Liga Asuransi – The development of the insurance industry is still interesting to follow. In the fourth week of September 2023, we have summarized 7 selected news related to insurance that you should know.
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OJK Successfully Arrests Illegal Insurance Actors With 10-Year Prison Sentences
A team of investigators from the Financial Services Authority (OJK) succeeded in arresting RH, an individual suspected of being involved in an insurance brokerage business without a license. Next, RH was handed over to the South Jakarta District Prosecutor’s Office to undergo legal proceedings.
Aman Santosa, Head of the OJK Literacy, Financial Inclusion, and Communications Department, revealed that RH’s arrest occurred on September 19, 2023, in Pekanbaru, Riau. OJK investigators collaborated with investigators from the Bengkulu Regional Police and Riau Regional Police in the arrest operation.
This incident started with the handover of the CV Duta Asuransi Indonesia (CV DAI) case files to the OJK Financial Services Sector Investigation Department (DPJK) on April 6, 2022. The handover was related to alleged insurance crimes at CV DAI in 2019–2020, including unlicensed insurance brokerage business activities. Perpetrators involved in this action can face prison sentences of up to 10 years, by Law Number 40 of 2014 concerning Insurance.
DPJK issued three Investigation Warrants (SPRINDIK) with suspects, including Mr. MAW (General Manager), Br. RH (freelance insurance and marketing agent), and Br. BN (freelance insurance and marketing agent). On November 22, 2022, the Attorney General’s Office stated that the case files were complete (P-21) for the three cases, and the judge rejected the legal action submitted by suspects MAW and RH.
On May 16, 2023, OJK investigators coordinated with the Public Prosecutor (JPU) to hand over the suspect and evidence to the South Jakarta District Prosecutor’s Office. However, Br. RH did not comply with the investigators’ summons, and attempts to arrest him were unsuccessful. Br. RH was issued a Wanted List (DPO) by the Head of the National Police’s Criminal Investigation Agency.
The search process for Mr. RH involved the National Police Criminal Investigation Mobile Investigation (Resmob) and regional Police investigators, who finally succeeded in arresting him. OJK expressed its appreciation to the parties involved in RH’s arrest. Aman Santosa expressed optimism that law enforcement in the financial services sector could run smoothly through cooperation and coordination.
Aman emphasized that this action aims to protect the interests of customers and the honor of the financial services sector industry and distance this sector from irresponsible practices.
It is estimated that solving risks in credit insurance will be a mutually beneficial solution
The Indonesia Financial Group Research Institute or IFG Progress has evaluated the distribution of risks in credit insurance, with 30 percent of this risk being borne by the creditor. In comparison, the insurer or guarantor bears 70 percent. According to Ibrahim Kholilul Rohman, Senior Research Associate at IFG Progress, the relationship between banking and insurance has yet to be balanced. In this context, banks often provide all credit to insurance companies without considering the debtor profile.
With this risk-sharing concept, banks will be more careful in insuring credit when it is transferred to a guarantee or insurance company. Thus, they will better consider the risks that remain their responsibility when the stakes are controlled by insurance.
In this framework, insurance companies also do not need to bear all the risks, so this solution is expected to be a win-win solution. This sharing of credit insurance risks will likely create a more sustainable ecosystem between banks, guarantee companies, and insurance companies.
Reza Y Siregar, Senior Executive Vice President (SEVP) of IFG Progress, emphasized the need for transparent information in credit insurance to improve the structure and balance of providing credit insurance.
IFG Progress Financial Research also shows that credit insurance is vital in the general insurance industry, with a significant premium contribution and rapid penetration growth. The link between credit insurance and the banking sector also appears strong because it helps manage banking credit risks. However, over the last five years, the credit insurance business has experienced a decline in performance, so strong policy and regulatory support is needed to increase supervision of this industry.
Data from the Indonesian General Insurance Association (AAUI) also shows that credit insurance has a significant market share in the general insurance industry, with positive growth supported by the government’s commitment to providing credit to the public. Bank credit growth is also a significant factor in the growth of credit insurance.
Thus, risk sharing in credit insurance is expected to produce a more balanced and sustainable solution for all parties involved.
