INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Monic N. Devina, D. Meitiara P. Bakrie and Ruth A. Mendrofa, ABNR Counsellors at Law
OJK Reg, 28 defines the concept of “insurtech” as a digital insurance brokerage service, which is one of the activities carried out by an insurance broker company with prior approval from the OJK. A party that can carry out such activities includes either a duly licensed insurance broker or one that has not secured a business licence as an insurance broker at that time but is in the process of filing an application for an insurance broker business licence. Certain requirements are imposed by the OJK for an insurance bro - ker to secure approval, including meeting equity requirements – ie, by submitting: • the last two-quarters of the company’s financial statements for a licensed insurance broker; or • an audited financial statement by a public accountant for a party that has not been licensed as an insurance broker. As regards the underwriting process, OJK Reg, 28 clarifies that the underwriting of a digital insurance broker must be minimal – ie, a pro - cess that does not require a direct or face-to- face survey over risks, a health check, etc. For example, in motor vehicle insurance, there is no requirement for physical checking of the vehicle, and no medical examination would be required for life insurance for underwriting within guaran - teed acceptance criteria. 8.2 Treatment of Different Types of Insurance Insurance products in Indonesia are generally grouped into two categories from an insurance regulatory perspective: life insurance and gen - eral insurance products. Insurance companies are limited to doing busi - ness tailored to their licences; this means that the offer of overlapping services – ie, life insur -
ance and general insurance at the same time – is not permitted. Business expansion for insurance companies, however, is possible in that life insurance com - panies can expand their business to invest - ment-related insurance products and fee-based activities (these include marketing other non- insurance products – eg, mutual funds or other products of financial institutions licensed by the OJK), credit insurance and suretyship, or other activities assigned by the government. Sharia- compliant general insurance companies can expand into these activities, except for credit insurance and suretyship; whereas general insurance companies are only allowed to add fee-based activities to their expanding business. Life insurance and general insurance products, including those that are Sharia-compliant, are subject to different regulatory treatment. 9. Regtech 9.1 Regulation of Regtech Providers At the time of writing, regtech is unregulated and classified as a fintech cluster, and players in the sector qualify as FSTIs under the OJK. It was reported in 2022 that the regulator was prepar - ing a regulatory framework for regtech. Regtech solutions in the market today are spread into several clusters under the OJK: • regtech (automates the collection and stor - age of customer due diligence (CDD) data to comply with AML and CFT regulations); • e-KYC (solutions for digital identity and digital signature); • verification technology (identification and non-CDD verification platforms);
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