Liga Asuransi – Hello risk takers, we are back to discussing developments and events in the world of insurance in Indonesia in the last week. Again, we would like to convey that in daily business matters, insurance objects are not only about vehicle, health, life and property insurance, but there is still a very wide range of objects that can be insured. Almost all business processes from A to Z can be protected by insurance. In this edition, as usual, we have again collected 7 selected news related to insurance that are good for you to know. Also included are things that are currently hot lately regarding Tapera.
As always, if you are interested in this article, please share it with your colleagues so they can understand it as well as you.
Positive Growth of the Life Insurance Industry in Indonesia and the Spirit of Unlimited Goals, Unlimited Gains from MDRT Day 2024
The life insurance industry in Indonesia continues to show positive performance. Until the end of March 2024, life insurance premiums were recorded to have grown by 0.9% Year on Year (YoY) to IDR 46 trillion. Meanwhile, life insurance company assets reached IDR 620.47 trillion, experiencing growth of 1.5% (YoY). These figures show the great potential of the life insurance industry in Indonesia, even though it is faced with various global challenges.
The positive record at the start of this year is important capital for the life insurance industry to continue to grow throughout 2024. This growth is in line with the main goal of the life insurance industry, namely providing financial protection to Indonesian families in the future. This achievement also confirms the position of the life insurance industry as an important pillar in the national economy to create a prosperous Indonesian society.
The development of the life insurance industry aims to create an industry that is strong, inclusive, efficient and contributive to national economic growth and improving community welfare. According to the Million Dollar Round Table (MDRT) Indonesia, existing challenges must be seen as great potential to encourage life insurance growth. Insurance companies are encouraged to increase education, explore potential and carry out wider expansion.
MDRT, as an insurance financial advisor association, continues to produce superior life insurance agents. Through the annual MDRT Day agenda, life insurance agents are invited to continue to grow together. This year, MDRT Day Indonesia carries the theme “Unlimited Goals, Unlimited Gains”, which aims to encourage participants to get out of their comfort zone and maximize their potential, in accordance with the philosophy of unlimited achievement.
“MDRT Day Indonesia 2024 provides a space for inspiration, motivation and knowledge for participants to challenge themselves, encouraging professionalism through increasing competency and capacity to become reliable financial advisors,” said Anwar Aonillah, MDRT Indonesia Country Chair 2023-2024.
The Unlimited Goals Unlimited Gains theme reflects MDRT’s mission to provide life insurance solutions that not only protect, but also empower agents to dream big and achieve their life goals without limits.
MDRT Seminar Day 2024: Inspiration and New Knowledge
This seminar is an opportunity to explore the latest concepts in the insurance industry and how to use them to achieve unlimited goals. Speakers will share experiences on how to achieve goals, both individually and as a team, and how perseverance can overcome failure.
With comprehensive training and certification programs, MDRT as the global association for life insurance practitioners ensures that agents are well prepared to meet market needs. MDRT membership is internationally recognized as a high standard of quality in the world of life insurance and financial services.
As of June 5 2024, MDRT membership in Indonesia has reached 2,563 members, with 878 new members in the first year of 2024. This figure is expected to continue to increase along with the growth of the life insurance industry in Indonesia.
Executive Director of Indonesian Life Insurance (AAJI), Togar Pasaribu, stated, “The MDRT Day Indonesia 2024 event is an important momentum for insurance professionals to gain inspiration and new knowledge. By presenting experienced speakers from within and outside the country, we hope that participants can take advantage of the opportunity This is to develop themselves and improve their professionalism in order to achieve bigger goals in their careers.”
With optimism and enthusiasm to continue to grow, the life insurance industry in Indonesia is expected to be able to make a significant contribution to the national economy and community welfare, while preparing reliable and competent agents through platforms such as MDRT.
