Liga Asuransi – The world of insurance in Indonesia is experiencing major changes, with various new regulations and industry challenges affecting all stakeholders. Starting from the surge in net losses due to the implementation of PSAK 117 to the push by the Financial Services Authority (OJK) to expand the scope of protection for MSMEs, farmers and fishermen, 2024 will be a period full of dynamics for this industry. Apart from that, the positive performance of several companies, such as Tokio Marine Indonesia, provides a glimmer of hope amidst the existing challenges. This article will discuss the seven most important news in the insurance industry in Indonesia, including the mandatory vehicle insurance policy which will be implemented starting 2025. What do you need to know? Let’s take a look together!
General Insurance Net Loss Jumps 1,080%: Impact of Implementation of PSAK 117
The general insurance industry in Indonesia recorded a surprising jump in net losses, namely 1,080.29% on a month-to-month (mtm) basis as of October 2024. The value of losses that must be borne increased drastically from IDR 1.71 trillion in September to IDR 20, 19 trillion. This surge reflects the major challenges facing the general insurance sector amidst the implementation of the latest accounting standards.
Impact of Implementation of PSAK 117
This loss is thought to be closely related to the implementation of the Statement of Financial Accounting Standards (PSAK) 117 concerning Insurance Contracts, which will be effective starting January 1 2025. PSAK 117, an adaptation of the International Financial Reporting Standard (IFRS) 17, changes the paradigm of insurance company financial reporting to create uniformity with international standards.
As part of preparations, insurance companies have started a “parallel run” in 2024. This process provides a clearer picture of the spread of short to long term risks, influencing premium reserves and revenue recognition. One of the implications is the identification of insurance contract portfolios into non-burdensome, semi-burdensome and onerous categories. Onerous contracts require larger reserves, which impacts the company’s capital.
Surges in Premium Reserves and Their Impact
According to data from the Financial Services Authority (OJK), the increase in premium reserves was the main factor in the spike in net losses. Premium reserves jumped 308.72% (mtm) to IDR 24.98 trillion in October, up from IDR 6.11 trillion in the previous month. One significant component is the reserve for unearned premiums (CAPYBMP), which rose 267.45% (mtm) from IDR 7.15 trillion to IDR 26.30 trillion.
As a result of this massive provision, underwriting income fell 35.52% (mtm) to IDR 25.67 trillion, or 44.68% lower than the previous year (yoy). Underwriting performance was increasingly burdened by gross claims which rose 14.22% (mtm) to IDR 42.29 trillion, even though some claims were transferred to reinsurance.
Profitability Indicators Worsen
Underwriting results, as the main indicator of profitability, recorded a deficit of IDR 10.32 trillion, reversing from a surplus of IDR 7.20 trillion in the previous month. Investment returns which increased 11.96% (mtm) to IDR 5.89 trillion were apparently not enough to cover operating expenses of IDR 15.40 trillion which rose 12.68% (mtm).
Thus, insurance business losses increased by 1,547.38% (mtm) to IDR 19.83 trillion. This condition brings the general insurance industry’s net loss to IDR 20.19 trillion in October 2024, in contrast to the net profit of IDR 7.93 trillion recorded in October 2023.
Challenges and Future Prospects
This spike in losses is a warning for the general insurance industry to better adapt to PSAK 117. Although the implementation of this new standard requires greater reserves, it is expected to create greater transparency and competitiveness in the global market.
Over the long term, a more thoughtful approach to risk management and a solid investment strategy will be the key to returning to profitability. Although this transition period is difficult, the general insurance industry has the opportunity to become stronger and more sustainable in facing future challenges.
Source : https://investor.id/finance/384707/rugi-asuransi-umum-meroket-1080imbas-psak-117/
OJK Encourages Insurance Protection for MSMEs, Farmers and Fishermen
The Financial Services Authority (OJK) continues to encourage insurance penetration to various levels of society, especially Micro, Small and Medium Enterprises (MSMEs), farmers and fishermen. Head of the OJK Insurance, Guarantee and Pension Fund Regulation and Development Department, Djonieri, stated that this segment of society is very suitable for microinsurance products that are affordable and meet their needs.
“OJK encourages insurance penetration into the MSME, farmer and fisherman segmentation through the development of micro-insurance products that are affordable and meet their needs, such as Rice Farming Business Insurance (AUTP), Cattle Farming Business Insurance (AUTS), and Fisheries Insurance for Small Fishermen (APUN) ,” said Djonieri, quoted Wednesday (25/12/2024).
Insurance Penetration Challenges in Indonesia
Djonieri revealed that the level of insurance penetration in Indonesia is still lagging behind neighboring countries such as Malaysia, Singapore and Thailand. Until September 2024, the insurance penetration rate in Indonesia will only reach 2.8%. The insurance penetration level is calculated based on the ratio of insurance industry premiums to the value of Gross Domestic Product (GDP).
