Liga Asuransi – The development of the insurance industry is still interesting to follow. In the third week of October 2023, we summarized seven news related to insurance that you should know.
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BPJS Health and BPJamsostek Assets Reach IDR 822.92 Trillion with Leading Investment Strategy
The Financial Services Authority recorded the brilliant achievements of the Social Security Administering Agency (BPJS) Health and BPJS Employment, or what is known as BPJamsostek, with total assets reaching IDR 822.92 trillion. This is extraordinary growth, where BPJS Health assets as of August 2023 reached IDR 118.25 trillion, up from IDR 103.82 trillion previously, with growth reaching 14.73 percent compared to the previous year. Meanwhile, BPJamsostek’s assets reached IDR 704.67 trillion, showing a growth of 12.72 percent in one year. Compared to August 2022, this is a significant jump, considering that BPJamsostek’s assets at that time were only IDR 613.37 trillion.
One of the determining factors for this increase in assets is the smart investment strategy implemented by BPJS Health. They prioritize investment in Government Securities (SUN) and bonds over the capital market, focusing on security rather than investment returns. In addition, improved contribution collection strategies have borne fruit, with collection rates reaching more than 90 percent. BPJS Health has also improved its monitoring system and anti-fraud system to ensure the continuity of this program.
Not only that, BPJS Health continues to strive to increase the number of its participants, with membership reaching 262.74 million, or the equivalent of 94.6 percent as of September 2023. Even though not all participants are active, they continue to increase through various programs such as Petakan, Sisir, Advocacy, and Registration (PESIAR), which is carried out down to the village level with the help of appointed agents. With all these achievements, BPJS Health and BPJamsostek have proven themselves to be key players in the world of social security in Indonesia.
PT Asuransi Kredit Indonesia (Askrindo), a BUMN Insurance Company, Encourages MSME Growth with a KUR Guarantee of IDR 85.4 Trillion
Askrindo, an insurance company owned by a State-Owned Enterprise (BUMN), has succeeded in providing people’s business credit (KUR) guarantees worth IDR 85.4 trillion until September 2023, helping more than 1.4 million debtors. KUR is a program that plays an important role in advancing the community’s economy, especially micro, small, and medium enterprises (MSMEs).
According to Askrindo Corporate Communication, Luluk Lukmiyati, this KUR program encourages the economic growth of MSME business groups. Askrindo has a mandate from the government to provide credit guarantees to productive and viable people’s businesses but does not yet have additional collateral. At the Insurance Literacy event in Jakarta, Luluk expressed the importance of Askrindo’s role in supporting this.
To continue providing guarantees to MSMEs, Askrindo is planning state capital participation (PMN) for 2024. This PMN will be their basic capital to overcome the possibility of default in the KUR recipient segment. With PMN, Askrindo can protect MSMEs from the risk of loss and default that may occur, making it a reliable guarantee company.
Even though it did not receive PMN this year, Askrindo hopes to secure the funding through Indonesia Financial Group (IFG) as a holding in 2024. Askrindo, which was established in 1971, is an integral part of the state-owned insurance and guarantee holding, Indonesia Financial Group (IFG ), which has a positive impact in supporting the growth and resilience of MSMEs.
The number of companies under special supervision has decreased, and the insurance sector continues to strive for recovery
The Financial Services Authority (OJK) revealed that currently there are nine insurance companies that are under special supervision. However, the good news is that this number has decreased compared to data as of December 2022, where there were 12 companies under special supervision.
Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervision (PPDP), Ogi Prastomiyono, explained that this decline was caused by two main factors. First, there was one company that lost its business license. Second, two other companies have recovered and are under normal supervision status.
Even though there are still several insurance companies facing challenges, the insurance industry recorded significant premium accumulation. In the period January to August 2023, even though there was a slight contraction of 1.20 percent to IDR 203.42 trillion, the insurance sector still generated sufficient income.
According to Ogi, although accumulated life insurance premiums are still experiencing a contraction of 6.58 percent on an annual basis with a value of IDR 118.30 trillion as of August 2023, there are signs of improvement. On the other hand, accumulated general insurance and reinsurance premiums grew positively by 7.38 percent year-on-year, reaching IDR 85.13 trillion. Despite several obstacles, the insurance sector continues to recover.
Askrindo’s Big Push for the People’s Economy: KUR Guarantee Worth IDR 85.4 Trillion until September 2023
Indonesian Credit Insurance (Askrindo), which is a general insurance and guarantee company owned by State-Owned Enterprises (BUMN), has recorded extraordinary achievements by providing guarantees for people’s business credit (KUR) worth IDR 85.4 trillion until September 2023. Initiative This guarantee has supported 1,471,508 debtors.
Luluk Lukmiyati, Corporate Communication at Askrindo, emphasized that the KUR program has a central role in supporting the community’s economy, especially the micro, small, and medium enterprises (MSME) group. According to him, Askrindo is carrying out the government’s mandate to provide credit guarantees to productive and viable people’s businesses, especially those that do not have additional collateral. Luluk explained this enthusiastically at the Insurance Literacy event in Jakarta.
However, along with the need for guarantees for MSMEs, Luluk stated that companies need to invest in the state capital (PMN) in 2024. This PMN will play an important role in dealing with the possibility of default in the KUR recipient segment.
Luluk explained, “Why do we need PMN? This is the basic capital for us. When we talk about protecting the risk of default in MSMEs, we must have sufficient capital to overcome these losses.” He emphasized that PMN would provide Askrindo with the capital needed to handle possible defaults that might occur in the MSME segment.
