Indonesia Insurance Industry – Governance, Risk and Compliance
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Indonesia Insurance Industry Regulation Overview
The insurance industry in Indonesia is regulated by the Financial Services Authority. The other bodies that oversee the market are the International Association of Insurance Supervisors (IAIS), the General Insurance Association of Indonesia, and the Indonesian Life Insurance Association among others.
The Indonesia Insurance Industry Governance Regulation research report provides a detailed analysis of the regulations for several insurance types including life, property, motor, and liability. The report also gives insights into recent and upcoming changes in non-admitted insurance regulations, taxation, and the legal system. Also, leverage our elaborate procedural review of new company registrations and operations based on key parameters such as license, FDI, minimum capital requirements, and solvency to better understand market avenues.
Key Regulators | · Financial Services Authority (Otaritas Jasa Keuangan – OJK)
· International Association of Insurance Supervisors (IAIS) · The General Insurance Association of Indonesia (Asosiasi Asuransi Umum Indonesia – AAUI) · The Indonesian Life Insurance Association (Asosasi Asuransi Jiwa Indonesia – AAJI) |
Compulsory Insurances | · Professional Indemnity Insurance
· Marine Liability Insurance · Social Security Insurance · Aviation Liability Insurance |
Key Taxes | · Tax on Insurance Premium
· Corporate Income Tax · Corporate Capital Gains Tax · Value Added Tax |
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Indonesia Insurance Industry – Key Regulators and Legislation
Financial Services Authority: OJK (Otaritas Jasa Keuangan) is the key regulatory body of insurance in Indonesia. The OJK was established in 2011 to replace the functions of the Capital Market Supervisory Agency and Financial Institution (Bapepam-LK). The key responsibilities of the OJK include regulating and supervising the financial services activity in the banking sector, capital market, insurance, and pension funds. The OJK also makes regulations on the procedure for the imposition of sanctions under the provisions of the legislation in the financial sector. The body also has the right to issue and revoke licenses.
International Association of Insurance Supervisors (IAIS): The IAIS is a membership-driven global organization that represents insurance regulators and supervisors. It formulates and issues various global insurance principles, standards, and guidance, provides training and support on issues related to insurance supervision and organizes meetings and seminars for insurance supervisors. The IAIS works closely with other financial sector standard-setting bodies and international organizations to promote financial stability.
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Indonesia Insurance Industry - Compulsory Insurance
Some of the key compulsory insurance required within the Indonesia insurance industry are:
- Professional Indemnity Insurance
- Marine Liability Insurance
- Social Security Insurance
- Aviation liability insurance
Indonesia Insurance Industry Analysis by Compulsory Insurances
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Indonesia Insurance Industry - Company Registration and Operation
Insurers are required to obtain a license to operate in the country. Article 8 of the Insurance Law requires all companies intending to carry out (re)insurance business in Indonesia to obtain a business license from the OJK. In addition, Article 18 of the Insurance Law and Article 9 of Regulation No. 67/POJK.05/2016 stipulates any entity engaging in reinsurance business activities must obtain a license from the OJK. Insurance intermediaries also have to get licenses for promoting and selling insurance contracts in the country.
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Indonesia Insurance Industry – Taxation
Tax is imposed upon insurance premiums within the insurance industry in Indonesia. The other taxes imposed are Corporate Income Tax, Corporate Capital Gains Tax, and Value Added Tax.
Corporate Income Tax: For tax purposes, a company is considered a resident company in Indonesia if it is established or resided in the country. Companies having a principal place of management in Indonesia are also considered resident companies. Corporate taxes are imposed on the global income of resident companies, whereas non-resident companies are taxed on Indonesia-sourced income. The standard corporate income tax rate for resident and non-resident companies operating in Indonesia is 22%.
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Scope
This report provides:
- Details of the insurance regulatory framework in Indonesia.
- Details of the rules and regulations governing insurance products and insurance entities.
- Lists and analysis of key trends and developments in the country’s insurance regulatory framework.
- Analysis of the rules and regulations on the establishment and operation of insurance businesses in the country.
- Details of the taxation imposed on insurance products and insurance companies.
Key Highlights
• The OJK is the government regulatory body supervising and regulating the insurance industry of Indonesia.
• The government permits 80% FDI in the Indonesian insurance industry.
• The Insurance Law 1992 was repealed and replaced by the new Insurance Law 2014.
• The placement of non-admitted insurance is not permitted in the Indonesian insurance industry.
• Composite insurance is not permitted in Indonesia
Reasons to Buy
- Insights into the insurance regulatory framework in Indonesia.
- Provides FAQ-style analytical insights comprising 129 knowledge elements on insurance compliance applicable to the country.
- Track the latest regulatory changes and expected changes impacting the Indonesia insurance industry.
- Gain detailed information about the key regulations governing the country’s establishment and operation of insurance entities.
- Understand key regulations and market practices on various types of insurance products.
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Frequently asked questions
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Which is the key regulator of the Indonesia insurance industry?
The Financial Services Authority is the key regulator of the Indonesia insurance industry.
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Which are the other bodies that oversee operations in the Indonesia insurance industry?
The International Association of Insurance Supervisors (IAIS), The General Insurance Association of Indonesia, and Indonesian Life Insurance Association among others oversee the Indonesia insurance industry.
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Which are the compulsory insurances required within the Indonesia insurance industry?
Some of the compulsory insurances required within the Indonesia insurance industry are professional indemnity insurance, marine liability insurance, aviation liability insurance, and social security insurance.
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What are the types of taxes imposed upon the Indonesia insurance industry?
Tax is imposed upon insurance premiums within the insurance industry in Indonesia. The other taxes imposed are Corporate Income Tax, Corporate Capital Gains Tax, and Value Added Tax.
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