Indonesia’s Insurers Split Syariah Units by 2026 Deadline
Indonesia’s insurance market is undergoing a significant transformation as 41 insurers separate their syariah business units into standalone entities before a December 31, 2026 regulatory deadline.
The mandate, issued by the Financial Services Authority (OJK) under Regulation No. 11 of 2023, requires all insurance and reinsurance companies with syariah windows to complete spin-offs or face license revocation.
Spin-off progress and market impact
As of August 2024, 41 insurers had submitted spin-off work plans to the OJK. Of these, 29 planned to continue as standalone syariah companies, while 12 indicated they would exit the syariah market and transfer their portfolios to other operators.
The latest company to complete the process is Sompo Indonesia, which commenced operations for PT Sompo Insurance Sharia (Sompo Syariah) after receiving its business license from the OJK on August 7, 2026.
For intermediaries, the spin-off wave creates a new market. Each standalone syariah entity is a separate counterparty with its own license, capital base, and governance structure. Brokers must reassess capacity, conduct due diligence, and renegotiate distribution agreements.
The 12 insurers exiting the syariah market raise questions about capacity redistribution. Portfolio transfers to remaining operators could concentrate risk.
Regulatory Pressure and Consolidation
The OJK’s regulatory focus extends beyond syariah spin-offs, with proposed capital rules restricting smaller insurers’ credit and specialty lines. This adds pressure for consolidation in Indonesia’s insurance sector.
By February 2025, 17 syariah business units were slated for spin-off, with five planning portfolio transfers to existing syariah insurers. Sompo Indonesia, offering syariah-based services since 2017, has a parent company with strong ratings from A.M. Best and Standard & Poor’s.
Syariah insurance growth and regulation
Takaful (Islamic insurance) accounted for approximately 9% of gross written premium in Indonesia as of 2022. Total insurance penetration in Indonesia was below 1.5% in 2022, compared to nearly 4% in Malaysia and above 10% in Singapore.
General syariah insurance assets grew by 13.77% in the first quarter of 2026, reaching IDR 10.8 trillion. The Indonesian Sharia Insurance Association (AASI) targets syariah insurance assets to reach 20-25% of total insurance industry assets by 2030.
The OJK’s regulation sets minimum equity at IDR 100 billion for newly spun-off syariah insurance companies and IDR 200 billion for reinsurance companies.
Industry response and future outlook
Eric Nemitz, president director and CEO of Sompo Indonesia, stated that the new entity sharpens the company’s syariah focus. “The establishment of Sompo Syariah allows us to serve the community with greater clarity and focus,” Nemitz said.
Ratna Indrayani, CEO of Sompo Syariah, emphasized the company’s commitment to syariah principles. “Sompo Syariah reflects our commitment to offering protection that is fair, transparent, and grounded in syariah principles,” Indrayani said.
