Liga Asuransi – Hi business people, let’s discuss important developments and events in the world of Indonesian insurance over the past week. Don’t forget, in the business world, insurance objects are not only limited to vehicles, health, life or property. The scope of insurance is very broad and covers almost every aspect of business operations. In this edition, we have summarized 7 main news stories about insurance that you should know, including the latest discussion about Tapera. If you found this article useful, please share it with your colleagues so they can also get useful information.
Two Insurance Companies on the Verge of Withdrawal, Minimal Capital is the Trigger! What’s Up with Their Business?
The Financial Services Authority (OJK) revealed that two insurance companies plan to return their business licenses. This decision was taken because both companies faced increasingly pressing challenges in meeting minimum equity requirements. Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervisor, Ogi Prastomiyono, stated that this step was taken for efficiency and company consolidation.
“Currently there are two insurance companies that are considering returning their business licenses due to efficiency and consolidation interests, as well as their possible inability to meet capital requirements,” said Ogi in a written statement, Thursday (12/9/2024).
Ogi also noted that quite a lot of insurance companies still have limited capital. Mergers, acquisitions and consolidation seem to be an inevitable step, similar to what happened in the banking sector.
In the OJK roadmap, strengthening insurance company capital is the main focus. Most insurance companies are currently still waiting for the minimum capital obligations that must be met in 2026 and 2028.
Based on OJK Regulation (POJK) Number 23 of 2023, the minimum paid-up capital for new insurance companies is IDR 1 trillion, while reinsurance companies must have capital of IDR 2 trillion. Established insurance companies are required to have a minimum equity of IDR 250 billion and IDR 100 billion for sharia insurance no later than December 31 2026. Meanwhile, for reinsurance companies, the minimum equity set is IDR 500 billion and IDR 250 billion for sharia reinsurance.
In the second stage, OJK groups insurance companies into two groups based on equity. For the first group (KPPE 1), the deadline for meeting the minimum equity of IDR 500 billion (and IDR 200 billion for sharia) is 31 December 2028. Meanwhile, the second group (KPPE 2) must meet the minimum equity of IDR 1 trillion for conventional insurance and IDR 500 billion for sharia.
OJK Imposes Heavy Sanctions on Jiwasraya and Berdikari Insurance! What is the Impact for Policyholders?
The Financial Services Authority (OJK) has imposed business activity restriction sanctions (PKU) on PT Asuransi Jiwasraya (Persero) and PT Berdikari Insurance (BIC). Acting Head of the OJK Literacy, Financial Inclusion and Communications Department, M. Ismail Riyadi, revealed that this sanction was given because the two companies had violated several provisions that apply in the insurance sector.
The imposition of PKU sanctions is part of the OJK supervision process regulated in existing regulations, with the aim of protecting the interests of policy holders and the general public.
“PT AJS and PT BIC are still required to fulfill all maturing obligations in accordance with applicable regulations,” emphasized Ismail in his written statement, Friday (13/9/2024).
Since these sanctions were imposed, PT AJS and PT BIC were prohibited from opening new coverage closures in all their business lines starting September 11 2024, until they could resolve the problems that caused these sanctions.
“OJK also asked PT AJS and PT BIC to maintain communication with policyholders as part of service to consumers,” concluded Ismail.
Great Eastern Life Premium Income IDR 1.7 trillion in Semester I 2024! MSIG Life Also Shows High Commitment with Fantastic Claim Payments!
Great Eastern Life Indonesia Insurance reported an increase in gross premium income reaching IDR 1.7 trillion or an increase of 7.19 percent in the first semester of 2024, according to unaudited financial reports.
“The company’s total assets reached IDR 13.3 trillion, an increase of 24 percent compared to the same period last year,” said President Director of Great Eastern Life Indonesia, Nina Ong, in a statement on Wednesday (11/9/2024).
