Indonesia: 39 insurers yet to announce plans for spinning off takaful windows
Source: Middle East Insurance Review | Jul 2019
Only 10 insurers have declared that they would spin off their takaful windows as at the end of April, to comply with the insurance law, according to the Financial Services Authority (OJK).
“There are still 49 insurance companies that have not yet carried out the spin-off, 25 of which are joint-venture companies. Only 10 of the 49 companies have stated that they will spin off the Islamic units,” said Mr Mochamad Mukhlasin, director of supervision of the Islamic non-bank financial industry. Of the 10, two are family takaful units, while eight are general takaful operators.
The OJK has asked the insurance industry to submit a spin-off plan for Islamic insurance units by 17 October 2020. The insurers have until 17 October 2024 to effect the spin-offs.
Mr Muchlasin said the companies which have yet to announce their spin-off plans are currently reviewing and preparing strategic steps. “They are also calculating equity and efforts to get a 20% investment in local ownership.”
Deputy commissioner of supervision of the non-bank financial services industry at OJK, Mr Mochammad Ichsanuddin, said that spin-off plans are constrained by capital. A government regulation sets the ceiling on foreign ownership of insurers operating in Indonesia at 80%. This means that local investors must hold a stake of 20%.
To date, there are four shariah insurance windows that have been fully spun off. They are Jasindo Syariah, Askrida Syariah, Asuransi Jiwa Bumiputera and Reindo Syariah. In total, there are currently 13 fully fledged or stand-alone takaful operators. M