Liga Asuransi – In the midst of the dynamics of the insurance and pension fund industry in Indonesia, the Financial Services Authority (OJK) continues to strengthen its supervision to protect consumer interests. Most recently, OJK highlighted an increase in the number of institutions under special supervision, including 14 pension fund companies and 8 insurance companies. This action reflects OJK’s commitment to maintaining financial sector stability by improving the quality of governance and regulatory compliance in the insurance industry. In this article, we will discuss further the importance of this strict supervision and provide the latest updates regarding the insurance industry in Indonesia, including the emphasis on the role of actuaries in risk management and the various protection programs presented to the public.
OJK Emphasizes the Importance of Actuaries in Insurance Companies for Risk Management
The Financial Services Authority (OJK) is tightening regulations regarding insurance companies’ obligations to have actuaries. As of October 2024, OJK noted that nine insurance companies did not yet have actuaries or submit candidates for eligibility testing.
According to the Chief Executive of OJK Insurance, Guarantee and Pension Fund Supervision, Ogi Prastomiyono, the presence of actuaries is very crucial for the risk management process in the insurance industry. “For companies that have not met the requirements, OJK has implemented supervisory measures in accordance with existing regulations,” explained Ogi in a written statement released at the OJK Board of Commissioners (RDK) Meeting, Monday (4/11).
Ogi added that OJK is actively collaborating with the Indonesian Actuaries Association (PAI), an organization that plays a role in issuing certification for actuaries. This collaboration aims to ensure the availability of professional and active actuaries certified in the insurance industry.
The importance of actuaries is increasing, especially with the implementation of the accounting standard PSAK 117 (formerly PSAK 74), which requires insurance companies to strengthen risk management through actuaries. Apart from that, the obligation of insurance companies to have actuaries is also regulated in Law Number 4 of 2014 concerning Insurance (UU 40/2014) and OJK Regulations.
The existence of actuaries not only fulfills legal requirements, but is also a strategic effort to face the challenges and risks faced by the insurance industry today. With supervisory actions from the OJK, it is hoped that insurance companies will become more serious about meeting the needs of actuaries for the sustainability and stability of the industry.
Towards Food Self-Sufficiency, Rice Farming Business Insurance Program Protect Farmers from the Risk of Crop Failure
In an effort to achieve food self-sufficiency, President Prabowo Subianto has set a target in the next three to four years to expand harvested land to four million hectares. This step is supported by the Rice Farming Business Insurance (AUTP) program, which aims to provide protection for farmers so that they remain protected from the risk of crop failure.
The AUTP program is based on Law Number 19 of 2013 concerning Farmer Protection and Empowerment. This program provides agricultural insurance as a form of insurance for farmers against economic losses that may arise due to crop failure. Jasindo Insurance Company Secretary, Brellian Gema, stated that this insurance allows farmers to have working capital for the next planting season, even though they face the risk of a failed harvest.
The government also eases the burden on farmers by providing an 80% premium subsidy, so that farmers only need to pay IDR 36 thousand per hectare to get a guarantee worth IDR 6 million per hectare. Until August 2024, Jasindo has insured more than 400 thousand farmers with a land area of more than 250 thousand hectares in 22 provinces.
AUTP has paid claims amounting to IDR 3.17 billion with a protected land area of 500 thousand hectares, resulting in a claims ratio of 7.08%. The largest participation in this program came from West Java, East Java and Central Java.
However, the implementation of AUTP faces several challenges, such as outreach to large areas, farmers’ understanding of the 20% premium payment, use of the SIAP application, and management of endemic land. However, Jasindo is optimistic that with wider outreach, this year’s AUTP target will be achieved, so that more farmers throughout Indonesia will be protected by insurance.
AXA Mandiri Presents New Insurance for a Brighter Future for Children’s Education
AXA Mandiri Financial Services (AXA Mandiri) introduced its newest product, Asuransi Mandiri Future Sejahtera. This dual-purpose insurance product offers life protection with various flexible benefits that can be adjusted according to the family’s financial needs, such as Death Benefits and End of Insurance Period Benefits.