List of Jakarta-Bandung Fast Train Trial Links, Residents Will Get Insurance Protection
PT Kereta Cepat Indonesia China (KCIC) has confirmed that all Jakarta-Bandung Fast Train (KCJB) trial passengers will receive travel insurance protection. You can check the KCJB trial registration link here.
As additional information, KCIC, as the Jakarta-Bandung Fast Train (KCJB) operator, has officially opened free trial registration for the general public. This registration takes place from Sunday (17/9/2023) to Saturday (30/9/2023). KCIC Corporate Secretary, Eva Chairunisa, explained that this operational trial activity allows the public to experience traveling by high-speed train up to 350 km per hour.
For those interested in taking part in the Jakarta-Bandung Fast Train trial, the registration process can be done via the following link http://ayonaik.kcic.co.id/
Eva also emphasized the importance of filling in personal data correctly and completely when registering to ensure passenger safety.
During this limited trial period, KCIC provides four return trip schedules daily, with eight high-speed train trips operating every day until September 30, 2023. Two of the four schedules depart from Halim Station, while the others are from Halim Station. Tegalluar, with the following departure schedule:
Halim Station Relations – Tegalluar PP: 09.00 WIB and 14.00 WIB
Tegalluar – Halim PP Station Relations: 09.00 WIB and 14.00 WIB
Eva also advised prospective passengers to pay attention to the selected fast train schedule and arrive at the station by one hour before departure time to avoid queues when the prospective passenger data verification process is carried out.
Former Commissioner of Kresna Group Involved in Rp. 343 Billion Insurance Case, BEI Finally Provides Response
Former Commissioner of PT Quantum Clovera Investama Tbk. (KREN), Michael Steven is now a suspect after being reported by nine PT Asuransi Jiwa Kresna customers with total losses reaching IDR 343 billion. The Indonesian Stock Exchange (BEI) provided its comments regarding this case.
According to the Director of Transaction Supervision and Compliance at BEI, Kristian Sihar Manullang, the Kresna Group case is related to the failure to pay several companies affiliated with Kresna to their creditors or investors. He explained that this case was not associated with stock transaction activities on the Exchange, and the IDX would continue to supervise stock transactions to protect investors by applicable procedures.
Kristian stated that as part of the monitoring measures, shares reopened after the suspension period will be monitored for one month on a special monitoring board. The aim is to ensure that transaction behavior and share price volatility have returned to normal.
Previously, Quantum Clovera Investama (KREN) management had provided a statement regarding the case involving their former commissioner. Management emphasized that they had yet to receive official confirmation regarding the clarity of the news. They explained that, as far as they know, the reported legal case does not involve the company itself.
KREN management also clarified that the legal case did not impact KREN’s operations. Michael Steven (MS), the former commissioner in this case, does not serve as a member of the Board of Directors or Commissioner of KREN. They emphasized that members of KREN’s directors and commissioners carry out their duties independently and professionally according to the company’s articles of association provisions.
Be careful! Deputy Minister of Finance Oversees Issues in the Insurance and Pension Fund Sector
The Ministry of Finance (Kemenkeu) highlighted a number of works that still need to be completed in Indonesia’s insurance and pension fund sectors. This was stated by the Deputy Minister of Finance, Suahasil Nazara, at the IFG International Conference 2023 in Jakarta on Tuesday (19/9/2023).
Suahasil stated that the insurance sector in Indonesia still has a lot of homework to do, especially in improving insurance governance. He emphasized the need to enlarge and strengthen the insurance market and optimize Indonesia’s great potential.
In the context of insurance reform, Suahasil underscored the importance of prioritizing and implementing good governance. He also stated that as the regulator, the Financial Services Authority (OJK) will carry out strict supervision to ensure that insurance in this sector follows good governance standards, has strong corporate governance, and a solid structure.
Apart from the insurance sector, the Ministry of Finance also noted problems in the pension fund sector, especially in terms of coverage which is still low. Suahasil said it was necessary to overcome this problem by conducting outreach and expanding the scope of pension funds. He emphasized the need to achieve higher participation in the pension fund system.
In a separate note, OJK noted that premium income in the insurance industry during January-July 2023 reached IDR 177.14 trillion, a decrease of 2.34 percent compared to the previous period. A decline in life insurance premiums caused this decrease, while general and reinsurance tips experienced positive growth. Overall, capital in the insurance industry remains healthy, with good solvency.
