Asian News - Indonesia: Foreign ownership rule to be revised for insurers
Source: Asia Insurance Review | Mar 2016
The Financial Services Authority (OJK) will soon issue a new regulation on foreign ownership in the country’s insurance industry as mandated by a revised law on insurance.
Dr Firdaus Djaelani, OJK Commissioner for the Non-banking Financial Industry, said last month that the regulation would stipulate details about foreign ownership of insurance firms, which was unspecified in the 2014 Law on Insurance Business that revised previous legislation, reported The Jakarta Post.
Legislators have called on the regulator to lower the foreign ownership cap to 49% from the current 80%. But Mr Firdaus said that no decision on the foreign ownership ceiling has been made.
With the new rule still being formulated, he said that foreign shareholders in the insurance industry are currently still allowed to own stakes of up to 80% in accordance with a 2008 government regulation on the insurance business.
Insurers with high foreign ownership stakes came during 1998 financial crisis
He acknowledged that many insurance companies owned by foreign shareholders, including those that have had large assets and significant operations in Indonesia for decades, are expecting that there would be no ownership cap in the upcoming change in policy.
He said there are at least six insurance companies in which stakes of more than 80% are controlled by foreign shareholders at present, adding that “they entered Indonesia decades ago when we were in the 1998 financial crisis”.
Most foreign shareholders that entered Indonesia’s insurance market after the 1998-99 Asian financial crisis have a stake of less than 50% in their local ventures, he said.
In addition, Dr Firdaus said the OJK would invite insurers to discuss a new stipulation regarding a “single presence policy” in the 2014 law that requires two sister insurance firms owned by a single holding company to be merged into one.