OJK Prepares New Regulation on Microinsurance

The Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) is planning to prepare a new policy related to microinsurance products aimed at providing risk protection for small business actors. The Executive Director of the Indonesian General Insurance Association (AAUI), Cipto Hartono, explained that the regulation will strengthen the legal foundation for insurance products marketing to the lower- to middle-income segments.

“It is currently being prepared in parallel with OJK, because each insurance company is actually already selling [microinsurance], but the market is small and not yet well established. So, once there is a regulatory framework in place, it will be easier to coordinate,” said Cipto to Hukumonline.

Technically, microinsurance products and their distribution channels are regulated under Circular Letter of OJK No. 9/SEOJK.05/2017 (“SEOJK 9/2017”). However, OJK is also encouraging general insurance companies to optimize the microinsurance market, particularly in the Micro-, Small-, and Medium-scale Enterprises (“MSME”) segment.