On the other hand, pension funds recorded positive asset growth, and investment in pension funds continued to grow. Thus, improvements in the insurance and pension fund sectors must be pursued and monitored to ensure better progress in the future.
Sinarmas MSIG Life Pays Claims of IDR 1.3 Trillion, Unit Link Products Dominate
PT Asuransi Jiwa Sinarmas MSIG (Sinarmas MSIG Life) has paid insurance claims amounting to IDR 1.3 trillion during the first semester of 2023. The most significant claims were given to Investment-Linked Products (PAYDI) or unit links.
Herman Sulistyo, Director and Chief Agency, Corporate, & Sharia Business Officer of Sinarmas MSIG Life, revealed that claims for health, critical illness, and death benefits reached more than IDR 273 billion. This benefit is provided to individual MSIG Life customers who experience various diseases, including diarrhea, typhoid fever, appendicitis, and dengue fever.
On the other hand, Herman also said that group customers’ most significant claims were for Acute Respiratory Infections (ARI), diarrheal diseases, and fever. Apart from that, Sinarmas MSIG Life will also continue to pay claims for COVID-19 disease during the first semester of 2023.
Regarding gross written premiums (GWP), traditional products have the most significant contribution in June 2023, with IDR 648 billion out of IDR 1.2 trillion. Meanwhile, unit link products reached IDR 552 billion. This marks a shift from the previous year, where unit-linked products dominated GWP in 2022 with IDR 1.74 trillion out of a total of IDR 2.6 trillion. In 2021, the company’s GWP reached IDR 3.6 trillion, with unit-linked products amounting to IDR 2.7 trillion: trillion and traditional products amounting to IDR 900 billion.
Andrew Bain, Director, and chief Operating & IT Officer of Sinarmas MSIG Life, explained that the company has shifted the focus of sales and new product development towards traditional products that offer protection. Despite this, Sinarmas MSIG Life continues to provide investment-based products or PAYDI by the new Financial Services Authority (OJK) regulations. This is done because of the increasing need for insurance protection amidst increasing public awareness of the importance of insurance, especially after the COVID-19 pandemic.
Encouraging Financial Inclusion through Providing Micro Insurance Products
The use of microinsurance in the informal sector encourages increased financial inclusion in the insurance sector. This condition is relevant, considering that most of Indonesia’s population works in the informal sector.
According to the National Survey of Financial Literacy and Inclusion conducted by the Financial Services Authority in 2022, the level of financial literacy in insurance is much higher than the level of financial inclusion in insurance. The literacy rate reached 31.7 percent, while the inclusion rate was only 16.63 percent. This shows that public understanding of insurance products still needs to be in line with widespread use.
Reza Yamona Siregar, Head Executive Vice President at Indonesian Financial Group (IFG) Progress, stated that the informal sector has excellent potential for the insurance industry to develop, and one way to increase insurance inclusion is through microinsurance products.
The importance of providing good information and supervision in offering microinsurance products to informal sector workers. These offers should be made in large quantities to reduce operational costs, which in turn can increase insurance inclusion.
Microinsurance is an insurance product designed to protect against financial risks for low-income people, including those who work in the informal sector. Offering microinsurance products on a large and organized scale can help overcome operational cost constraints.
Even though there are challenges, such as limited income and access to information and the lack of mandatory use of insurance products, the insurance industry needs to penetrate the informal sector. This insurance product has a vital role in reducing financial risks for society.
On another note, the contribution to insurance premium income during January 2023 reached IDR 177.13 trillion, experiencing a contraction of 2.34 percent compared to the previous year. This was primarily due to a decrease in life insurance premiums.
It is essential to continue educating the public about insurance products, both by the government and insurance companies, to increase understanding and participation in the insurance industry.
Insurance companies also need to provide a comprehensive explanation to the public about the products they offer. The new regulations from the Financial Services Authority (OJK) aim to protect consumers, and insurance companies must balance product marketing and consumer protection.
The vast potential of the insurance industry in Indonesia still needs to be explored further, and economic transformation can be the key to overcoming challenges in developing the insurance business in the future.
Source: https://www.kompas.id/baca/ekonomi/2023/09/19/dongkrak-inklusi-keuangan-lewat-produk-asuransi-mikro
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