This study analyzes the regulatory framework and legal implications of the spin-off policy applied to Sharia Business Units (Unit Usaha Syariah/UUS) within Indonesia's Islamic insurance industry. The policy is formally mandated under Law Number 40 of 2014 on Insurance (UU Perasuransian) and further reinforced by Law Number 4 of 2023 on the Development and Strengthening of the Financial Sector (UU PPSK), as well as OJK Regulation Number 11 of 2023. These instruments collectively require UUS entities to separate from their conventional parent companies and constitute independent legal entities no later than December 31, 2026. Employing a qualitative descriptive-thematic methodology through systematic literature review of Scopus-indexed publications from 2015 to 2026, this study finds that the spin-off policy significantly influences institutional independence, corporate governance quality, and risk management practices. While challenges persist in capital adequacy, human resource capacity, and technology infrastructure, the regulatory framework presents a transformative opportunity for the long-term growth and competitiveness of Indonesia's Islamic insurance industry. The study contributes to understanding governance fragmentation, Sharia supervisory board effectiveness, and policy reform pathways within emerging Islamic finance jurisdictions.