In this Legal Update, Rod Brown, Sean Prior and Stanley YP Tan of Mayer Brown JSM, and Fadjar W Kandar and Barryl Rolandi of Kandar & Partners Advocates, summarise Regulation 67 issued by the Financial Services Authority of Indonesia (Otoritas Jasa Keuangan, the “OJK”) with respect to insurance companies.

Insurance Companies

The OJK issued Regulation No. 67/POJK.05/2016 on 23 December 2016 regarding Business Licensing and Institutional aspects of Insurance Companies, Sharia Insurance Companies, Reinsurance Companies and Sharia Reinsurance Companies (“Regulation 67”).

Regulation 67 contains detailed provisions relating to the licensing regime and organisational structure of companies (the “Insurance Company”) engaging in the services of life insurance, general insurance, reinsurance, Sharia insurance, Sharia general insurance and Sharia re-insurance.


The minimum paid-up capital requirement for different types of insurance companies are as follows:

• Life insurance and general insurance company: IDR 150 billion

• Re-insurance company: IDR 300 billion

• Sharia insurance and sharia general insurance company: IDR 100 billion

• Sharia re-insurance company: IDR 175 billion

Insurance companies that have already obtained a business license prior to the enactment of Regulation 67 and intend to change their share composition through acquisition and/or adding new shareholders, are required to comply with the above minimum paid-up capital requirements, except in the event that where (i) a new shareholder acquires shares in an insurance company by way of inheritance; or (ii) the change of shares composition is carried out in order to comply with the minimum equity requirements under OJK Regulation No.71/POJK.05/2016 regarding Financial Solvability of Insurance Companies and Reinsurance Companies.


Regulation 67 requires all insurance companies to appoint a “controller”. Regulation 67 defines a controller as a party (i.e., an individual or a business entity) who has the power to, directly or indirectly, appoint directors or commissioners (or any person in the insurance company with a position equivalent to directors or commissioners) of an insurance company and/or control over the decision of such directors or commissioners (or over any person in the company with a position equivalent to directors or commissioners). Regulation 67 provides that a controller can be either a shareholder or not a shareholder. In the event the controller is a shareholder, then such controller would be the controlling shareholder of the insurance company.

Insurance companies that have already obtained a business license prior to the enactment of Regulation 67 are required to report the appointment of their controller within six months from the enactment of Regulation 67 (i.e., before 28 June 2017). In the event the appointed controller has not passed a fit and proper test by 28 June 2017, the board of directors of the insurance company must submit a report along with an application for a fit and proper test to the OJK.


Pursuant to the “single presence policy” introduced by Law No.40 of 2014 on Insurance (“Insurance Law”), an individual/entity may not take up the role as the controlling shareholder in more than one insurance company. To comply with the policy, the controlling shareholder may consider mechanisms such as a merger, consolidation, partial or complete divestment of the shareholding or other corporate actions with prior approval of OJK. The criteria to determine a controlling shareholder under Regulation 67 is the same as that for the banking sector as mentioned above.

For an insurance company that has not complied with the shareholding requirement under the single presence policy within five years from the enactment of Insurance Law (i.e., before 17 October 2017), Regulation 67 requires an “action plan” which first must be filed and approved by its shareholders at a general meeting, before the board of directors of the insurance company submits the action plan to the OJK. The action plan shall set out details of the compliance methods, in addition to stages and period of implementation.

Note that according to the current Negative Investment List (issued in May 2016), any foreign investors’ ownership in an Indonesian Insurance Company is limited to 80%. Also, Regulation 67 requires that a foreign shareholder must at least have an “A” rating or its equivalent, issued by an internationally recognised rating institution.


Regulation 67 also requires that prior approval must be obtained from the OJK for any proposed change of ownership in any insurance company, whether direct or indirect shareholding, acquisition or addition of new shareholders in the insurance company.


Foreign employees employed by an insurance company are only allowed to hold certain permitted positions. Foreign employees may be employed as (i) experts, who hold positions one level below the board of directors; (ii) actuaries; or (iii) consultants. These foreign employees may deliver only limited functions in the form of underwriting, actuary, marketing and/ or information systems. Regulation 67 provides that the maximum period of employment of a foreign employee is five years. The foreign employees are also required to be assisted by an Indonesian employee for the purpose of transfer of knowledge, skills and technology.

Regulation 67 came into effect on 28 December 2016.