products and marketing of insurance companies in Indonesia.

OJK Regulation No. 8 of 2024 regarding Insurance Products and Marketing Channels for Insurance Products (“OJK Reg. 8/2024”) was stipulated on April 25, 2024, and will come into force on October 29, 2024.

We highlight some key points that should be considered by insurance companies in Indonesia:

Marketing of Certain Insurance Products Exempted from Prior Approval Requirement

The previous regulation, OJK Regulation No. 23/POJK.05/2015 regarding Insurance Products and the Marketing of Insurance Products (“OJK Reg. 23/2015”), required every new insurance product to be reported to the OJK to obtain approval or a registration letter prior to being marketed.

OJK Reg. 8/2024 now allows insurance companies to market certain insurance products without first obtaining OJK approval.

Insurance products eligible for this exemption are:

1. Insurance products never marketed in Indonesia by the insurance company and which do not fulfil the following criteria:

• The insurance product has a savings or cash-value element;
• The insurance product is a credit insurance product or sharia financing insurance product; and
• The insurance product involves suretyship or sharia-based suretyship (collectively, the “Criteria”);

2. Insurance products developed from a previously marketed product but which feature a material change (e.g., a change in the risk coverage, including the exclusion or limitation of causes of risk covered and/or a change in the cash-value calculation method), but do not fulfil the Criteria;
3. Insurance products developed from a previously marketed product that fulfils the Criteria but do not feature any material changes.

For eligible insurance products marketed without prior approval from the OJK, insurance companies must still submit a report to the OJK on the implementation of the insurance products at the latest five business days after the products have been marketed.

Offering Digital Insurance Products Now Requires a PSE Registration Certificate 

OJK Reg. 8/2024 requires insurance companies that offer and market insurance products digitally to:

• Obtain an Electronic System Operator (Penyelenggara Sistem Elektronik or “PSE”) registration certificate from the Ministry of Communication and Informatics;
• Have and implement policies, standards, and procedures for information technology risk management; and
• Fulfil all requirements from the OJK and the authorized agency for the organization of electronic system.

Furthermore, the electronic system used to offer the insurance products digitally must contain information regarding the identity of the insurance company, the insurance products being offered, the terms and conditions of the insurance policy, as well as a summary of the products and services.

If the electronic system of another party is used to market the insurance products, such electronic system must be connected to the electronic system of the insurance company.

Insurance companies that intend to offer and market insurance products digitally through a partnership with other parties must obtain prior approval from the OJK. While OJK Reg. 8/2024 sets out the general obligation to obtain such prior OJK approval, it notes that further provisions on obtaining such approval shall be determined by the OJK. To date, no implementing regulation on this matter has been issued, but we may expect an implementing regulation to be issued in soon, considering the effective date of OJK Reg. 8/2024.

Further Provisions on Product Development Committees 

Article 50 of OJK Regulation No. 73/POJK.05/2016 regarding Good Corporate Governance by Insurance Companies (as amended) (“OJK Reg. 73/2016”) briefly mentions the requirement for insurance companies to have a work unit specific for insurance product development.

OJK Reg. 8/2024 reaffirms the requirement for insurance companies to have an insurance product development committee, which now must consist of at least:

• The director in charge of the insurance product development function, as the main person-in-charge;
• The executive responsible for the operational function;
• The executive responsible for the risk management function;
• The executive responsible for the marketing function; and
• The company’s actuary.

The main duty of the insurance product development committee is to assess and give recommendations on the following:

1. Development of insurance products based on analysis or the results of tests conducted by the company during the development process;
2. Classification of insurance products as those which have obtained approval from the OJK or those that only need to be reported to the OJK; and
3. Marketing of insurance products (either to continue marketing, change the insurance products, and/or cease the marketing of the insurance products).

Transition From Previous Regulations

As OJK Reg. 8/2024 serves to revoke and replace the previously applicable OJK Reg. 23/2015 and Article 50 of OJK Reg. 73/2016 on product development committees, the following transitional provisions shall apply:

1. OJK approvals or registration letters for insurance products issued prior to October 29, 2024, shall remain valid.
2. Any reporting process for insurance products that is not completed by October 29, 2024, shall be subject to OJK Reg. 8/2024.
3. Administrative sanctions imposed based on OJK Reg. 23/2015 shall remain valid so long as they do not conflict with OJK Reg. 8/2024.
4. Insurance companies that are not able to resolve the cause of administrative sanctions imposed based on OJK Reg. 23/2015 shall be subject to further administrative sanctions pursuant to OJK Reg. 8/2024.

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