Liga Asuransi – Hello risk takers, we have entered a new year, 2024. We wish you all a Happy New Year 2024, hopefully in 2024 everything we have prepared from the previous year will increasingly produce what we want. In the 1st week of January 2024, we will once again discuss the world of insurance, because insurance is not only limited to vehicles and life, especially for business protection coverage, insurance still has a very wide reach. In this first week of January 2024, we are again collecting 7 selected news related to insurance that are good for you to know.
As always, if you are interested in this article, please share it with your colleagues so they can understand it as well as you.
Insurance Expert Evaluation of the Impact of the Constitutional Court Decision, Investigating Criminal Acts in the Financial Services Sector
The decision of the Constitutional Court (MK) to delete the phrase “only” in Article 8 Number 21 of Law (UU) Number 4 of 2023 concerning Development and Strengthening of the Financial Sector (UU P2SK) attracted the attention of insurance experts. The Constitutional Court’s decision, which was announced under number 59/PUU-XX/2023 on Thursday (21/12/2023), received a wise response from Lecturer and risk management practitioner, Wahyudin Rahman, who also serves as General Chair of the Indonesian Insurance Writers Community (Kupasi ).
According to Wahyudin, the Constitutional Court’s decision opens access for customers in the financial services sector to take legal action through the police if a criminal act occurs in the financial sector. However, Wahyudin also highlighted several problems that might arise if investigators came from outside the OJK. First, the integrity and competence of investigators in the financial sector is considered inadequate. Second, the potential to become the object of a pre-trial lawsuit in court.
“The financial sector is a vulnerable industry. Some customers do not have good intentions, easily report financial institutions without filters, are often followed up by law enforcement and often even take financial advantage,” said Wahyudin. If OJK is involved, Wahyudin emphasized the need for administrative sanctions first before going to the criminal level. Regarding the Constitutional Court’s decision, Wahyudin thinks that the OJK, the Indonesian Police (Polri), and related parties need to redesign their cooperation agreements to achieve harmonization in the handling and authority of investigators within and outside the OJK.
In its ruling, the Constitutional Court stated that the phrase “can only be carried out by investigators from the Financial Services Authority” in Article 49 paragraph (5) of Law Number 21 of 2011 concerning OJK is contrary to the 1945 Constitution of the Republic of Indonesia. Article 8 point 21 of the PPSK Law which regulates changes to Article 49 paragraph (5) of Law Number 21 of 2011 concerning OJK now reads: “Investigations into criminal acts in the financial services sector can be carried out by OJK investigators.”
PT Asuransi Asei Indonesia is Positive Regarding the Issuance of POJK 20/2023: Efforts to Improve Coordination and Governance
PT Asuransi Asei Indonesia gave a positive response to the issuance of Financial Services Authority Regulation (POJK) Number 20 of 2023 (POJK 20/2023) concerning Insurance Products Linked to Sharia Credit or Financing and Sharia Suretyship or Suretyship Products. President Director of Asuransi Asei Indonesia, Achmad Sudiyar Dalimunthe, stated that the POJK regarding credit insurance had gone through a series of discussions with the insurance industry, looking at the concerns and objectives of the credit insurance business related to bank loans.
Dody, Achmad Sudiyar Dalimunthe’s nickname, stated that with this POJK, it is hoped that coordination between insurance companies and banks will become smoother and have a strong legal basis. “The interests of the insured, both the bank and the bank debtor, will be stated more clearly in the policy,” he said to Bisnis on Thursday (28/12/2023).
Dody added that the presence of POJK provides a common basis for insurance companies, thereby reducing differences in the scope of guarantees between insurers, creating healthy business competition and improving governance. “For reinsurers, this will also create more accountable risk recording, including reserves for long-term risks,” he added.
