Liga Asuransi – Without realizing it, we have entered December 2023, the last month of 2023. Of course, we have gone through a lot of events this year, and of course with good risk management, it will make you calmer during this time. Now there is only 1 month left, let’s fill December 2023 with activities that are more useful and still full of calculations.
Let’s talk again about the world of insurance because insurance is not only limited to vehicles and life, especially for business protection coverage, insurance still has a very wide reach. In the first week of December 2023, we are again collecting 7 selected news related to insurance that are good for you to know.
As always, if you are interested in this article, please share it with your colleagues so they can understand it as well as you.
Transformation of Changes in the Indonesian Health Paradigm, Synergy of BPJS Health and Private Insurance
The Ministry of Health (Kemenkes) introduced major changes in Indonesia’s health service scheme by presenting the concept of “coordination of benefits” (CoB) or coordination of benefits between the Health Social Security Administration (BPJS) and private insurance companies. This innovative step was announced by the Director General of Pharmaceuticals and Medical Devices at the Ministry of Health, Rizka Andalucia, who explained that the CoB scheme was in the process of discussing and drafting.
In her statement, Rizka explained that with the CoB scheme, BPJS Health will collaborate with private insurance companies to increase the coverage and quality of health services. Awareness of BPJS Health’s limitations in covering all community health needs is the main trigger for this change. This step is expected to expand health services to BPJS Health participants, have a positive impact on patients, and optimize the service scheme.
The importance of the CoB scheme was also highlighted by the Financial Services Authority (OJK) through the Roadmap for the Development and Strengthening of Indonesian Insurance 2023–2027. OJK provides direction to implement synergies between BPJS Health and commercial insurance as added value for health insurance participants. This synergy is expected to provide more protection in the 2025–2026 period.
From a regulator’s perspective, the social security provided by BPJS Health is directed at providing basic protection. Therefore, there is still a possibility that people need additional benefits that are not covered by BPJS Health. The Road Map emphasizes the need for synergy between BPJS Health and insurance companies to ensure that additional benefits can be accessed more easily by the public.
This transformation creates a new paradigm in the Indonesian health system, where collaboration between the public and private sectors is directed at providing holistic health protection for the community. The synergy between BPJS Health and private insurance is expected to be a progressive step in achieving more inclusive and effective national health goals.
Brilliant Performance of the Indonesian General Insurance Industry, Premiums Increase 10.1%, Business Transformation Seen in Various Sectors
The Indonesian general insurance industry has recorded brilliant achievements in the third quarter of 2023 with premiums reaching IDR 73.58 trillion, experiencing growth of 10.1% year-on-year (yoy) from the same period the previous year which amounted to IDR 66.85 trillion . Business transformation can be seen in a number of business lines, especially in engineering, ship insurance and personal accident which are the main drivers of this growth.
Significant growth was seen in engineering premiums which jumped 53.8% yoy to IDR 3.64 trillion, while ship insurance (suretyship) experienced growth of 39.7% yoy to reach IDR 1.36 trillion. Likewise with personal accident premiums which grew 33.1% yoy to IDR 2.24 trillion. Nevertheless, the property, motor vehicle and credit insurance business lines remain the main contributors, reaching 45.1% of total general insurance premiums in the third quarter of 2023.
On the property business side, despite experiencing a contraction of 9.3% yoy, premiums still reached IDR 18.65 trillion. Meanwhile, motor vehicle premiums grew 11.9% yoy to IDR 14.59 trillion, and credit insurance premiums rose 28.7% yoy to IDR 13.86 trillion. Trinita Situmeang, Deputy Chair of AAUI for Statistics & Research, stated that the growth in motor vehicle premiums was caused by an increase in retail sales of vehicles, both two-wheeled and four-wheeled.
Not only in premium income, the general insurance industry also showed growth in claims payments, which grew by 12.2% yoy to IDR 30.77 trillion. This increase was reflected in liability business line claims which jumped 276% yoy, personal accident claims which rose 57.8% yoy, and credit insurance claims which increased 21.2% yoy.
