Liga Asuransi – The insurance business is still interesting to discuss, because insurance is not only limited to vehicles and life, especially for business protection coverage, insurance still has a very wide reach. In the second week of November 2023, 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.
Engineering Insurance is Growing Rapidly in the Political Year 2024 with the Acceleration of IKN Projects
The Indonesian General Insurance Association (AAUI) sees bright prospects for the engineering insurance business line in the 2024 political year, especially in line with the acceleration of the National Capital (IKN) project. Deputy Chair of AAUI Member & Institution Cooperation, Heddy Agus Pritasa, emphasized that this projection was driven by the support of election candidate contestants for the sustainability of IKN. In the Insurance Outlook 2024 Webinar on Tuesday (7/11/2023), Heddy expressed his confidence that the engineering insurance line would experience significant growth.
Engineering insurance, as explained on the OJK’s official Ilmu Uangmu OJK page, is a type of insurance product that provides protection against loss or damage to insured property due to accidents that occur suddenly and cannot be predicted in advance.
During the first semester of 2023, AAUI recorded growth in engineering insurance premiums in the general insurance sector of 38% on an annual basis (year-on-year/yoy), increasing from IDR 1.66 trillion to IDR 2.29 trillion. Meanwhile, engineering insurance premiums in reinsurance also increased by 14.6% yoy, from IDR 558 billion to IDR 640 billion.
President Joko Widodo (Jokowi)’s statement regarding the sustainability of IKN development also provides positive support. According to Jokowi, the development of IKN has been mandated by law (UU) and has received approval from 93% of the factions in the DPR. In this way, IKN development is guaranteed to continue sustainably, even after its term of office ends next year.
This article will discuss further how the IKN project provides impetus for the growth of the engineering insurance sector and how industry players can take advantage of opportunities amidst changing political dynamics and national development.
Stepping into the Future: Challenges and Opportunities for the Indonesian Life Insurance Industry in 2024
The Indonesian life insurance industry enters 2024 with various challenges and opportunities that need to be addressed. The Indonesian Life Insurance Association (AAJI) revealed several critical aspects that will shape the direction of development of this industry.
Literacy and Inclusion Levels: Low But Potential
One of the main challenges facing the life insurance industry is the low level of literacy and inclusion. According to AAJI data, in 2022, the insurance literacy rate will only reach 31.7 percent, while inclusion will only be 16.6 percent. However, Fauzi Arfan, Head of AAJI’s Product, Risk Management and GCG Division, expressed optimism that by 2024, literacy and inclusion levels could increase.
Fauzi highlighted that literacy in the life insurance industry in Indonesia is actually high, even higher than the inclusion level. This shows that the majority of buyers have a good understanding of insurance. AAJI hopes that the gap between literacy and inclusion can narrow over time.
Political and Regulatory Challenges
Another challenge facing this industry is the political contestation that will occur in 2024, with the presidential election (pilpres) and legislative election (pileg) being the main focus. Meanwhile, the implementation of a number of regulations, such as the separation of sharia business units (UUS) on December 31 2026, the implementation of PSAK 74 starting January 1 2025, and insurance capital policies in 2026, are challenges that need to be faced.
However, Fauzi sees that these regulations can actually be an opportunity for the life insurance industry to grow healthier. Strengthening capital, as intended by the Financial Services Authority (OJK), is considered an opportunity to strengthen this industry.
While facing challenges, the life insurance industry can also explore opportunities from technological advances. With 212.9 million internet users and 167 million social media users, digitalization opportunities are increasingly wide open. Life insurance companies are now starting to switch to using technology to market their products, in accordance with the direction outlined in the Indonesian Insurance Roadmap 2023—2027 which was recently published by the OJK.
Fauzi emphasized his hope that with innovation and the use of technology, the Indonesian life insurance industry can grow healthily and with quality. With products loved by the public, it is hoped that the level of complaints will decrease, opening the door for significant growth in the future.
As an industry that is constantly adapting, the Indonesian life insurance industry is preparing to face the complex dynamics of 2024 with the belief that challenges will become drivers of innovation, and opportunities will become the foundation for sustainable growth.
OJK Prepares New Rules for Finance, Insurance and Digital Assets
The Financial Services Authority (OJK) is preparing a number of new regulations covering various financial sectors, from the insurance industry, P2P lending, to crypto digital assets. Chairman of the OJK Board of Commissioners, Mahendra Siregar, stated that this series of regulations was part of the OJK’s reform steps to support the development of the financial industry.
In the insurance industry, OJK is currently updating regulations regarding insurance products and marketing in accordance with the mandate of the P2SK Law. Mahendra revealed that focus was also given to managing insurance products in the credit insurance business line, by improving credit insurance regulations which are still based on existing regulations.