It should be noted, POJK 20/2023 was stipulated on 12 December 2023 and promulgated on 13 December 2023. In this regulation it is explained that risk management in insurance products related to sharia credit or financing must be carried out carefully, including determining contribution premiums, risks that covered, and the period, based on the insurance company’s capabilities as regulated in the insurance agreement or policy. The application of this precautionary principle aims to manage the high risk exposure borne by the product.
AJB Bumiputera 1912 Management Announces Recovery of Operational Application System
The management of Bumiputera 1912 Joint Life Insurance (AJB) provided the latest information regarding the recovery of the company’s operational application system after experiencing disruption for the last 6 months. AJB Bumiputera 1912 Corporate Secretary, Hery Darmawansyah, stated that the operational application system has now been reactivated.
“Starting today [Thursday, 28 December 2023], the BP Migrasi Asper Application can be accessed again,” said Hery in an official statement received by Bisnis on Thursday (28/12/2023). Hery emphasized that all data in the application is safe and can be reused by all Bumiputera operational offices.
Regarding the Bumiputera Online (BlL) application, Hery explained that the server was active and was in the finalization stage, namely the data extraction process. Furthermore, Hery announced that AJB Bumiputera 1912 is targeting full restoration of BIL applications in January 2024, when it is hoped that services to policyholders can run normally without significant obstacles.
By restoring the operational application system, AJB Bumiputera 1912 is committed to providing optimal service to all policy holders in all company operational offices.
The Importance of Protection During the Christmas Holidays, Insurance Experts Give Advice to the Public
In welcoming the Christmas 2023 and New Year 2024 (Nataru) holidays, an insurance observer, Irvan Rahardjo, advised the public to have additional protection to reduce financial risks. Irvan emphasized the importance of having home insurance to protect against the risk of fire and property theft. In addition, he recommends travel insurance with coverage for death, disability, treatment resulting from accidents, lost baggage, and plane delays.
Irvan also advised the public to have vehicle insurance with all risk coverage, at least Total Loss Only (TLO), as well as commercial health insurance, at least BPJS Health with active membership. According to him, ensuring that all insurance policies are active, premiums are paid, and there are no arrears is an important step. Before leaving the house during the long Christmas holiday, Irvan recommends that the doors be locked properly and that electrical equipment be disconnected from the socket to prevent damage due to weather disturbances.
In this context, Survey Data from the Ministry of Transportation through the Transportation Policy Agency (BKT) estimates a significant increase in the number of people traveling during the Christmas holidays, reaching 107.63 million people. Seeing the trend of increasing mobility, the Indonesian General Insurance Association (AAUI) noted the increasing demand for travel insurance. AAUI Executive Director, Bern Dwiyanto, said that demand for travel insurance is expected to exceed IDR 1 trillion, showing public understanding of the benefits and protection provided by travel insurance.
Thus, the use of additional insurance during the Christmas holiday is expected to provide financial protection and peace of mind for the Indonesian people.
Challenges and Opportunities for the Insurance Industry in Indonesia, OJK Perspective
The Financial Services Authority (OJK) identified several main challenges that are still obstacles to the growth of the insurance sector in Indonesia. One of the main problems is the low level of consumer confidence in the credibility of the insurance sector, which is reflected in the inclusion level which is still below the level of insurance literacy.
According to the Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervision, Ogi Prastomiyono, other challenges include inadequate capital capacity and weaknesses in the availability of experts, especially in the fields of actuarial, underwriting, investment management and internal audit. Ogi emphasized that this problem shows that there is suboptimality in the Governance, risk management and compliance (GRC) function, especially in supporting key business aspects such as underwriting and investment.
Apart from that, monitoring of insurance product performance is also considered not to be by international standards and best practices, which is the initial detection of problems in the insurance industry. Ogi also highlighted the need to encourage associations and institutions to support industry players, especially in the aspects of market conduct and consumer protection, as well as providing supporting services that are by professional practices and codes of ethics.
