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After more than 2 years, the Insurance League is here to publish selected insurance news about the Indonesian insurance industry, which has received a positive response from the public. We are grateful for the response from readers, whose number is increasing daily.
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- AJB Bumiputera’s Financial Restructuring Plan Gets OJK Green Light?
KONTAN.CO.ID – JAKARTA. The Member Representative Body (BPA) of the Bumiputera 1912 Joint Life Insurance (AJB) is optimistic that the problems faced by mutual insurance will soon find common ground.
BPA spokesperson RM. Bagus Irawan revealed that recently his party had met again with the Financial Services Authority (OJK). During the meeting, he saw that the Company’s Financial Restructuring Plan (RPKP) had signs of getting the green light.
“The RPKP is only one step away from approval from the OJK,” he told KONTAN last weekend.
Unfortunately, Bagus has not explained in detail what points will be listed in the RPKP. Even though, at the beginning of last December, he had given his lattice a little.
For example, regarding the payment of claims to policyholders, AJB Bumiputera 1912 plans to make payments in the first phase in February this year and then the second phase in February 2024.
In addition, a haircut plan will be enforced about the implementation of article 38, paragraph (4), The articles of association of AJB Bumiputera 1912. At that time, Bagus said he was being proposed to return to the OJK with a range of amounts that could meet the balance between assets and liabilities.
Recently, AJB Bumiputera released financial reports for the second quarter of 2022, which recorded liabilities increasing by 3.60% year on year (yoy) to IDR 33.30 trillion.
This created an imbalance with total assets owned during that period of only IDR 9.78 trillion. Thus, the company’s equity is recorded to experience a more profound negative.
The company’s equity was negative at IDR 23.51 trillion, or an increase of 4.80%. As a result, the listing also contributed to AJB Bumiputera 1912’s solvency or risk-based capital (RBC) level dropping to a harmful level of 1,236.41%.
- AASI Predicts Next Year’s Sharia Insurance Industry to Grow 9% -11%
KONTAN.CO.ID – JAKARTA. The Indonesian Sharia Insurance Association (AASI) targets the Islamic insurance industry to record a premium growth or contribution of 9% -11% in 2023.
Executive Director of the Indonesian Sharia Insurance Association (AASI) Erwin Noekman said Islamic insurance, in principle, estimates based on statistical calculations or existing trends. There will be growing even though the development is less significant than in previous years.
“We believe the sharia industry is developing modestly around double digits between 9% – 11%,” said Erwin when contacted by Kontan.co.id, Friday (30/12).
Erwin explained that the target was believed to be because, from a financing standpoint, sharia banking would still grow. It is followed that there is potential in Aceh for those who will fully implement Islamic insurance starting next year.
“Then, we see that there are potentials for new sources of sharia financing, for example, from productive waqf that will carry out infrastructure development,” he said.
Apart from that, said Erwin, there is another bonus for the Sukuk for infrastructure development. There is a more apparent potential in 2023, where Umrah trips require sharia insurance.
“Moreover, the situation has improved, so the number of pilgrims going to Umrah will return to normal like the years before the pandemic,” said Erwin.
Look at the performance of sharia insurance. You can see from the Financial Services Authority (OJK) data that the gross contribution of sharia insurance reached IDR 19.95 trillion or grew 18.13% year on year (YoY) until the third quarter of 2022.
This value is recorded by sharia life insurance, general insurance, and sharia reinsurance. In addition, total assets rose 3.00% to IDR 44.99 trillion. With investment assets of IDR 36.90 trillion or a growth of 5.28%, along with investment returns of IDR 936 billion, a significant increase from the previous acquisition of IDR 13 billion.
The claims paid reached Rp. 14.40 trillion, a slight decrease of 1.58%. Thus, sharia insurance penetration was still recorded at 0.14%, including a density of Rp 96,127.
Meanwhile, according to Erwin, the challenges in the insurance industry are, in principle, the same as conventional insurance, life insurance, and general insurance. Erwin said, in general, the challenges of the insurance industry are like the image that needs to be improved. Where the idea of the insurance industry is declining, so it needs to be repaired again.
“Even though sharia insurance is not yet, hopefully, it is not involved in default cases and the like. In general, the insurance industry is experiencing a bad image test,” said Erwin.
In addition to the challenges in general in the insurance industry. Erwin reminded me that there are challenges experienced in sharia insurance. According to him, the challenge will be even more significant with an unbalanced competitive climate between sharia insurance companies that are fully operational and sharia units with unstable costs of insurance.
“If the Islamic insurance company is full, the cost is higher. If it is still a unit, it is relatively lower,” he explained.
AASI obtains input from Islamic insurance companies that are fully operational. They have analyzed this issue. In other words, it is not fair because the costs that must be incurred are more significant in Islamic insurance companies that are not units.
