The Financial Services Authority (OJK) has revealed that two insurance companies will spin off their takaful windows this year by establishing takaful companies.
Of the two companies, one has submitted an application for a new Shariah insurance business licence to OJK while the other will apply for a licence in December 2024, reported Antara News Agency quoting OJK's chief executive for Insurance, Guarantee and Pension Fund Supervision Ogi Prastomiyono.
In addition, a third insurer will submit an application for a takaful licence in December 2024, Mr Ogi said, adding that this company would complete the divestment of its Islamic insurance operations in 2025.
Meanwhile, a fourth insurer is set to complete divesting its takaful window to a new company by the end of this year, in accordance with the insurer’s Shariah unit separation work plan, said Mr Ogi.
He did not reveal the names of the four insurers. Previously, Mr Ogi had said that a total of 30 companies would spin off their Shariah insurance windows by forming a new company.
Transfers to other Shariah insurance companies
In addition, there are 11 insurers that planned or are planning to transfer their takaful operations to other Islamic insurance companies and cease offering takaful services. Of the 11 companies, one transferred its portfolio at the end of 2023 and three others aim to complete their transfers this year. Of the latter three, two insurers will start the transfer process in the third quarter of 2024 and one company will do so in the fourth quarter. The transfers are targeted to be completed in the first half of 2025.
Among the 30 insurers with plans for takaful units, a few have already completed the spin-off since 2014 when the OJK directed that the separation of Islamic and conventional insurance units is mandatory.
The deadline for the spin-off of takaful windows is 31 December 2026. If all goes to plan, there will be 30 new takaful companies then, in addition to the 15 wholly-Islamic insurers already operating in Indonesia.
The requirement for Shariah insurance spin-offs was issued in October 2014, without any detailed guidance on the process. In July 2023, OJK issued rules to regulate the divestment process.