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The Rise of Insurance Technology in Indonesia

The insurance industry in Indonesia began during the Dutch colonial period, presenting itself as one of the many mechanisms to secure the Dutch’s trading activities. Indonesians are vaguely familiar with the benefits of insuring themselves against loss, damage, illness or death – ultimately, this lack of awareness materializes in the low adoption rates of insurance coverage.

The Jakarta Post reported that only 1.7 % (one point seven percent) of the population have insurance, and as a result, Schinder Law Firm sees a substantial opportunity for the insurance business to grow rapidly in Indonesia.

It is no secret that Millennials expect instant gratification and rapid services: insurance companies are perfectly poised to meet this need by selling their products through digital platforms. The rise of such a platform had led the Indonesian Financial Services Authority (OJK) to issue Regulation No. 13 of 2018 regarding Digital Financial Innovation (the “Regulation”) to regulate and supervise the digitization of insurance industry practice.

Under the Regulation, the “Digital Financial Innovation” is “a renewal activity of business process, business model, and financial instrument which offers added value in financial services by involving the digital ecosystem, in which the insurance sector is classified as one of digital financial innovation.”

To be considered a part of the “Digital Financial Innovation,” the financial service must:

  1. Be Innovative and future-oriented;
  2. Utilize the communication and information technology as the primary medium for consumers of the financial service sector;
  3. Support financial inclusion and literacy;
  4. Benefit the mass market;
  5. Integrate itself with existing financial services;
  6. Implement a collaborative approach; and
  7. Adhere to consumer protection and data privacy laws.

Many believe that this Regulation mainly applies to insurance companies, but insurance agencies and insurance brokerages are welcomed to sell insurance products in digital platforms. However, there are certain caveats that limit agencies and brokerages. For example, insurance agencies can only market one insurance product from each insurance company; insurance brokerages can market various insurance products from several insurance companies, but regardless of a company’s status as an agency or broker, companies that intend to sell or market insurance products via digital platform need to register themselves to the OJK, via a regulatory sandbox mechanism.

As the world is quick to adopt new technologies, Schinder Law Firm is adept to provide legal assistance in the technology sector. Our legal service ranges from helping companies in the technology space start from a small establishment, elaborate on foreign ownership limitations, acquire licenses, and any other legal issues that may arise.

About the author:



Marsha graduated with cum laude predicate from Universitas Tarumanagara 2018 majoring in business law. During her study, she joined various committee, seminars, and workshops. She was the participant of Student Exchange Program at Malaya University.

Prior to joining Schinder Law Firm, Marsha worked at another prominent law firms in Jakarta, which emphasis in foreign direct investment, energy, financial technology, e-commerce, and various general corporate matters ranging from general to complex. In addition, she has been involved in a complex merger and acquisitions transactions.

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