Ogi stated that the condition of the insurance industry, which is still faced with several challenges, is contrary to the great potential of the national economy, especially considering Indonesia’s position as a member of the G20. Nevertheless, Ogi remains optimistic about the growth opportunities of this sector, especially with the increase in gross income per capita and the potential of the insurance market which is still large. Even though insurance penetration in Indonesia is still low, namely only around 2.27% in 2022, Ogi believes that this market has room to develop further, considering that penetration is still low when compared to neighboring countries in Southeast Asia.
The Relationship between Insurance Company Capital and Customer Loyalty: OJK’s Strategic Steps to Strengthen the Industry
The Financial Services Authority (OJK) revealed that the amount of insurance company capital has a significant relationship with the level of customer loyalty, which is one of the reasons behind setting higher minimum capital by the regulator. According to the Head of the OJK Insurance, Guarantee and Pension Fund Regulation and Development (PPDP) Department, Djonieri, the results of OJK studies and observations show that insurance companies with large capital tend to have more loyal customers. These findings are strengthened through comparisons of cases in various countries around the world.
As explained by Djonieri in an online discussion on Thursday (28/12/2023), increasing capital in the insurance sector is considered a strategic step by the OJK to strengthen this industry. OJK believes that apart from creating a loyal customer base, insurance companies with adequate capital will be able to build sustainable businesses.
For information, OJK plans to increase the minimum capital for insurance companies from IDR 100 billion currently to IDR 500 billion in 2026, then to IDR 1 trillion in 2028. Meanwhile, for reinsurance companies, the minimum capital is currently around IDR 200 billion and will be increased gradually to IDR 1 trillion in 2026 and IDR 2 trillion in 2028.
The new regulations also cover foreign ownership which must go through the Indonesian Legal Entity (BHI), as well as grouping or tiering involving the Insurance Company Business Group (KUPA). Djonieri stated that KUPA is an alternative for insurance companies with limited capital to continue operating, by joining or forming KUPA.
In another context, OJK also regulates the use of foreign workers (TKA) to encourage the transfer of knowledge from TKA to local professionals, especially regarding agency aspects, codes of ethics, and internal audit teams which are not permitted to hold concurrent positions.
Apart from that, the latest regulations in the insurance sector also highlight cooperation within one ownership as an effort to strengthen networks and collaboration between companies. Djonieri emphasized that these steps are a breakthrough to strengthen the insurance industry in Indonesia.
Source: https://investor.id/finance/349854/ojk-semakin-besar-modal-perusahaan-asuransi-makin-loyal-nasabah
OJK Prohibits Insurance Companies from Providing Guaranteed Investment Returns on PAYDI Products
The Financial Services Authority (OJK) has issued a new regulation that prohibits insurance companies that market Investment Linked Insurance Products (PAYDI) or unitlinks from including investment return guarantees. This rule is contained in Article 48 of the Financial Services Authority Regulation (POJK) Number 22 of 2023 concerning Consumer and Public Protection in the Financial Services Sector, which was promulgated in December 2023.
The Directorate of EPK Development and Regulation, Department of Consumer Protection, Supervision of Behavior of Financial Services Business Actors, Education and Consumer Protection, OJK explains several provisions related to the preparation of PAYDI agreements. Apart from prohibiting insurance companies from including investment return guarantees, this regulation also prohibits the implementation of a waiting period on PAYDI, unless the insured or participant has chosen not to undergo a medical examination by the underwriting provisions and understands the consequences of the waiting period.
The rules also stipulate that agreements related to PAYDI must contain detailed information, including how to cancel the insurance policy, amount of funds returned, name of sub-funds, investment strategy, formation of cash value, amount and method of premium or contribution payments, costs during the coverage period, how to calculate benefits investments, consumer rights, additional PAYDI features, and fees charged if the policyholder does not cancel the policy after the payment period ends.
This rule aims to provide better protection to consumers and ensure transparency in PAYDI product offerings, which often involve investment aspects. With this regulation, it is hoped that consumers can make smarter decisions and fully understand the insurance products they choose.
This article is brought to you by L&G Insurance Broker, an insurance broker in Indonesia.
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