Meanwhile, several product innovations in the sharia insurance industry will be launched. Erwin said several initiatives, such as parametric insurance, will be used in agriculture, plantations, animal husbandry, and anything that uses parametric calculations or is related to natural disasters.
In addition, several product innovations in sharia insurance will be developed but are still in discussion.
- Listen! 5 Tips for Choosing the Right Term Life Insurance
Bisnis.com, JAKARTA – Entering early 2023, many people make financial resolutions throughout the year. One of them is related to insurance products. So, see 5 tips on choosing the right term life insurance according to your needs. Most people need help understanding the many types of insurance available. Consumers only consider insurance when they experience a loss, injury or accident. Now is the time to have insurance. Quoting from Forbes, Sunday (1/1/2023), term life insurance will provide coverage for a certain period—usually 10, 15, 20, or 30 years. This can be an affordable way to get coverage until you reach certain financial milestones. In addition, life insurance companies consider at least two main factors when determining the premium a person must pay for coverage: health and age. Aviva UK & Ireland General Insurance CEO Adam Winslow said that the younger a person is when buying life insurance, the lower the price because it has a more negligible risk to be insured. However, several steps should always be considered before choosing an insurance product. Quoting from Outlook on Sunday (1/1/2023), here are 5 tips for selecting the correct term life insurance
- Get protection as needed. Ideally, a person should calculate the amount of term insurance based on family financial goals, regardless of whether the person is still alive. “This is made possible by drawing up a detailed financial plan, in which all financial goals are identified and by discounting the projected inflation-adjusted essential goal amount to today’s value at a conservative discount rate,” said Horus Chenthil Iyer, Founder and Chief Strategist of Financial Consultants.
- Choose the correct term. The duration of the policy may be equal to the time remaining to reach the goal or retire according to the financial plan, whichever is longer, so there is an available buffer.
- Choose critical illness coverage. Next, choose a term insurance plan that comes with essential illness coverage because anyone can face a loss of income during an acute illness, and recovery may take one to two years before the person becomes financially productive again. “It is highly recommended that one opt for critical illness coverage,” says Iyer.
- Consider the age factor. A person’s insurance requirements decline with age, considering that the longer a person lives, the more goals are met through income. Therefore, an increase in term insurance coverage is not necessary, given the indemnity principle, which states that insurance is to compensate for losses and not to make gains.
- Review insurance regularly. A person may need to increase insurance coverage if there is a significant change in lifestyle or essential financial goals. That’s why it’s important to review insurance coverage every three to four years.
- OJK: Performance of Life Insurance Decreased, General Insurance and Reinsurance Soared
Bisnis.com, JAKARTA – The Financial Services Authority (OJK) noted that the accumulation of life insurance premiums had decreased by -6.46 percent annually (year-on-year/yoy) in November 2022.
OJK Chief Executive for Non-Bank Financial Industry Supervision (IKNB) Ogi Prastomiyono said that the accumulation of premiums in the life insurance industry only reached IDR 173.33 trillion with this contraction in November 2022.
“The accumulated life insurance premiums contracted by -6 .46 percent yoy [year-on-year] compared to the previous period with a value of Rp. 173.33 trillion in November 2022,” Ogi said in an online presentation of the December 2022 Monthly Board of Commissioners Meeting (RDKB), Monday (2/1/2023).
Meanwhile, compared to the previous month or the October 2022 period, the OJK recorded that the accumulation of life insurance premiums reached IDR 157.42 trillion. However, it still experienced a contraction of 5.76 percent yoy.
Meanwhile, growth occurred in the accumulation of general insurance and reinsurance premiums which recorded an increase of 14.06 percent yoy during the same period to reach IDR 106.91 trillion as of November 2022.
However, Ogi said that the accumulation of insurance sector income during the period January to November 2022 reached IDR 280.24 trillion or was able to grow by 0.44 percent compared to the same period in the previous year.
Then, regarding capital in the IKNB sector, both from the life insurance industry and general insurance, each recorded risk-based capital (RBC) of 479.88 percent and 324.34 percent.
“Even though the RBC is in a downward trend and the RBC of several insurance companies is monitored closely, the insurance industry’s overall aggregate is still above the threshold of 120 percent,” he explained.
- Indosurya Life Insurance Case, This is the OJK Update After Hundreds of Percent Negative RBC
Bisnis.com, JAKARTA – The Financial Services Authority said the case of PT Asuransi Jiwa Indosurya Sukses (Indosurya Life) was resolved with a policy conversion scheme into shares.
“So equity, solvency (risk-based capital) is fulfilled,” said Ogi Prastomiyono in a presentation on the Results of the December 2022 Monthly Board of Commissioners Meeting, Monday (2/1/2023).