This company also shows a strong level of capital adequacy with an RBC (Risk-Based Capital) of 293.05 percent, far above the minimum ratio set by the OJK, namely 120 percent.
Since April 2024, Nina Ong has officially served as President Director of Great Eastern Life Indonesia, along with three new directors: Roy Hendrata as Marketing Director, Hana as Finance Director, and Sisca as Bancassurance Director.
Nina Ong expressed her confidence to achieve sustainable growth and strengthen the company’s position in Indonesia with various innovations, including digital acceleration aimed at increasing customer satisfaction and supporting sustainability through reducing paper use.
On the other hand, PT MSIG Life Insurance Indonesia Tbk (MSIG Life) reported payment of health and death claims of IDR 336 billion during the first semester of this year.
CEO & President Director of MSIG Life, Wianto Chen, explained that this claim payment reflects the company’s commitment to protecting customers amidst high treatment costs. MSIG Life recorded an RBC of 1,876 percent as of June 2024, far above the regulator’s minimum requirement of 120 percent.
Health claims also increased by 33 percent compared to the previous period, with diseases such as dengue fever, digestive tract infections, acute respiratory infections, typhus and bacterial infections being the main causes of claims.
Allianz Ayudhya General Insurance Soars! Merger with Aetna Health Drives Rapid Growth!
Allianz Ayudhya General Insurance (AAGI) shows solid balance sheet strength post merger with Aetna Health in 2023. With a very strong level of capital qualification, as measured using the AM Best Capital Adequacy Ratio (BCAR), AAGI is expected to remain at a very strong level. strong in the medium term.
As the ninth largest general insurance company in Thailand, AAGI has a market share of 3.5 percent in 2023. Although its operations are limited to just one country, AAGI’s underwriting portfolio is diversified across various business lines and distribution channels, although its geographic reach remains in Thailand.
The merger with Aetna Health in 2023 has enabled AAGI to expand coverage of the health insurance market, which is expected to drive premium growth in the medium term. This is mainly thanks to strengthening distribution channels and developing health and commercial products.
With strong financial backing from its parent, Allianz Ayudhya Capital Public Company, AAGI employs a conservative investment strategy, with the majority of its portfolio consisting of cash, savings and high-quality bonds.
Although the company uses reinsurance moderately for underwriting and catastrophe risk management capacity, the high credit quality of its reinsurance partners offsets this reliance. AAGI’s operational performance is considered adequate, with an increase in underwriting performance after joining Aetna Health Insurance (Thailand).
Cost management initiatives and a lower acquisition cost ratio contributed to the improvement, although the loss ratio of the auto insurance business was slightly higher. Stable investment income from interest also plays a role in supporting the company’s profitability.
Source : https://mediaasuransinews.co.id/asuransi/neraca-keuangan-allianz-semakin-kokoh-usai-aksi-merger/
Swiss Re Predicts Surge in Reinsurance Demand! Is It Time to Invest in Property and Cyber Protection?
Swiss Re predicts a surge in demand for property and specialist reinsurance due to rising property values, urbanization and inflation-driven repair costs.
In their latest report, Swiss Re predicts that the focus will shift towards increasing the need for reinsurance protection as reform discussions begin in the insurance industry.
Urs Baertschi, Swiss Re CEO for Property & Casualty Reinsurance, stated that while industry challenges remain similar to last year, their intensity is increasing, fueling higher demand.
“With the increasing risk of natural disasters, economic uncertainty and geopolitical instability, reinsurance is a natural solution for insurance companies to protect themselves from excessive losses,” said Baertschi, as reported by Insurance Asia on Friday, September 13 2024.
A report from the Swiss Re Institute revealed that global insured losses from natural disasters have exceeded US$100 billion for four consecutive years through 2023, with 2024 projections showing the same trend. In the first half of this year, losses have reached US$60 billion to US$62 billion, well above the 10-year average.
