AASI Sees Positive Impact from UUS Spin-off Requirement on Sharia Insurance Industry

Regulatory Background

The Financial Services Authority (OJK) has mandated that insurance/reinsurance companies must complete the spin-off of their Sharia Business Units (UUS) by the end of 2026, as stipulated in Article 9 of POJK 11/2023. This regulation aims to strengthen the Sharia insurance sector by creating independent entities.

Industry Perspective

The Indonesian Sharia Insurance Association (AASI) views this requirement as having a positive impact on the industry. Arry Bagoes Wibowo, Head of Legal, Compliance, and Inter-Institutional Affairs at AASI, explained that while the deadline is end-2026, companies will likely complete the separation process in Q1 2027. This timeline suggests that the full impact of the regulation will be realized in early 2027.

Growth Opportunities

The spin-off requirement is expected to lead to an increase in the number of Sharia insurance companies, thereby creating significant growth opportunities for the industry. As more entities operate independently, the sector is likely to experience enhanced competition and innovation, ultimately benefiting consumers and contributing to the overall growth of the Sharia insurance market in Indonesia.