Despite the significant growth, Trinita reminded that the ratio of claims paid in the third quarter of 2023 grew 41.8%, indicating the need for vigilance and careful risk management in the future. Overall, the performance of the Indonesian general insurance industry in the third quarter of 2023 reflects the resilience of this sector amidst economic dynamics and changes in consumer behavior.
Revealing the Potential of TUGU Shares After Enlivening the Market with an Interim Dividend of IDR 90.7 Billion
PT Asuransi Tugu Pratama Indonesia Tbk (TUGU) made history by posting the highest net profit of all time in the third quarter of 2023, reaching IDR 1.1 trillion. This success prompted management’s decision to distribute an interim dividend of IDR 90.7 billion, equivalent to 8% of net profit. This dividend is a new step for TUGU, which previously tended to distribute annual dividends with a ratio of 35%-40%.
The decision to pay interim dividends without the need to go through the General Meeting of Shareholders (GMS) mechanism reflects management’s confidence in the company’s brilliant achievements. TUGU achieved extraordinary achievements not only from premium income but also investment performance and one-off gain income from the legal victory over Citibank in Hong Kong.
With this announcement, TUGU joins 27 other stock issuers who have decided to distribute interim dividends in 2023. Head of Investment Research, Cheryl Tanuwijaya, considers the distribution of interim dividends to be a positive catalyst for TUGU share price movements in the short term. More than that, he saw it as a signal of further corporate action from the company.
“By distributing this interim dividend, TUGU is giving a signal that they plan to distribute quite large dividends at the end of the year. This can be attractive to investors and be a smart strategy in seeking dividends, considering TUGU’s positive record in providing profits and achievements satisfactory performance,” said Cheryl.
Tanuwijaya predicts TUGU’s profit in 2023 will reach IDR 1.4 trillion, marking an increase of 303% year on year. Using an assumed dividend payout ratio (DPR) of 40%, Cheryl estimates dividends per share could reach IDR 150, equivalent to a dividend yield of 13.4% compared to the current share price. The announcement of the interim dividend distribution was the conclusion of a series of corporate actions by TUGU following its stock split at the end of May, which saw its share price reach an intraday high of IDR 1,480.
Latest Innovation Maipark Launches MCM 3.0 to Manage Earthquake Risk
PT Reinsurance Maipark Indonesia (Maipark) introduced the latest breakthrough with the launch of Maipark Catastrophe Modeling (MCM) 3.0 on Tuesday (28/11/2023). This computer system adopts the Indonesian insurance vulnerability curve to estimate losses due to disasters, especially earthquakes. By building this curve based on 20 years of claims data, MCM 3.0 is the first Computer Assisted Instruction (CAI) model to fully utilize Indonesian earthquake insurance data.
Kocu Andre Hutagalung, Main Director of Maipark Indonesia, explained that this system allows insurance companies to manage risks related to earthquakes more effectively. Every time a company issues an earthquake insurance policy, they can refer to the database contained in MCM 3.0. “This database not only includes premiums, but also location information which is very important because every location has earthquake vulnerability. So, it can be used to build more accurate risk models,” said Kocu.
Iwan Pasila, Deputy Commissioner for Supervision of Insurance, Guarantees and Pension Funds at the Financial Services Authority (OJK), expressed his appreciation for MCM 3.0. According to him, this database is the basis for insurance companies to manage risks, especially related to earthquakes. “Managing risk must be based on data, and Maipark provides the only reference for natural disaster risk,” he added.
Apart from launching MCM 3.0, Maipark also gave awards to insurance companies in several categories of capital owned. This award covers the capital category from under IDR 300 billion to above IDR 2 trillion, as well as the award for the largest premium growth category for the 2022 session for several well-known companies in the insurance industry.
AXA Mandiri Financial Services Denies Pro-Israel Support and Insists on International Compliance
PT AXA Mandiri Financial Services provided clarification regarding the boycott of pro-Israel products implemented by the Boycott, Divestment & Sanctions (BDS) movement. This action involved several companies, including AXA, which was said to be the target of the boycott by the BDS Movement. Chief Communication Officer of AXA Mandiri Financial Services, Atria Amino Rai, emphasized that AXA Group does not support military aggression or territorial occupation in Israel.
