SSEK Indonesian Legal Consultants founding partner Ira A. Eddymurthy and Maria Yudhitama, an associate at the firm, have contributed the Indonesia chapter of the new Practical Law global guide to insurance and reinsurance.
SSEK Legal Consultants has one of the leading insurance law practices in Indonesia and has been involved in numerous high-profile cross-border transactions. SSEK√¢¬Ä¬ôs insurance clients include ACE, Chartis Insurance, Dai-ichi Life, Hanwha Life and Prudential.
The following is an excerpt√Ç¬†from the Indonesia chapter of the Practical Law global guide to insurance and reinsurance written by SSEK Legal Consultants.
The key ongoing requirements that insurance/reinsurance companies must comply with are to (among others):
- Ensure that the board of directors (BOD), board of commissioners (BOC), sharia supervisory board, actuary, internal auditor and controller pass the fit and proper test administered by the Financial Services Authority (Otoritas Jasa Keuangan) (OJK).
- Maintain the financial soundness of the company, including minimum solvency level based on a risk-based capital (RBC) calculation (that is, 120% of minimum capitalization, self-retention and permitted investment).
- Appoint a controller and report the appointment and any change of controller to the OJK.
- Comply with OJK and public reporting requirements, including submission to the OJK of:
- an annual report on the implementation of good corporate governance (GCG)
- periodic operational reports (annually, quarterly and monthly) and
- the strategic investment policy of the insurance/reinsurance company.
- Comply with GCG requirements, including requirements related to the general meeting of shareholders (GMS), BOD and BOC, formation of committees (such as investment committee and development of insurance product committee), shareholders and investment.
- Obtain prior approval from the OJK for the launch of any new product.
- Report any amendment to the articles of association (AOA), including any increase of capital through the issuance of shares.
The OJK does not require private insurance and reinsurance companies to notify the OJK of any material transaction that is outside the ordinary course of business, or if there is an affiliated transaction. However, in practice, private insurance and reinsurance companies usually notify the OJK of any material transaction.
Publicly-listed insurance and reinsurance companies must notify the capital markets division of the OJK of any affiliated or material transaction. In addition, they must satisfy several requirements under capital market laws and regulations.
The key ongoing requirements with which insurance and reinsurance brokerage companies must comply include the obligation to:
- Meet requirements relating to the operation of the business (for example, the employment of insurance experts).
- Comply with GCG requirements, such as GMS, BOD, BOC and shareholder requirements.
- Ensure that the controlling shareholders, members of the BOD and BOC, foreign employees and technical experts pass the fit and proper test administered by the OJK.
- Submit periodical reports to the OJK.
Other providers of insurance/reinsurance-related activities
There are no key ongoing requirements that must be fulfilled by actuary consultants, public accountants and appraisers. Such providers must be registered with the OJK before providing insurance-related services.
To read the full guide to insurance and reinsurance in Indonesia, click here.