The Roadmap for Development and Strengthening of the Insurance Industry 2023-2027 has been launched by the OJK as a guide for regulators, associations and the insurance industry to develop development and strengthening strategies in the next five years.
In the P2P lending sector, OJK together with stakeholders are currently preparing a roadmap for development, strengthening and increasing the integrity of P2P lending. The aim is to encourage P2P lending to channel financing to the productive sector and MSMEs more effectively, while eradicating illegal lending activities that are detrimental to the legal industry. OJK is committed to revising old regulations to realize this road map.
For the sharia-based financial services sector, OJK will issue sharia output regulations for Sharia Commercial Banks and business units, as an effort to support the strengthening of sharia regulations for Sharia Banks that are currently in effect. The plan is that OJK will release a circular regarding licensing, approval and online reporting for finance companies and sharia finance companies.
Lastly, OJK is currently drafting new regulations in the field of technological innovation in the financial services sector, digital financial assets and crypto assets. Mahendra revealed that the task of regulating and supervising crypto assets will be transferred from the Commodity Futures Trading Supervisory Agency (Bappebti) to the OJK. As part of the preparations, OJK is working on transition guidelines regarding the transfer of tasks for regulating and supervising digital financial assets, including crypto assets, from CoFTRA to OJK.
Indonesian Life Insurance Association (AAJI) Projects Premium Rebound to IDR 192.2 Trillion in 2024
The Indonesian life insurance industry is projected to experience positive momentum with a rebound in industry premiums which is estimated to reach IDR 192.2 trillion in 2024, as stated by AAJI’s Head of Product, Risk Management and GCG, Fauzi Arfan, in the Insurance Outlook 2024 Webinar on Tuesday (7 /11/2023).
Fauzi explained that this projection was based on a consistent growth pattern in the life insurance industry every year. Even this year, this industry is still faced with a number of challenges, especially in educating the market and sellers about traditional products and insurance products related to investment, better known as unit-linked (Paydi).
“Currently, we see challenges in educating the market about Paydi and traditional products. However, we are optimistic that by the end of this year, this learning will reach its peak, paving the way for sustainable growth in 2024,” said Fauzi.
AAJI projects that by the end of 2023, life insurance premium income will still experience a contraction to IDR 183 trillion. One of the factors causing this decline is the Financial Services Authority (SEOJK) Circular Letter Number 5 of 2022 concerning Paydi, which has had an impact on the shift in unit-linked sales due to several tightenings in the sales process.
Despite the decline, Fauzi stated that SEOJK Paydi actually had a positive impact by making life insurance premium income healthier.
In terms of products, AAJI projects that traditional insurance products will experience an increase, while unit-linked will experience a decrease in 2023. In detail, traditional products are projected to reach IDR 87.6 trillion, while unit-linked products are estimated to reach IDR 95.4 trillion in the same year.
Life insurance premiums are projected to still be dominated by the bancassurance channel, estimated to reach IDR 78 trillion in 2023. Meanwhile, agency is projected to experience a slight correction to IDR 57 trillion this year, with other distribution channels worth IDR 48 trillion through digitalization channels.
Fauzi emphasized that the digitalization channel has improved over time and is estimated to continue to make a positive contribution to insurance premium income in the future. This article will discuss in depth the projections and strategies adopted by the Indonesian life insurance industry to face changing business dynamics in the coming years.
Astra Insurance Imprints Growth in Three Main Business Lines Until 2024
President Director of PT Asuransi Astra Buana, Christopher Pangestu, is optimistic about his company’s growth projections by determining three main business lines which are expected to be the largest contributors to premiums in 2024. Until now, the largest contribution to Astra Insurance premiums still comes from motor vehicle (automotive) insurance. ), followed by property insurance and health insurance. Christopher expressed his belief that these three business lines will remain the largest contributors, considering that the company’s portfolio is quite mature.
In his meeting in Jakarta on Thursday (9/11/2023), Christopher explained that the company’s growth did not happen suddenly because Astra Insurance is an old and stable player. In planning for the future, the company prioritizes sustainable growth with a well-planned strategy.
Christopher hopes that health insurance can overtake the premium contribution from property insurance in the coming year, although he also hopes that both business lines can continue to grow significantly. “Even though the premiums for both [health insurance and property insurance] are almost the same, health insurance could overtake property insurance,” he added.
This thought was triggered by business development carried out by Astra Insurance. Even though most of the company’s business comes from the Astra Group, Christopher emphasized that business development outside the group has great potential. By focusing on developing non-Astra businesses, Astra Insurance hopes to continue expanding its impact in the market, remaining at the forefront of the general insurance industry.