President Director of AXA Mandiri, Handojo G. Kusuma, said that the benefits of this product are designed not only to protect customers, but also to help them achieve their family goals, for example in terms of children’s education. “Asuransi Mandiri Future Sejahtera is expected to be a financial solution that helps parents provide quality education for their children up to college level,” said Handojo at the product launch event.
With inflation in education costs increasing every year, this product can be a way to ease the burden on parents in facing rising education costs. Rudi Nugraha, Director of AXA Mandiri, revealed that education costs according to data from the Central Statistics Agency (BPS) continue to increase between 10-15% per year, so long-term financial planning is very important.
“Insurance Mandiri Future Sejahtera makes it easy for parents to prepare education funds, with flexibility in determining the final benefit amount and payment time. “This freedom allows parents to plan their children’s educational future more calmly,” added Rudi.
This product offers two options, namely Plan Optima and Plan Maksima. The Maksima Plan includes Death Benefits, Premium Waiver Benefits, and End of Insurance Period Benefits. On the other hand, Plan Optima offers both a Death Benefit and a Lump Sum Cash Benefit. In fact, if there is no risk of death, customers are still entitled to receive End of Insurance Period Benefits on these two plans.
With Asuransi Mandiri Masa Sejahtera, AXA Mandiri hopes to provide a solution that not only helps people achieve financial prosperity, but also safeguards the future of their children’s education amidst economic changes.
Soaring Tourists, Jasindo Travel Insurance Records 239% Premium Increase
The increasing number of tourists, both domestic and international, provides great opportunities for the insurance industry, especially travel insurance. PT Asuransi Jasa Indonesia (Jasindo) is one of the companies that has succeeded in taking advantage of this momentum, by recording an annual increase in travel insurance premiums of up to 239%, reaching IDR 2.8 billion as of October 2024.
Jasindo Business Development Director, Diwe Novara, revealed that data from the Central Statistics Agency (BPS) shows an increase in domestic travel by 29.31% and international travel by 20.93% on an annual basis until August 2024. This figure is a strong signal that interest in insurance travel has also increased.
“Travel insurance premiums recorded by Jasindo showed rapid growth, with an increase of 239% compared to the same period last year,” explained Diwe. As a follow-up step, Jasindo is also developing an official travel insurance program for ministries, institutions and companies in the BUMN ecosystem.
Jasindo is also expanding digital partnerships through a business-to-business-to-consumer (B2B2C) approach to reach more consumers. Apart from support from partners, this growth momentum also needs to be strengthened by a tourism ecosystem that provides various types of travel, such as halal tourism, religious tourism and staycation promos, which are believed to attract people’s interest in choosing travel insurance protection.
Even so, Diwe said there were challenges in penetrating travel insurance in Indonesia. According to him, service innovation and a wider variety of benefits are key factors in winning the market. With this approach, it is hoped that travel insurance can become the main choice for Indonesian tourists who want to enjoy their trip with a sense of security.
5 Important Steps Before Buying an Insurance Policy for Optimal Protection
In modern life, insurance is increasingly becoming a primary need, especially for those who have families. No longer just basic needs, family priorities now also include preparing funds for health, education, installments and retirement. According to Karin Zulkarnaen, Chief Customer and Marketing Officer of Prudential Indonesia, insurance can protect us from various financial risks in the future. However, there are still many people who do not understand how insurance works, especially the terms and conditions stated in their policies.
Before deciding to buy insurance, prospective customers need to pay attention to several important things, so that the protection benefits they get are maximized in accordance with existing regulations. Here are five important steps to consider before buying insurance:
- Understand the Product Comprehensively
Make sure the product you choose suits your needs and financial condition. After receiving information from marketers, customers must pay attention to every detail of the product, including the applicable terms and conditions. - Accurate Personal Data and Health History
Complete personal data information is very important to provide optimal benefits from insurance. With data that is always updated, prospective customers also avoid the risk of claim rejection due to incomplete data or non-disclosure errors. - Knowing the Exemption Article Well
The exclusion article in an insurance policy provides information about conditions or risks that will not be covered by insurance. By understanding this exception, potential customers can avoid misunderstandings when making a claim. - Proper Claim Submission Procedure
Understanding the claim procedures and required documents will make it easier for customers in the claim submission process later. This information will make the claims process run quickly and smoothly. - Regularly evaluate the policy
Carrying out regular policy evaluations is important to ensure the insurance policy remains relevant to your needs. Regular consultations with marketing or customer service personnel also help in adjusting the policy to the latest conditions.