Indonesian Insurance Industry Asset Growth Reaches IDR 1,121.69 Trillion in April 2024
The Financial Services Authority (OJK) reported that the Indonesian insurance industry’s assets reached IDR 1,121.69 trillion in April 2024. This figure shows an increase of 1.44 percent year on year (yoy) from IDR 1,105.75 trillion in the same period last year. previously. This information was conveyed by Agusman, Chief Executive for Supervision of Financing Institutions, Venture Capital Companies, Microfinance Institutions and Other Financial Services Institutions (PVML) of the OJK, in a press conference on the results of the OJK Monthly Board of Commissioners (DK) Meeting in May 2024.
Increase in Commercial Insurance Assets
Agusman explained that total commercial insurance assets reached IDR 903.18 trillion, an increase of 2.10 percent yoy. The performance of commercial insurance can also be seen from the accumulated premium income which reached IDR 112.75 trillion, up 11.25 percent yoy. Life insurance premiums grew by 3.98 percent yoy with a value of IDR 59.97 trillion, while general insurance and reinsurance premiums grew 16.99 percent yoy with a value of IDR 52.78 trillion.
The commercial insurance industry continues to show solid capital with Risk Based Capital (RBC) for life insurance at 429.76 percent and general insurance at 325.62 percent, well above the threshold of 120 percent.
Non-Commercial Insurance Assets
For non-commercial insurance, which includes BPJS Health and BPJS Employment as well as ASN, TNI and POLRI insurance programs, total assets were recorded at IDR 218.51 trillion, experiencing a contraction of 1.18 percent yoy.
Pension Fund Asset Growth
The pension fund industry is also showing significant growth. Total pension fund assets as of April 2024 grew by 8.74 percent yoy, reaching IDR 1,432.73 trillion, an increase from IDR 1,317.57 trillion in April 2023. This growth includes voluntary pension programs which recorded total assets of IDR 371.74 trillion , up 5.35 percent yoy. Meanwhile, the mandatory pension program, which includes the old-age insurance program and BPJS Employment pension guarantee as well as the old-age savings program and accumulation of ASN, TNI and POLRI pension contributions, recorded total assets of IDR 1,060.98 trillion, growing 9.98 percent yo.
Growth of Guarantee Company Assets
The asset value of guarantee companies also experienced quite significant growth. In April 2024, total assets of guarantee companies will reach IDR 47.61 trillion, growing 12.58 percent yoy from IDR 42.29 trillion in April 2023.
Overall, the Indonesian insurance industry shows positive performance and solid growth in various sectors, both commercial and non-commercial insurance, as well as the pension fund industry and guarantee companies. OJK continues to monitor these developments to ensure the stability and health of the financial industry in Indonesia.
Financial Services Authority (OJK) Improves Health Insurance Ecosystem for Cost Efficiency and Risk Management
The Financial Services Authority (OJK) is making significant improvements to the health insurance ecosystem to encourage better risk management practices and increase the efficiency of managing health costs. This step was taken following a significant increase in health insurance claims until the first quarter of 2024, which was allegedly triggered by the practice of overtreatment or excessive treatment.
Ogi Prastomiyono, Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervision, stated that all parties in this ecosystem must be directed to create efficiencies in medical costs. He also emphasized the importance of encouraging insurance customers to adopt a healthy lifestyle, which in turn can increase productivity and reduce the potential for disease. In this way, health care costs can be reduced to be more efficient.
OJK also encourages insurance companies to utilize digital technology and generative artificial intelligence (AI) in the future. This technology is expected to build a strong database that can be utilized in teleconsultations, reducing the need for physical visits to hospitals.
“Currently, OJK is also encouraging the use of first-level health facilities such as clinics to provide health services,” said Ogi in an official statement on Wednesday (12/6).
Apart from that, OJK also asked insurance companies to form a Medical Advisory Board. This council will provide regular input regarding existing medical services, so that insurance companies can communicate with partner hospitals based on the council’s recommendations.
OJK also emphasizes the importance of insurance companies building a health insurance membership database. This database will help companies obtain adequate information about the loss ratio experience of closed business entities and individuals. This information is important to mitigate the risk of fraud from customers, both business entities and individuals. This database will later be used jointly by all insurance companies that provide health insurance services.
