Binder Agreement (Insurance) Template for Indonesia

A Binder Agreement (Insurance) is a fundamental document in the Indonesian insurance industry that establishes a delegated authority relationship between insurers and their distribution partners. It is used when an insurance company wishes to authorize a broker or agent to bind insurance coverage on their behalf, subject to specified limitations and conditions. The agreement must comply with Indonesian insurance regulations, particularly Law No. 40 of 2014 and OJK requirements, and typically includes detailed provisions on underwriting authority, risk acceptance criteria, premium handling, reporting obligations, and compliance requirements. This type of agreement is essential for insurers looking to expand their distribution channels while maintaining proper control and oversight of their underwriting operations.

1. Parties: Identifies the Insurance Company (Principal) and the Binder Holder (Agent/Broker), including their complete legal details and regulatory licenses

2. Background: Sets out the context of the agreement, including the Principal's authority to conduct insurance business in Indonesia and the Binder Holder's qualifications

3. Definitions: Defines key terms used throughout the agreement, including regulatory terms specific to Indonesian insurance law

4. Appointment and Scope: Details the appointment of the Binder Holder and the exact scope of authority granted

5. Duration and Territory: Specifies the term of the agreement and geographical limitations of the binding authority

6. Binding Authority Limits: Specifies financial, risk, and class of business limitations on the binding authority

7. Compliance Requirements: Details compliance obligations under Indonesian insurance regulations and OJK requirements

8. Premium and Commission: Specifies premium handling procedures and commission structures

9. Reporting and Records: Details required reports, documentation, and record-keeping obligations

10. Risk Management: Outlines risk management procedures and controls

11. Termination: Specifies termination conditions and post-termination obligations

12. General Provisions: Includes standard contractual provisions like notices, amendments, governing law, etc.