In addition, Swiss Re also identified increasing demand for reinsurance in the engineering sector, especially for renewable energy projects, in line with the positive outlook for the construction industry. The cyber reinsurance market is expected to continue to grow as awareness of the risk of cyber attacks increases.
OJK Predicts Insurance Sector Growth in 2025! Is It Time to Invest?
The Financial Services Authority (OJK) has outlined performance projections for the insurance sector for 2025, covering the life and general insurance industries. Even though the market is considered to have great potential, the decline in people’s purchasing power will be the main challenge in the coming year. However, OJK believes the insurance industry still has the opportunity to continue to grow thanks to several improvements that have been made.
Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervisor, Ogi Prastomiyono, expressed his confidence in the growth of the insurance sector after the change of government and in 2025. The posture of the State Revenue and Expenditure Budget (APBN) next year is also expected to support increased domestic consumption .
“With this, we hope that the insurance sector will feel a positive effect. “The insurance market is still very wide open with a level of inclusion that is not as high as other sectors such as banking,” said Ogi in his statement to journalists on Tuesday (10/9/2024).
In the life insurance sector, OJK recorded slow but consistent growth until July 2024, after experiencing negative growth in 2023. “Throughout 2024, life insurance premiums showed positive growth compared to the previous year, reaching IDR 104.30 trillion or an increase of 2.14%,” explained Ogi.
Previously, Ogi also mentioned that the life insurance industry had faced challenges in adapting investment-linked (PAYDI) or unit-linked insurance products. After experiencing a decline, unit link production has now reached a new balance point and is expected to grow positively in the future.
Meanwhile, in the general insurance sector, which is more sensitive to economic conditions, OJK predicts that positive growth will continue. This can be seen from the good operational performance in general insurance premiums until July 2024, which grew around 22% compared to the previous year.
One of the drivers of premium income in the general insurance industry is the credit insurance business line, which experienced growth of 18.94% (yoy) reaching IDR 11.90 trillion until July 2024. On the other hand, the value of claims is also relatively controlled with a total of IDR 8, 96 trillion.
“Even though there are challenges from macroeconomic aspects such as decreasing purchasing power and high interest rates, OJK is optimistic that the general insurance sector in Indonesia in 2025 will still have good growth potential,” concluded Ogi.
Source : https://investor.id/finance/373030/peluang-dan-tantangan-asuransi-tahun-2025
Insurance Digital Transformation: 90% of Transactions Can Be Fully Online by 2025
Insurance companies are increasingly adopting digitalization to improve customer experience by offering online services and self-service options. This step aims to simplify the management of insurance policies and overall improve the quality of service.
Etiqa’s Head of E-Channel, Noel Tordesillas, revealed that the shift towards digitalization and online services allows customers to more easily research, purchase and manage their insurance policies. “Currently, we are witnessing a major shift towards digitalization, including increased use of online channels by customers,” said Tordesillas in a statement quoted by Insurance Asia on Thursday, September 12 2024.
By 2025, Tordesillas estimates that up to 90 percent of all insurance transactions will be completely digital, which will improve the claims process and customer experience. “With an improved claims experience, customers can submit and submit their documents online and receive real-time status updates,” he explained.
AI tools and chatbots are also increasingly being used to provide quick responses to customer inquiries. However, Tordesillas notes that many insurance companies still have difficulty providing a modern customer experience, especially when compared to global online services like Netflix or Amazon.
“Insurance companies are often hampered by outdated, manual systems they have used for decades, which prevent them from providing a level of service on par with global online services,” Tordesillas said.
He also added that stringent regulatory requirements often slow down the modernization process, as insurers must comply with complex rules before they can implement changes. Additionally, the lack of customer feedback mechanisms is a major problem, preventing insurers from fully understanding customer satisfaction.
“When insurance companies don’t have access to the voice of the customer, they lose the online communication channels that allow customers to easily contact and get help,” concluded Tordesillas.
This news is brought to you by L&G Insurance Brokers, insurance broker experienced in Indonesia.
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