It is hoped that these improvements will increase public confidence in health insurance services in Indonesia, as well as ensure that these services are more efficient and targeted. OJK is committed to continuing to monitor and supervise the implementation of this initiative in order to achieve the common goal of improving the quality of health services in Indonesia.
OJK Handles Contraction of Unit Linked Insurance Premiums, Encourages Product Improvement and Innovation
The Financial Services Authority (OJK) responded to the decline in insurance product premiums linked to investment (PAYDI) or unit linked. Based on data from the Indonesian Life Insurance Association (AAJI) in the first quarter of 2024, unit linked premiums decreased by 16% on an annual basis (year on year/yoy), down from IDR 22.98 trillion in the first quarter of 2023 to IDR 19.22 trillion.
Ogi Prastomiyono, Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervision (PPDP), stated that his party continues to encourage improvements in the marketing process, liability management and fund management, so that the unit linked portfolio can provide the benefits promised to policyholders.
“OJK also continues to encourage life insurance companies to develop protection products that can provide protection against risks related to the lives of policy holders, so that they can increase positive contributions to society’s productivity,” said Ogi in a written answer on Tuesday (11/6/2024).
Furthermore, Ogi emphasized the importance of insurance companies developing more effective methods in managing assumptions for determining premiums and liabilities, as well as monitoring investment placement in accordance with obligations. Aspects of liquidity and asset quality must also be considered so that the company is able to pay its maturing obligations and continue to grow sustainably.
AAJI highlights the contraction in unit linked premiums because if it continues, it could have a negative impact on the life insurance industry. AAJI Executive Director, Togar Pasaribu, stated that his party plans to hold discussions with life insurance players to discuss unit linked issues at the end of this month. One of the points that will be discussed is the mandatory recording rules contained in SEOJK Number 5 of 2022.
“The recording, and the others are still confidential,” said Togar when met at the AAJI House, Central Jakarta, Monday (10/6/2024). It is hoped that this discussion can be forwarded to the OJK as a basis for revising existing regulations.
Togar explained that unit linked products are different from traditional products. In unit linked products, the responsibility for investment placement lies with the policy holder, while the responsibility for protection lies with the company. Meanwhile, for traditional products, all responsibility lies with the company.
Togar added that although both require caution, the level of caution for unit linked products is lower than traditional products. Traditional life insurance products have regulatory obligations, such as technical reserves, that can accumulate over the long term.
“If there are problems, there will be stricter regulations on traditional products. Ultimately, what do insurance companies want to sell?” Togar said. Therefore, according to him, both traditional and unit linked products need to be viewed proportionally.
With the improvement efforts from OJK and discussions carried out by AAJI, it is hoped that the life insurance industry can continue to develop and provide optimal benefits for society.
Wanaartha Life Liquidation Team Distributes IDR 26 Billion in the First Stage of Liquidation
The Liquidation Team of PT Asuransi Jiwa Adisarana Wanaartha, or better known as Wanaartha Life (In Liquidation), has succeeded in distributing the first phase of liquidation proceeds with a total value of more than IDR 26 billion. Chairman of the Wanaartha Life Liquidation Team, Harvardy Muhammad Iqbal, said that this first stage of payment had been distributed to more than 8,700 policy holders.
“The total paid was more than IDR 26 billion. Thus, there are still proportional funds remaining of around IDR 8 billion that have not been taken by policy holders,” said Harvardy to Kontan, Wednesday (12/6).
Harvardy explained that for policy holders who have not confirmed receipt of the first stage of payment, their proportional portion of funds will be entrusted to the District Court through a consignment mechanism. Later, policy holders can submit a request to collect proportional funds directly to the District Court, not through the Liquidation Team.
“The Liquidation Team will make further announcements regarding the consignment process,” he added.
