7 Selections of Indonesian Insurance News in May 2023 – Week 4

Liga Asuransi – Dear readers, how are you? Hopefully, your business will run well and smoothly. As usual, we will always present exciting news and updates according to the information.

Here we have summarized seven news update options for you. If you are interested in this article, please share it with your colleagues so they understand like you.

AAJI: Rogue Insurance Agent Will Enter “Blacklist,” Cannot Return to Industry

Rogue insurance agents can cause losses for insurance customers. There is a fraud case by an agent of PT Asuransi Jiwa Sinarmas MSIG Tbk (Sinarmas MSIG Life) in Manado, which the Manado District Court is currently handling.

The Indonesian Life Insurance Association (AAJI) revealed they would give strict sanctions to insurance agents involved in fraudulent acts.

The Chairman of the AAJI Management Board, Budi Tampubolon, stated that the names of rogue agents would be blacklisted. He stressed that such actions would not be tolerated and would result in the agent being barred from returning to the insurance industry.

To reduce the risk of dishonest agents, AAJI requires all agents who are association members to have a certificate. In addition, insurance agents are also required to attend regular training to ensure their skills as marketing agents.

AAJI or their respective companies can organize this training. However, Budi admits that agents’ fraudulent practices still occur frequently, even though they have fulfilled their obligations.

Budi urges customers always to be careful when applying for insurance through marketing agents. He stressed that the insurance application form included information that premium payments had to be made directly to the company, not through a marketing agent.

Elin Waty, Head of Distribution Channels and Inclusion of AAJI Marketers added that OJK Circular (SE) No. 5 regarding PAYDI introduces mitigation measures, such as welcoming calls, to deal with fraudulent acts by agents.

This welcome call aims to ensure that the products purchased are appropriate and well-understood and that customers understand the benefits, risks, and procedures for filing claims.

Elin emphasized that customers should ask if they did not receive a welcome call and suggested that they transfer premium payments directly to the company’s account to ensure the transaction’s legitimacy.

Source: https://money.kompas.com/read/2023/05/26/053000126/aaji–agen-asuransi-nakal-bakal-masuk-blacklist-tak-bisa-kembali-ke-industri. 

Many Reinsurance Companies Leave the Net-Zero Insurance Alliance, Experts Say

Reinsurance company Swiss Re has left the Net-Zero Insurance Alliance (NZIA). Previously, Swiss Re was a founding member when NZIA was launched at the 2021 G20 Climate Summit in Venice. Swiss Re’s decision follows several other reinsurance companies, such as Hannover Re, Munich Re, and Zurich, which have already left the alliance.

NZIA is a commitment from the insurance industry to push their risk business, both in insurance and reinsurance, towards an environmentally friendly company to achieve zero greenhouse gas emissions by 2050. This commitment aligns with the Paris Agreement on Climate Change and also means avoiding extractive industries such as coal mining and oil and gas.

Responding to this, the Head of the College of Risk Management and Insurance (STIMRA), Abitani Taim, stated that implementing a joint commitment to reduce the portfolio of greenhouse gas emission coverage to zero by 2050 is a challenging task.

He also added that the uncertain geopolitical conditions caused companies to struggle to survive. Limiting insurance and reinsurance risk appetite due to following NZIA rules is a formidable challenge.

Abitani stated that the steps taken by these companies were not actually to avoid monopolies but rather their commitment to implement them, which could reduce the company’s revenue. He also doubts the sustainability of NZIA and predicts that the alliance will not last long if all members fail to fulfill their commitments.

As a global reinsurance giant, Swiss Re stated that its decision to leave NZIA did not change the company’s commitment to a sustainability strategy. Other reinsurance companies also expressed similar sentiments, that even though they left the alliance, their mission to encourage sustainable practices and zero carbon emissions remained the same.

In April, Hannover Re, a German reinsurance company, announced its decision to leave NZIA after careful consideration. This makes them the third reinsurance company to leave the alliance in less than a month.

While Hannover Re did not provide detailed reasons, Munich Re previously highlighted antitrust issues limiting decarbonization goals when they announced their decision to leave the alliance. On the other hand, Zurich notes that they want to focus on supporting their customers in their transition, as expressed in their announcement.