Even though the company did not receive PMN this year, Luluk hopes to secure the funding through the Indonesia Financial Group (IFG) as a holding in 2024. Askrindo, which was founded on April 6 1971, is an integral part of the insurance and guarantee BUMN Holding, Indonesia Financial Group (IFG), which plays an important role in supporting this sector.
Revitalizing the Insurance Industry: OJK Reminds Companies to Spin Off UUS by Meeting the RKUPS Deadline
The Financial Services Authority (OJK) has announced significant progress in the separation of Sharia Business Units (UUS). Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervision (PPDP), Ogi Prastomiyono, said that to date no company has proposed a separation based on the Sharia Unit Separation Law (P2SK) and OJK Regulation (POJK) Number 11 of 2023. However, PT Asuransi Allianz Life Syariah is one that has recently separated its units.
According to Ogi, in order to comply with POJK Number 11 of 2023, companies that have Sharia business units must submit changes to the Sharia Unit Separation Work Plan (RKPUS) no later than 31 December 2023. However, not all companies that submit RKPUS will immediately receive separation permits.
“After submitting the RKPUS, it will be determined which UUS units will separate themselves into full-fledged Sharia companies, and which will continue to run their Sharia businesses and transfer their Sharia unit portfolios to existing Sharia insurance companies,” he explained.
The UUS separation process is regulated in OJK Regulation (POJK) Number 11 of 2023 concerning the Separation of Sharia Units of Insurance and Reinsurance Companies. These regulations stipulate a number of conditions that must be met by insurance and reinsurance companies who wish to separate their UUS.
These conditions include the requirement that the value of tabarru funds and investment funds of UUS participants must reach at least 50 percent of the total value of insurance funds, tabarru funds, and participant investment funds in their parent companies. In addition, the minimum equity of UUS must reach at least IDR 100 billion for sharia units of insurance companies, and IDR 200 billion for sharia units of reinsurance companies.
In the event that there is a decrease in the assets or equity of the Sharia unit during the separation process so that it does not meet the requirements, this does not eliminate the obligation of the insurance and reinsurance company to continue the separation of the Sharia unit, in accordance with POJK regulation Number 11 of 2023.
Apart from that, the UUS spin-off must also ensure that the rights of policyholders and participants remain protected, and must not violate laws and regulations in the insurance sector. The overall separation of the Sharia unit aims to strengthen the resilience and competitiveness structure of the insurance and reinsurance industry, create more efficient business operations, and encourage investment in technology and human resources. It also aims to protect the interests of policyholders and participants.
The General Insurance Industry in Indonesia is Ready to Break Through Success: Challenges and Projections for the Future
The Indonesian General Insurance Association (AAUI) predicts positive growth in the general insurance industry until the end of this year. AAUI General Chair, Budi Herawan, is optimistic about the positive direction of the Indonesian economy in the future. However, he also highlighted the need for internal improvements and reforms in the general insurance industry.
Budi said, “Several Financial Services Authority Regulations (POJK) will be issued soon, and this is very related to our financial health.” He explained his views when speaking at the 27th Indonesia Rendezvous at the Nusa Dua Convention Center, Bali.
In addition, Budi hopes that 2024 will bring further improvements compared to this year, and he wants to see more insurance businesses grow domestically. “We are fighting for the interests of our country so that there is no overlap with foreign owners,” he stressed.
Budi also emphasized AAUI’s important role in encouraging healthy growth for general insurance companies in Indonesia. According to him, the next 10 years will be a challenging period, requiring extraordinary efforts from all stakeholders.
Regarding the growth of gross general insurance premiums this year, AAUI estimates an increase, although not significant, of around 11-12 percent. However, when it comes to underwriting results, estimates cannot be predicted.
According to AAUI Deputy Chair for Statistics & Research, Trinita Situmeang, AAUI is optimistic that general insurance premiums will continue to grow until the end of 2023, with growth reaching one to two digits. This optimism is based on general insurance penetration which is still low, namely around 0.46 percent in 2022, with a density reaching IDR 325,000 per year.
Fierce Debate: OJK Moves Forward with KUPA for Insurance with Limited Capital
The Financial Services Authority (OJK) policy to increase the minimum capital limit for insurance companies to IDR 1 trillion by 2028 has sparked debate among the Indonesian insurance industry. OJK believes that this increase is necessary to strengthen the structure, resilience, and competitiveness of the insurance industry, as well as to face challenges in innovation in technology-based insurance products and services.
OJK is also considering grouping insurance companies based on capital, similar to those in the banking industry with Business Groups Based on Core Capital (KBMI). However, in the insurance industry, the plan is that there will only be two classes of insurance.
However, OJK emphasized that insurance companies that cannot reach the minimum capital will not be terminated or forced to merge with other companies. They will be included in the Insurance Company Business Group (KUPA), where there will be a parent insurance company (holding) and member companies that do not meet the minimum capital.
OJK also allows companies that have not met the minimum capital to invite partners or partners to KUPA. The aim is to strengthen the resilience of the insurance industry in the face of possible default.
OJK plans to issue an OJK Regulation (POJK) which regulates the classification of insurance companies based on capital, which will affect the company’s business activities. This policy will increase the minimum capital limit for insurance companies gradually, from IDR 100 billion to IDR 500 billion in 2026, and finally reaching IDR 1 trillion in 2028.
Apart from that, Sharia insurance companies will also experience an increase in the minimum capital limit, and new insurance companies that obtain permits will be required to have higher capital than existing companies. This policy aims to overcome higher business risks in the insurance business.
This article is brought to you by L&G Insurance Broker.
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