In a press conference in Jakarta on Wednesday (29/11/2023), Atria explained that AXA Group carries out business in accordance with international rules and norms, especially in terms of upholding human rights. He denied the news released by the BDS Movement, stating that AXA Group is not a product that supports Israel or is pro-Israel. “The news is not true, and AXA does not support military aggression. We strictly comply with international rules and laws and uphold human rights,” said Atria.
The BDS Movement is implementing a global boycott of companies linked to or suspected of supporting Israel. In its category, AXA is included in the consumer boycott target, which is a complete boycott of a product because the company that owns the product is involved in supporting Israel. However, AXA Mandiri Financial Services emphasized that they do not support Israel and continue to conduct business in accordance with international principles.
Risk Revolution Indonesian General Insurance Association Encourages Risk Sharing in Credit Insurance
The Indonesian General Insurance Association (AAUI) revealed plans for risk sharing in credit insurance between banks and insurance companies, projecting huge benefits for the industry in managing risk more effectively. In the initial design, banks were expected to bear 25% of the risk, while the remaining 75% would be the responsibility of insurance and guarantee companies. AAUI Chairman, Budi Herawan, stated that this risk sharing is currently in the finalization stage, and the insurance industry is looking forward to its implementation after going through a 2-3 month socialization period before official implementation.
In his interview in Jakarta on Tuesday (28/11/2023), Budi emphasized the need for risk resharing to prevent channeling risks directly to insurance as a way to overcome NPLs. According to him, this new policy brings great expectations for the insurance industry, opening up opportunities for improvement and more effective risk mitigation.
Budi hopes that credit insurance products will cover sectors such as home ownership credit (KPR) and people’s business credit (KUR). Previously, the Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervision, Ogi Prastomiyono, announced that the regulator would issue a Financial Services Authority Regulation (POJK) regarding credit insurance. This regulation will replace Minister of Finance Regulation (PMK) Number 124/PMK.010/2008 which regulates the Implementation of Credit Insurance and Suretyship Business Lines. One of the main regulations in the POJK credit insurance is risk sharing between banks and insurance companies, where banks are expected to bear 75% of the risk, while 25% remains the bank’s responsibility.
BTN Optimistic to Achieve Net Profit of IDR 3.2 Trillion in 2023 Thanks to Agreement to Pay Off Bad Credit with Jiwasraya
PT Bank Tabungan Negara (Persero) Tbk. (BBTN) maintains optimism in achieving its net profit target of IDR 3.2 trillion in the 2023 financial year, with the belief that payment of insurance claims worth IDR 500 billion at PT Asuransi Jiwasraya (Persero) will be completed in December 2023. BTN President Director, Nixon L.P. Napitupulu, revealed that this agreement is a positive step towards achieving the profit target, which currently reaches IDR 2.31 trillion by September 2023.
In a public expose on Wednesday (29/11/2023), Nixon explained that the agreement with Jiwasraya was related to the payment of insurance claims worth IDR 700 billion, which is expected to become a source of income for BTN. Although the audited value of payments up to December 2023 reached IDR 500 billion, Nixon stated that this figure could increase to IDR 600 billion. This is expected to make a significant contribution to achieving the 2023 profit target.
BTN is still facing the problem of outstanding bad credit from home ownership loans (KPR) which originate from the credit life insurance collaboration with Jiwasraya. Regarding this, Nixon emphasized that the agreement with Jiwasraya would be an important step in overcoming this challenge. The previous collaboration with Jiwasraya was related to credit life insurance products, but due to the problems faced by Jiwasraya, its liabilities were transferred to IFG Life.
IFG President Director, Hexana Tri Sasongko, confirmed that there had been an agreement to resolve bad credit worth IDR 500 billion with BTN. Hexana is optimistic that the restructuring process will proceed quickly once funding is available, with a target for completion this year or early in the first quarter of 2024. This restructuring will involve a restructuring transfer and the signing of a transfer deed between Jiwasraya and IFG Life, which is expected to provide a positive solution to the problem.
This article is brought to you by L&G Insurance Broker, an insurance broker in Indonesia.
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