With these five steps, potential customers can buy the right insurance product and maximize the benefits of protection for future needs.
OJK Increases Supervision, 14 Pension Funds and 8 Insurances are under Special Supervision
As of October 28 2024, the Financial Services Authority (OJK) highlighted that 14 pension fund companies and eight insurance and reinsurance companies were under special supervision. This step was taken to ensure consumer protection in the insurance and pension fund sectors. According to Ogi Prastomiyono, Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervision (PPDP), the increase in the number of insurers being supervised shows a sharpening of supervision to ensure the quality of the industry is maintained.
Not only that, OJK has also implemented 43 administrative sanctions against financial services institutions in the PPDP sector. This supervisory action covers the need for actuaries in insurance companies, noting that there are still 29 companies that have not met the requirements regarding actuaries.
In terms of performance, the insurance industry shows significant growth. Insurance sector assets in September 2024 were recorded at IDR 1,142 trillion, an increase of 2.46% compared to the same period the previous year. In the commercial insurance sector, total assets reached IDR 922.48 trillion, or an increase of 3.81% on an annual basis. Commercial premium income also increased, reaching IDR 245.42 trillion, with life insurance premiums increasing 2.73% to IDR 135.64 trillion and general insurance and reinsurance premiums increasing 9.7% to IDR 109.78 trillion.
This positive performance is supported by solid capital, where the life and general insurance industry reported a Risk Based Capital (RBC) ratio of 458.31% and 329.89%, far above the threshold set by the OJK, namely 120%. However, on the non-commercial insurance side, BPJS assets and insurance programs for ASN, TNI and POLRI were recorded to have decreased by 2.8% to IDR 220.02 trillion.
In the pension fund industry, total assets rose 10.10% yoy to IDR 1,500.06 trillion in September 2024. Meanwhile, in the guarantee sector, recorded assets grew 3.65% yoy to reach IDR 47.58 trillion.
OJK’s steps in tightening supervision in the insurance and pension fund sectors are proof of the regulator’s seriousness in maintaining the stability of the financial services sector.
AAJI Optimism: Life Insurance Industry Targets Positive Growth by the End of 2024
The Indonesian Life Insurance Association (AAJI) expressed optimism that the life insurance industry will experience positive growth until the end of 2024, supported by increasing public awareness of the importance of health protection. Throughout the third quarter of 2024, life insurance premiums were recorded to grow 2.73% annually (YoY) to IDR 135.64 trillion. Fauzi Arfan, Head of Products, Risk Management and Governance at AAJI, said that apart from increasing health awareness post-pandemic, developments in digitalization have also driven demand for insurance products by expanding reach to more consumers via digital platforms.
Through digital transformation, companies can reach a wider market and answer the increasing need for health protection. However, Fauzi also reminded that companies need to be aware of potential challenges such as a decline in people’s purchasing power or global economic uncertainty that could affect demand.
To achieve a balance between profits and protection obligations, life insurance companies implement a number of strategies. One of them is product innovation, where many companies now provide life insurance with additional health benefits that are more in line with market needs. AAJI also appealed to insurance companies to implement more efficient claims management. One way is to tighten the risk assessment process for new policies to minimize the risk of high claims.
Fauzi stated, “With these strategies, it is hoped that life insurance companies can maintain a balanced claims burden while maintaining stable profit growth amidst market dynamics.”
AAJI noted that in Semester I/2024, the total number of life insurance insured increased by 25.18 million people or grew 28.4% YoY to 113.68 million people. Total premium income in that period was recorded at IDR 88.49 trillion, up 2.6% YoY, while total claims paid reached IDR 77.67 trillion, down 2.2% YoY. The number of claims was distributed to around 9.82 million beneficiaries, which shows the public’s increasing trust in the role of the life insurance industry in their financial planning.
With solid performance and continued growth, the life insurance industry shows positive signs in facing various challenges in 2024.
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