Banking - SBUs of insurance companies will be spun off in 2026

Banking - SBUs of insurance companies will be spun off in 2026 The Financial Services Authority (OJK) has announced a mandatory spin-off for 29 Islamic Business Units (UUS) in the Indonesian insurance and reinsurance sector, with a deadline of December 31, 2026. OJK acknowledged that some companies have returned their UUS licenses due to capital and ecosystem needs, viewing this market consolidation as a natural process as long as consumer services are protected. This separation is required under POJK Number 11 of 2023 and Law Number 40 of 2014. 29 UUS are currently planning to execute their spin-off in 2026. Indonesia currently has 16 full-pledged Islamic insurance companies (10 life, 6 general). Companies can either establish a new Islamic company or transfer their portfolio to an existing licensed Islamic company. (Source : Bisnis Indonesia). Comment : The Indonesian financial services industry is undergoing a major structural transformation driven by the Financial Services Authority (OJK) regulation mandating the separation (spin-off) of Sharia Business Units (UUS) from conventional insurance and reinsurance companies. This move is designed to strengthen the Sharia financial ecosystem and ensure better protection for policyholders. The mandatory spin-off represents a pivotal moment for Indonesia’s Sharia finance sector, aiming to transition the segment from being an ancillary unit to a market composed of highly capitalized, independent, and competitive players. The significant increase in the number of full-fledged Sharia companies is expected to deepen market penetration and support the broader growth of the national Sharia economy.