Indonesia’s Financial Services Authority (OJK) has set a clear deadline: by the end of 2026, conventional insurance companies operating Sharia business units must meet new minimum capital thresholds under POJK 23/2023 — Rp500 billion for conventional insurers, compared to Rp250 billion for full Sharia insurers. For many boards, this is quietly becoming one of the more consequential regulatory decisions of the decade.
Why the deadline matters more than it appears
On the surface, this looks like a capital adequacy rule. In practice, it is reshaping the strategic calculus for every conventional insurer running a Sharia unit. Institutions now face a genuine choice: inject significant additional capital to remain a dual-license entity, or convert the unit into a fully independent Sharia insurance company.
Neither path is simple. Both carry implications for governance structure, Sharia Supervisory Board requirements, systems separation, and — perhaps most underappreciated — personal risk exposure for the directors and commissioners who sign off on the transition.
What boards should be asking now
- Does our current capital position meet the 2026 threshold, or does it require a capital injection plan?
- Have we modeled the operational cost of full conversion versus staying dual-licensed?
- Is our governance structure — including Sharia Supervisory Board composition — ready for an independent entity, if conversion is the chosen path?
- What is our realistic timeline, given that end-to-end conversion processes typically take up to a year?
The window is narrower than it looks
Institutions that begin preparation early — building the feasibility study, business plan, and regulatory documentation well ahead of the deadline — are in a materially stronger position than those that wait. Given OJK’s licensing process alone can take months, the effective planning window is shorter than the headline 2026 date suggests.
Tazkia Consulting has supported Sharia banking transformation processes in Indonesia for over two decades, including institutional conversions, spin-offs, and Sharia compliance assessments. Get in touch to discuss your institution’s readiness.