He said the OJK had conducted a review of Indosurya Life’s financial restructuring plan. “We have no objections to the RKP,” he said.
With an RKP deemed feasible, OJK said Ogi would focus on implementing the work plan proposed by the company. He also mentioned that RKP approval had been given since August 19, 2022.
On its website, Indosurya Life displays the latest financial reports as of March 2022. In this presentation, the company’s RBC is at a negative level of -341.47 percent, from the previous December 2021 -326 .33 percent.
Meanwhile, the company’s profit and loss post has improved from a loss in December 2021 of IDR 69.03 billion to IDR 8.62 billion. Meanwhile, Indosurya Life’s assets became IDR 731.26 billion.
- OJK Drops PKU Sanctions on PT Sun Maju Insurance Brokers
JAKARTA, KOMPAS.com – The Financial Services Authority (OJK) imposed a Business Activity Restriction Sanction (PKU) on insurance brokerage company PT Sun Maju Insurance Brokers for 3 months. This PKU sanction was given based on letter Number S31/NB.1/2022 dated 19 December 2022.
Chief Executive for Supervision of Insurance, Pension Funds, Financing Institutions, and Other Financial Services Institutions as Plt. Deputy Commissioner for Supervision of IKNB I Ogi Prastomiyono said the imposition of the sanction was because PT Sun Maju Broker Asuransi had yet to fulfill several recommendations from the results of a direct inspection.
“First, the claim register for the period after the inspection has been filled in and describes complete information,” he said in a press release, quoted Monday (2/1/2023).
He said the register must accommodate the company’s needs in calculating the period for forwarding information and claim documents following OJK regulations.
Then, the company also needs to complete a general ledger recommendation for the period as of December 31, 2021, and a register report for updating the identity data of the insured in 2021.
Furthermore, Sun Maju Insurance Brokers also need to complete evidence of an administrative letter from the OJK regarding changes in management regarding the resignation of members directors.
Finally, companies must complete and accurately complete the first-semester financial and second-semester financial reports of 2021 through the e-reporting system.
Ogi emphasized that with this PKU sanction, PT Sun Maju Insurance Brokers was prohibited from performing insurance intermediary services until the cause of the PKU sanction was resolved.
“Nevertheless, PT Sun Maju Broker of Compulsory Insurance will continue to settle its maturing obligations,” he said.
For information, PT Sun Maju Insurance Brokers is located at Indosurya Life Center Lt. 3, Jl. MH Thamrin No. 8 – 9 Kebon Melati, Tanah Abang, Jakarta 10230.
- Insurance Company Cancels Ship Insurance in Russia and Ukraine
KONTAN.CO.ID – LONDON. Shipping insurance companies will cancel war risk coverage in Russia, Ukraine, and Belarus starting January 1, 2023. This follows reinsurers’ exclusion of these areas, as they face heavy losses.
Reinsurers, who insure insurance companies, typically renew 12-month contracts with insurance clients on January 1. It gave reinsurers the first opportunity to reduce exposure since the war in Ukraine began. After this year, it was hit by losses related to the conflict and Hurricane Ian in Florida.
American, North, British, and Western P&I (cover and indemnity) clubs will no longer be able to offer war risk coverage for liabilities in those regions from January 1, insurers said in a recent notice on their websites.
The companies in the club are one of the largest P&I insurers covering about 90% of the world’s ships. The UK P&I Club said on December 23 that the problem arose due to a lack of availability of reinsurance for reinsurance, also known as retrocession.
“Reinsurance Club can no longer secure reinsurance for exposure to war risks to Russian, Ukrainian or Belarusian territorial risks,” it said.
American P&I said on December 23 that it had received a “cancellation notice” for the region from its war risk reinsurance and was canceling its insurance.
Ships usually carry P&I insurance, which covers third-party liability claims, including environmental damage and injury. Separate hull and engine policies protect the vessels from physical damage.
Industry sources said that moving by insurance companies will make it more difficult for shipowners or charterers to find insurance, driving up prices and possibly meaning some ships go uninsured.
Reinsurance and retrocession providers include global players Hannover Re, Munich Re, and Swiss Re, and syndicates in the Lloyd’s of London marketplace. The company did not immediately respond to a request for comment.
Reuters reported earlier this month that proposed contract clauses circulated by reinsurers excluded war-related claims for aircraft and ships in Ukraine, Russia, and Belarus.
The Japanese government has urged insurers to take on additional risks to continue providing sea warfare insurance for liquefied natural gas (LNG) shippers in Russian waters, a senior official at the industry ministry said this week.
This information is presented by L&G Insurance Broker – The Smart Insurance Broker
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