• Change of the Limit of Foreign Ownership in Insurance Companies
Article:

Change of the Limit of Foreign Ownership in Insurance Companies

18 February 2020

The government has officially permitted foreign ownership in insurance companies exceeding 80%. The provisions regarding change of the limit of foreign ownership are set out in Government Regulation Number 3 Year 2020 regarding Amendment to Government Regulation Number 14 Year 2018 regarding Foreign Ownership in Insurance Companies.

Based on Government Regulation Number 3 Year 2020, in the event that foreign ownership in insurance companies that are not public companies has exceed 80% by the time this regulation comes into effect, such insurance companies are excluded from the limit of foreign ownership as regulated under Article 5 (1) of the Government Regulation Number 14 Year 2018 which is not exceeding 80%, and such insurance companies is prohibited from increasing the percentage of foreign ownership. The provision on foreign ownership under this regulation is also applicable for insurance companies or reinsurance companies conducting set-off of their sharia units to become sharia insurance companies or sharia reinsurance companies. Government Regulation Number 3 Year 2020 comes into effect on 20 January 2020 and is prepared in order to support and maintain the growth and development of the insurance industry, as well as considering the ability of domestic capital capacity.

In this revision, the provisions of Article 6 Paragraph 2 are amended. Between Article 6 Paragraph 2 and Paragraph 3 added 1 paragraph, namely Paragraph 2A. Article 6 Paragrah 3 and Paragraph are removed, so Article 6 states:

In the event of foreign ownership in an insurance company that is not a publicly listed company reaches 80% at the time this regulation comes into force, the insurance company is exempted from the ownership agreement in accordance with Article 5 Paragraph 1, and the insurance companies mentioned below are providing foreign ownership

In Article 6 paragraph 2A, it is added a provision that the insurance companies that require additional capital obtained by local partners (Indonesian legal entities and Indonesian citizens), paid up capital must be made through an initial public offering of shares in Indonesia.

This government regulation was enacted in Jakarta on January 16, 2019 by President Joko Widodo and enacted in Jakarta, has been effective on January 20, 2020 which was signed by Minister of Law and Human Rights Yasonna H Laoly.