Even in the context of increasingly fierce competition, Christopher expressed his hope that the property and health business lines can grow together, creating harmonious growth amidst the challenges faced by the general insurance industry. Positive performance can be seen from Astra Insurance’s financial report in the third quarter of 2023, with profit after tax reaching IDR 996.98 billion, an increase of 11.39% on an annual basis from the same period the previous year, IDR 895.05 billion.
AAJI Welcomes the POJK Credit Insurance and Equal Treatment Plan
The Indonesian Life Insurance Association (AAJI) gave a positive response to the regulator’s plan to develop a Financial Services Authority Regulation (POJK) regarding credit insurance, an initiative which is a derivative of the Law on the Development and Strengthening of the Banking System (UU PPSK). Chair of Products, Risk Management, GCG AAJI, Fauzi Arfan, stated that OJK is currently preparing a special POJK to regulate credit insurance by paying attention to equal treatment between banking and life insurance.
Fauzi Arfan stated that currently, the life insurance industry seems to bear most of the credit insurance risks, while banks appear to be less involved in bearing these risks. It is hoped that this POJK plan can touch on this aspect and create a fairer balance between the two sectors.
In the Insurance Outlook 2024 Webinar on Wednesday (8/11/2023), Fauzi Arfan also said that the regulations would include equal treatment, where banks would also bear some of the risks from credit insurance. This is a significant step in balancing the roles of banking and life insurance in the context of credit insurance.
OJK Deputy Commissioner for Supervision of Insurance, Guarantees and Pension Funds, Iwan Pasila, stated that the association’s active role is very important in developing credit insurance POJK to build a database that can support insurance companies in carrying out good risk assessments. By involving associations, it is hoped that this regulation can provide a strong foundation for managing credit insurance products more effectively.
The POJK credit insurance plan also covers several aspects, including risk sharing between banks and insurance companies, better implementation of subrogation, limitations on acquisition costs, and a maximum coverage period of 5 years. Apart from that, this rule also stipulates that claims submitted by banks to insurance companies can only be made if the credit is in the bad category.
The government, through the OJK, is trying to improve regulations related to credit insurance with the aim of encouraging improvements in the management of insurance products in the credit insurance business line. The finalization of these regulatory improvements aims to ensure that the determination of premium rates, underwriting practices and the formation of technical reserves are carried out in a prudent manner, supported by complete and credible risk data.
OJK Announces Developments in Handling Problematic Life Insurance Cases. There are 3 companies in the spotlight
The Financial Services Authority (OJK) recently provided the latest update regarding the handling of several problematic life insurance cases that are currently of concern to the public. Cases in the spotlight include PT Asuransi Jiwasraya (Persero), PT Asuransi Jiwa Adisarana Wanaartha (Wanaartha Life/PT WAL), and PT Asuransi Jiwa Kresna (Kresna Life).
- Jiwasraya case
OJK confirmed that Jiwasraya had submitted an Action Plan containing a strategy for completing the policy transfer by agreeing to the restructuring to PT Asuransi Jiwa IFG (IFG Life). This plan has received approval from the directors and commissioners of IFG Life and PT Bahana Pembinaan Usaha Indonesia (BPUI) or better known as the Indonesia Financial Group (IFG). In September 2023, liabilities worth IDR 31.14 trillion or 90.99% of the liability transfer agreement have been transferred. OJK noted that 99% of Jiwasraya policyholders have agreed to the restructuring, and Jiwasraya continues to offer restructuring to those who have not yet made a choice.
- Wanaartha Life Case
After the business license was revoked by the OJK, Wanaartha Life formed a liquidation team. The team is currently processing claim bills from policyholders and creditors. At this time, OJK continues to monitor the process of preparing the Temporary Liquidation Balance Sheet (NSL) by the Wanaartha Life liquidation team to ensure that the distribution of recovery assets to policyholders and creditors is carried out proportionally in accordance with applicable regulations.
- Case of Krishna Life
The Kresna Life liquidation team has received registration of claims claims from policyholders and creditors. A total of 3,903 policyholders have submitted claim bills to the liquidation team. OJK monitors the policyholder bill registration process and ensures that verification and preparation of the NSL is carried out in accordance with applicable regulations. OJK also urges people who have Kresna Life policies to contact the liquidation team to register their policies.
OJK continues to be committed to monitoring and ensuring that the handling of these cases is carried out in accordance with applicable regulations for the benefit of policyholders and creditors.
This article is brought to you by L&G Insurance Broker, an insurance broker company in Indonesia.
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