Harvardy also revealed plans to carry out the second phase of proportional distribution in the near future. If there are no problems, this second phase of payments will begin in June 2024. Regarding the distribution value, Harvardy stated that further information will be announced as soon as possible.
Previously, the Financial Services Authority (OJK) said that they were processing approval for the disbursement of guarantee funds for the second phase of payments to policyholders. OJK is also committed to continuing to supervise the liquidation process of Wanaartha Life until it is complete and will evaluate the entire process.
This step is expected to provide certainty and clarity to Wanaartha Life policy holders, while ensuring that the liquidation process runs transparently and in accordance with applicable regulations.
Commercial Car Insurance is Important for Rental Businesses, Provide Full Protection
Car rental businesses who rely on commercial car insurance can get full compensation in cases of vehicle theft or embezzlement. According to the explanation of Laurentius Iwan Pranoto, Head of Public Relations, Marcomm, & Events Astra Insurance, the compensation provided by insurance is in accordance with the specified insurance price.
“For example, if the lost car has a market value of IDR 100 million, then insurance will compensate the loss in cash amounting to IDR 100 million,” he told CNNIndonesia.com on Tuesday (11/6).
For rental business people who buy cars with a credit scheme, Iwan explained that insurance will compensate the loss to the creditor or party financing the car loan. This process involves calculating the remaining debt that still needs to be paid, after deducting the proceeds from insurance claims.
Iwan emphasized the importance of ensuring that the car used for rental activities is insured with a type of commercial insurance that is appropriate for its use. This is important because car insurance for personal use often does not cover risks that occur when the car is used for commercial activities such as rental.
“In conditions without commercial insurance, claims will be rejected by the insurance company if the car is lost or stolen,” he added.
Iwan also mentioned that consumers who initially insured their cars with personal insurance can change the type of coverage to commercial by adjusting the premium paid.
“The policy owner or insured can apply to change the type of coverage by adding a commercial clause to the insurance company. This process will involve a re-survey of the car and adjustments to the premium charged,” he explained.
By choosing commercial car insurance, car rental businesses can ensure that they are fully protected from the financial risks that can arise from the loss or theft of a car. This step not only provides protection, but also provides peace of mind in running their rental business operations.
OJK Prepares to Issue Government Regulations for the TPL Mandatory Insurance Program
The Financial Services Authority (OJK) continues to coordinate with relevant ministries and institutions to issue Government Regulations (PP) regarding the Mandatory Third Party Liability (TPL) Insurance Program in accordance with the targets set by the Government.
Ogi Prastomiyono, Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervisor, explained that this program aims to provide legal liability benefits to third parties for damage caused by motor vehicle accidents. However, he emphasized that this mandatory insurance does not cover the costs of accidents to people, because this is guaranteed by PT Jasa Raharja.
“Currently OJK is collaborating with the general insurance industry to ensure the infrastructure for implementing this mandatory insurance,” said Ogi in Jakarta on Tuesday.
The infrastructure that is being prepared includes product features, premium amounts, premium payment mechanisms, benefits to be paid, and claims payment mechanisms. Apart from that, OJK is also preparing standardization of workshops that will be used to support the implementation of this mandatory insurance.
Apart from taking care of mandatory TPL insurance, Ogi also highlighted the development of special regulations for electric vehicle insurance. He encouraged the Indonesian General Insurance Association (AAUI) to immediately establish standard policy provisions governing electric vehicle insurance coverage.
“The risks guaranteed in electric vehicle insurance are different from conventional vehicles, so adjustments are needed in risks and premium rates,” he added.
Previously, Wayan Pariama, Deputy Chair of Technical Division 3 AAUI, expressed his hope that the PP regarding TPL insurance could be realized in 2025. This plan is expected to be completed on the plan list in October or November this year.
With these steps, OJK is committed to ensuring that mandatory TPL insurance can be implemented effectively and provide adequate protection for the public, as well as supporting the development of electric vehicles in Indonesia.
This news is brought to you by L&G Insurance Brokers, insurance broker experienced in Indonesia.
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