This article was published in BISNIS INDONESIA daily with the heading “Jokowi Minta OJK Tuntaskan Asuransi Bermasalah” on 28/12/2023.
Liga Asuransi – In a meeting at the Presidential Palace on January 16, 2023, President Joko Widodo (Jokowi) urged the Financial Services Authority (OJK) to address the issues faced by several insurance companies in Indonesia. Insurance observer Irvan Rahardjo commented that it was time for the OJK to take a firm and proactive stance in fulfilling its role of consumer protection.
Irvan emphasized that consumer protection, the fundamental aspect that needs safeguarding, should be the primary focus. He stressed that attention should not only be given to financial service providers but also to resolving issues within the lingering insurance industry. Irvan pointed out that companies like Kresna Life, Wanaartha Life, and Bumiputera, along with major players like Jiwasraya, should be given serious consideration.
Highlighting the need for a more active role of the OJK in addressing insurance companies’ problems, Irvan stressed the necessity of handling internal issues at Bumiputera comprehensively, not solely relying on internal company efforts. According to him, resolving problems in insurance companies, particularly Bumiputera, should be thorough.
Following the meeting with President Jokowi, Chairman of the OJK Board of Commissioners, Mahendra Siregar, expressed his commitment to continue driving the resolution of difficulties faced by several insurance industries. Mahendra affirmed that the OJK would provide a separate report to the Head of State on the latest developments in handling issues within the insurance industry. These measures are expected to bring about improvements and restore public confidence in the insurance industry in Indonesia.
Troubled insurance companies are those facing financial, administrative, or operational difficulties that pose threats to business sustainability and public trust. Challenges faced by insurance companies include but are not limited to, the inability to meet policyholder claims, poor investment management, or questionable business practices.
The inability to fulfill policyholder claims is a common issue that can harm policyholders and damage the company’s reputation. This problem may arise from high-risk exposure or suboptimal investment decisions. Poor investment management is also a serious issue, as subpar investment performance can lead to a decline in asset value, affecting the company’s ability to meet its financial obligations.
Additionally, questionable business practices, such as unethical fund management, lack of transparency in financial information management, or other practices detrimental to policyholders, can also be sources of problems. All these issues can result in financial risks for policyholders, damage the overall image of the insurance industry, and decrease public trust.
The consequences of troubled insurance companies include financial risks for policyholders relying on insurance claims and a decline in public trust in the insurance industry as a whole. Such cases can create negative impacts on the entire insurance sector, fostering an unhealthy environment for industry growth.
The best solution to address troubled insurance companies involves proactive measures. Firstly, transparency and accountability in the insurance companies’ business practices are essential. Financial and operational information of the company should be easily accessible to policyholders and other stakeholders.
Secondly, management changes may be necessary for restructuring the company and managing crises. Authorities, such as the Financial Services Authority (OJK), can provide assistance and guidance in handling internal issues within the company. Regulator assistance is crucial for overseeing and guiding troubled insurance companies, ensuring customer protection, and meticulously supervising the restructuring process.
Education and increased public awareness of appropriate insurance choices can contribute to creating a healthier environment. With improved financial literacy and customer awareness, it is expected that the public can make wiser decisions in selecting reliable insurance companies.
By involving regulatory intervention, internal reforms, and active customer participation, troubled insurance companies can take steps toward recovery. This not only benefits affected policyholders but also supports stability and the restoration of trust in the Indonesian insurance industry.
In the context of Indonesian insurance companies, particularly those deemed problematic, President Joko Widodo (Jokowi) has given clear directives to the Financial Services Authority (OJK) to resolve issues faced by companies like Kresna Life, Wanaartha Life, and Bumiputera. Insurance observer Irvan Rahardjo emphasizes the urgency for OJK to take affirmative action in consumer protection, highlighting the need to focus on unresolved issues within the insurance industry.
Financially troubled insurance companies, poor investment management, or involvement in questionable business practices are under scrutiny. The inability to meet policyholder claims, suboptimal investment management, and practices detrimental to the public are major concerns. Consequently, policyholders are at risk of not receiving their rightful claims, leading to a decline in overall public trust in the insurance industry.
The best solution involves transparency and accountability in business practices, necessary management changes, and regulator assistance such as OJK. Education and increased public awareness are also key to creating a healthier insurance environment. Through collaborative efforts between regulators, internal corporate reforms, and active customer participation, it is expected that the insurance industry in Indonesia can restore its image, enhance public trust, and provide better financial protection for policyholders. These measures not only benefit affected policyholders but also support the growth and stability of the insurance industry.
This article is part of the book “BANGKITNYA ASURANSI KAMI” with keynote speaker Professor Muhammad Eddi Purnawan Anggota Badan Supervisi OJK. February 2024. ISBN, Publisher IPB Press.
The price of this book is IDR 155,000 and can be ordered through ligasuransi.com.
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