Source: https://finansial.bisnis.com/read/20230523/215/1658589/ramai-perusahaan-reasuransi-tinggalkan-net-zero-insurance-alliance-begini-kata-pakar. 

Death Insurance Claims Decrease Health Increases, AAJI Reveals the Causes

Bisnis.com, JAKARTA — Death claims in the life insurance industry have decreased after cases of COVID-19 decreased in 2022. However, health claims experienced a significant increase last year.

Fauzi Arfan, Head of Product, Risk Management and GCG of the Indonesian Life Insurance Association (AAJI), confirmed this. He stated that death claims had decreased because the COVID-19 pandemic was getting under control in 2022. “With more and more Indonesian people having been vaccinated against COVID-19, the risk of death has also decreased,” said Fauzi.

Data from the COVID-19 Task Force on Monday (22/5/2023) showed that around 203,842,839 people had received the first dose of the vaccine. Meanwhile, 174,889,198 people have received the second dose. The third or first booster dose has been given to 68,835,517 people, while the fourth dose has been given to 3,177,982 people until yesterday.

Meanwhile, regarding health claims, Fauzi added that health claims will experience a significant increase in 2022. This is due to the large number of people seeking treatment at the hospital. At a time when the COVID-19 pandemic was still high in 2021, people tended to be afraid to leave their homes and seek treatment at the hospital. However, with the improvement in the pandemic conditions, people are returning to the hospital for treatment.

Based on AAJI data, the total claims and benefits paid by the life insurance industry throughout 2022 amounted to IDR 174.28 trillion to 12.67 million people, a decrease of 0.2 percent compared to the previous year.

Meanwhile, health claims experienced a significant increase, reaching 25.9 percent year-on-year (yoy) of the total claims of IDR 16.41 trillion from IDR 13.04 trillion. However, payment of death claims has decreased by 43.8 percent, contributing 6.8 percent or equivalent to IDR 11.88 trillion in 2022.

Source: https://finansial.bisnis.com/read/20230525/215/1658636/klaim-asuransi-meninggal-turun-kesehatan-naik-aaji-ungkap-penyebabnya. 

Boy Had a Car Accident, Don’t Expect to Claim Insurance

Accidents involving minors, as drivers, can cause car insurance claims to be unable to be disbursed. In the event of an accident involving a child under 17 years of age driving his motorized vehicle, the car insurance will not be claimable.

Laurentius Iwan Pranoto, Head of Communication and Management of Astra Insurance Customer Service, explained that insurance claims must be based on the Indonesian Motor Vehicle Insurance Standard Policy (PSAKBI).

Whether the claim is accepted depends on PSAKBI and whether the person violated the Road Traffic Traffic Act (UU LLAJ). If someone does not have a driver’s license (SIM), they are not allowed to drive under the rules of the Traffic Act.

Furthermore, in PSAKBI Chapter II, Exceptions, Article 3, number 4, it is explained that insurance coverage does not cover loss, damage, and expenses for motorized vehicles as well as legal liability to third parties if:

• Caused by the intentional actions of the insured and/or the driver.
• When a loss or damage occurs, a motorized vehicle is driven by someone who does not have a driving license (SIM) by applicable laws and regulations.
• Driven by someone under the influence of alcohol, illegal drugs, or other harmful substances.
• Driven by force even though the vehicle’s condition is damaged or not roadworthy.
• Entering or passing through closed roads, prohibited, not intended for motorized vehicles, or violating traffic signs.

Thus, it can be ensured that accidents caused by minors who do not have a driver’s license will not be eligible to claim car insurance, even though the vehicle has All Risk type insurance.

However, remember that insurance terms and conditions may vary between different insurance companies. It is important to always refer to individual insurance policies and consult directly with the relevant insurer to understand how claims will be handled in these situations.

Source: https://otomotif.kompas.com/read/2023/05/22/062200615/bocah-alami-kecelakaan-mobil-jangan-harap-bisa-klaim-asuransi. 

UMKM Insurance Shop Package Insurance, What are the Benefits?

The Shop Package Insurance product initiated by PT Great Eastern General Insurance Indonesia (GEGI) is designed to protect MSME businesses.

