The Financial Services Authority or Otoritas Jasa Keuangan (OJK).
Yes.
Over the past several years bancassurance has become a marketing trend for life and other insurance companies. Most life insurance companies try to expand their business by entering into bancassurance partnership agreements with major banks in Indonesia.
Based on OJK Circular Letter No. 32/SEOJK.05/2016 on the distribution channel of insurance products in cooperation with banks (bancassurance) (Circular 32), there are three types of business models for bancassurance cooperation:
- product reference;
- distribution cooperation; and
- integrated products between a bank and insurance products (bundled products).
The salient terms are as follows:
- exclusivity;
- fees, commissions and terms of payment;
- nature of distribution (business model) of insurance products;
- period of agreement, renewal and termination; and
- limitations on rights and obligations of each party.
Yes. An insurance company must obtain approval for each specific bancassurance activity from the OJK, and a bank must report the bancassurance activity to the OJK.
There is no regulatory restriction for an insurer to appoint a bank as its exclusive distributor, except on a credit-linked portfolio under a referral business model where the bank must have a panel of at least three insurers.
Yes, the form of the preferential treatment is a matter of negotiation.
There is no regulatory approval or notification needed just for entering into a negotiation. Insurance companies, however, must obtain approval from the OJK before entering into a bancassurance arrangement.
In obtaining an approval of the bancasurance partnership from the OJK, the insurance company must submit an application along with documents, including:
a) a draft bancassurance agreement (parties must place their initials in the draft);
b) a copy of approval of the insurance products;
c) a sample of the brochure, marketing media, or an application letter which includes information on the commission payable to the bank;
d) description of insurance product that will be sold; and
e) procedure under the insurance policy closing and premium payment.
The regulation also prescribes the minimum content of a bancassurance agreement.
The OJK, in its sole discretion, can ask for the agreement to be amended with a view to ensuring compliance with the regulation.
There is no requirement under the Insurance Law or Anti Monopoly Law to make antitrust or competition analysis related to the bancassurance agreement. However it would be prudent to do so if a dominant position or unfair competition is likely to be created.
The Business Competition Supervisory Commission (a state agency established to examine allegations relating to the Anti-Monopoly Law) (KPPU) may consider that the exclusivity
arrangement in a bancassurance arrangement between a major bank with a large numbers of customers can create unfair competition and market closure and that these practices are violations of the Anti-Monopoly Law. This is all a matter of fact and it would be prudent to undertake a competition analysis and for the issue to be considered in identifying a bank and dealt with in negotiations.
Based on data privacy, insurance and banking regulations, both the bank and insurance company are obliged to maintain confidentiality of customers’ data. A bank is only allowed to provide personal information of its customers to the insurance company if the bank has obtained written approval from the customers (specific purpose consents are required). Subject to consent from the customers, there is no prohibition for an insurance company using customer information for its business.
Yes. Please see response to Question 12.
Under the Electronic Information and Transaction Law (and implementing regulations), any use of personal data (e.g., data collection, transfer, process, disclosure) through electronic media may only be done with proper prior consent from the relevant data owners. Further, similar with Circular 12/35, the Financial Services Authority Regulation No.1/POJK.07/2013 on Protection for Financial Sector Consumers requires financial services providers (which includes insurance companies) to maintain the confidentiality of their customer data.
There is no prohibition on agreeing up-front/staggered payments to be paid by insurance companies to banks for their platform.
For life insurance companies, fees and compensation payment can be agreed between the parties.
For certain general insurance products (e.g., property and motor insurance products), acquisition costs are capped.
Not applicable.
No.
No, although note that there is a delineation between insurance companies (general versus life, and sharia products need to be dealt with separately). Any insurance product sold through a bancassurance arrangement must be approved by the OJK.
None provided such products are within its license.
All insurance products sold in Indonesia (including sold using bancassurance arrangements) must be approved by the OJK. Before approving a product, the OJK will review the specifications of the product, including the insurance policy.
Yes, insurance companies generally own the IP rights to such policy forms.
Indonesia does not recognize a brand partnership between two insurance companies (or more) or between an insurance company and a bank.
Under the Indonesian Insurance Law an insurance product must be issued by an insurance company and this product must be registered under the name of the insurance company.
The Indonesian Insurance Law prohibits an insurance product from being registered under the name of two insurance companies.
No. However, the bank would generally exercise regarding the level of access to its customer data.
a) The bank personnel must be trained and qualified to sell the product and must obtain agent certification. The regulations related to bancassurance do not stipulate whether providing training to the bank employees who sell the insurance products is an obligation of the bank or the insurance company or whether training expenses must be paid by the insurance company. In practice this arrangement is agreed between the parties under the bancassurance agreement.
b) No, the bank would be compensated based on the consideration set out within the distribution agreement.
No. However, the bank would generally exercise regarding the level of access to its customer data.
Yes. There is no restriction for banks to lease space to insurance companies. In practice the bank will provide some space to insurance companies to distribute its products.
If the insurance companies were to lease some space in the bank's premises, it must show:
- The name of the insurance companies in the table/room that is used by the insurance companies; and
- The insurance companies personnel must keep using his/her identity card of insurance companies
None.