This product covers several aspects, including the protection of business assets, legal liability to visitors and the general public, work accident protection for employees, and business continuity benefits.

Linggawati Tok, Marketing Director of GEGI, explained that the purpose of this product is to assist MSME owners in developing their businesses in the event of damage or loss that disrupts business operations.

Under current conditions, damage or disruption in MSME business operations can cause significant losses. Therefore, today’s businesses must be aware of the risks, both the threat from the negligence of MSME owners and the risk of employee negligence.

Shop Package Insurance from GEGI provides up to 7 guarantees in 1 insurance product to help reduce these risks. In addition, this product also protects against theft, riots, strikes, floods, storms, landslides, earthquakes, and other accidental damage.

Damage due to other accidents that are covered in this product includes items such as the replacement of old furniture with new ones (regardless of age), documents, computer system records, employee personal items, paintings, and works of art, with a replacement limit of up to IDR 10 million per category.

With this Shop Package Insurance product, MSME owners can obtain comprehensive protection for their business and reduce the financial impact arising from unexpected damage or loss.

Source: https://money.kompas.com/read/2023/05/16/160000926/asuransi-umkm-shop-package-insurance-apa-manfaatnya- 

Allianz Life Pays Claims of IDR 4.3 Trillion Throughout 2022

PT Asuransi Allianz Life Indonesia (Allianz Life Indonesia) reports that they paid claims of IDR 4.3 trillion in 2022. These claims consist of life and health insurance claims from conventional and sharia insurance products exceeding 310,000 shares.

Bianto Surodjo, Business Director of Allianz Life Indonesia, stated that payment of claims is essential for customers. Allianz Life Indonesia tries to help customers through difficult times due to illness.

According to him, the critical illness conditions most often claimed by customers in 2022 are cancer and stroke. In addition, conditions such as angioplasty and other invasive treatments for coronary heart disease, severe coronary heart disease, and first heart attack are widely claimed.

Bianto added that having health and life insurance protection is one way to anticipate financial problems that may arise due to health risks in the future.

In addition, in the first quarter of 2023, Allianz paid insurance claims of IDR 1 trillion. This total payment consists of more than 70,000 life and health insurance claims from conventional and sharia insurance products.

Bianto explained that the critical illness conditions most frequently claimed by customers in January-March 2023 were cancer, stroke, coronary heart disease, first heart attack, and kidney failure.

Source: https://money.kompas.com/read/2023/05/19/190000326/allianz-life-bayar-klaim-rp-4-3-triliun-sepanjang-2022. 

AAJI: Minimum Capital Arrangements Make Insurance Companies More Resilient

The Financial Services Authority (OJK) plans to increase the minimum capital requirements for insurance and reinsurance companies, both conventional and sharia. Budi Tampubolon, Chairman of the Executive Board of the Indonesian Life Insurance Association (AAJI), explained that the provision increase was based on several considerations.

The insurance industry is a financial industry that requires substantial capital. The challenges and demands faced by insurance companies today are very different compared to 10-20 years ago.

Budi stated that he could understand and agree that a minimum capital increase is necessary to provide better leverage for the insurance company.

Budi explained that most AAJI members already have more than IDR 500 billion equity. In detail, several companies have equity between Rp. 250 billion to Rp. 500 billion, and there is one company with equity below Rp. 100 billion, which is considered unhealthy.

Therefore, most companies are ready if the minimum capital requirement is increased to Rp 250 billion or Rp 300 billion. However, if it is set at Rp 500 billion, most companies must prepare themselves.

One of the concerns is whether insurance companies that only focus on certain businesses should still meet the new minimum capital requirements. This consideration needs to be done because the company’s shareholders are investors.

Budi also said that company acquisitions or mergers could be a solution to meet the minimum capital requirements.

However, because there is no exact figure regarding the equity limit that will be set, further discussions still need to be held. Decisions regarding how much the minimum capital increase will be enforced and how long must be discussed with all relevant parties.

Source: https://money.kompas.com/read/2023/05/24/181230826/aaji-pengaturan-modal-minimum-bikin-perusahaan-asuransi-lebih-punya-ketahanan. 

This information is presented by L&G Insurance Broker – The Smart Insurance Broker.

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