As a form of support for the development of micro insurance, OJK has issued OJK Regulation (POJK) Number 8/2024. This regulation regulates the simplification of the licensing process for simple insurance products, making it easier for insurance companies to launch new products that are more relevant to people’s needs.
Ease of Licensing Process
Djonieri explained that this latest regulation cuts bureaucracy which previously became an obstacle in developing insurance products. “Insurance companies are only required to report insurance products five working days after the company first markets them to customers,” he explained.
This step is expected to accelerate the penetration of micro insurance among MSMEs, farmers and fishermen who have been considered vulnerable to financial risks. With the availability of products such as AUTP, AUTS, and APUN, it is hoped that this community group can obtain adequate protection at an affordable cost.
The Future of Microinsurance
OJK’s efforts not only aim to increase insurance penetration nationally, but also support broader financial inclusion. With more flexible regulations and relevant products, microinsurance is expected to be an effective solution in protecting previously underserved segments of society.
In the future, collaboration between OJK, insurance companies and the government will be the key to creating an inclusive and sustainable insurance ecosystem in Indonesia.
Tokio Marine Indonesia Records Positive Performance in Property Insurance Line of IDR 756 Billion as of November 2024, Up 4%
PT Asuransi Tokio Marine Indonesia (Tokio Marine Indonesia) showed positive performance in the property insurance business line. Until November 2024, the company recorded premium income of IDR 756 billion, an increase of 4% compared to the same period last year.
“This value increased by around 4%, compared to the same period last year,” said President Director of Tokio Marine Indonesia, Sancoyo Setiabudi, to Kontan, Thursday (26/12/2024).
Main Contribution from the Commercial Property Segment
Sancoyo explained that the commercial property segment provided the largest contribution to property insurance premium income, especially through the Japanese business portfolio. However, this achievement is still below the 10% growth target that the company has set for this year.
“Given the challenging market conditions, we remain grateful to be able to show positive growth compared to the previous year,” he said.
Challenges in the Property Market
According to Sancoyo, the property market this year is still facing significant challenges due to high interest rates which limit market growth. This has a direct impact on the property insurance business, which has tended to be dominated by companies with captive markets over the last few quarters.
“In the last few quarters, property insurance growth has also tended to be dominated by companies that have captive markets. Next year, we predict challenges in the property insurance market will be even greater,” he said.
However, he remains optimistic that the property insurance market still has the opportunity to grow, although at a slower rate than in previous years.
Ambitious Target 2025
Tokio Marine Indonesia targets property insurance premium income of IDR 1 trillion in 2025. Sancoyo admits that this target is quite challenging, but his party sees growth opportunities, especially from the local market.
To achieve this target, Tokio Marine will focus on several strategies, such as strengthening distribution channels through brokers, which is currently the main distribution channel in the general insurance market. Apart from that, the company also plans to expand penetration through agency channels with a focus on products for the SME segment.
“We are optimistic that the SME segment can be a significant growth driver in 2025,” said Sancoyo.
Focus on Innovation and Expansion
With various planned efforts, Tokio Marine Indonesia is committed to continuing to innovate and strengthen its position in the property insurance market. The company believes that an adaptive strategy and focus on local market needs can help it face challenges and achieve ambitious targets in the coming years.
OJK Affirms Equity and Liquidity Obligations for Credit Insurance and Suretyship
Financial Services Authority (OJK) through OJK Regulation (POJK) no. 20/2023 stipulates new rules that require general insurance companies that market credit and suretyship insurance products to have equity of at least IDR 250 billion as of 13 December 2024. This rule is designed to strengthen the financial resilience of insurance companies in facing business risks.
Head of the OJK Insurance, Guarantee and Pension Fund Regulation and Development Department, Djonieri, explained that apart from minimum equity, companies are also required to have a healthy liquidity ratio. “The current asset and liability ratio must reach a minimum of 150%. This is an anticipatory step towards business risks that could occur,” said Djonieri.
Insurance Company Liquidity Conditions
OJK noted that on average insurance companies that market credit and suretyship insurance have liquidity of 160%. Even so, there are still a number of companies that do not fully comply with these liquidity rules.
“We continue to monitor and pay special attention to the implementation of this rule, considering the importance of liquidity to maintain the continuity of insurance company business,” he added.
Purpose of the New Rules
This regulation is expected to increase customer confidence while minimizing the risk of default in the credit insurance and suretyship industry. With adequate equity and healthy liquidity, insurance companies are expected to be better prepared to face dynamic market challenges.
OJK’s attention to implementation
In an interview with CNBC Indonesia in the program Power Lunch on Tuesday (24/12/2024), Djonieri emphasized that the OJK would continue to monitor the implementation of this regulation. “We are committed to ensuring that all insurance companies comply with this new regulation. If violations are found, the OJK will take firm steps,” he said.
Challenges and Hopes for the Future
By implementing this regulation, OJK hopes that the credit insurance and suretyship industry can be more stable and contribute more to the national economy. Although challenges still exist, this step is believed to be an important step towards creating a healthier and more sustainable insurance ecosystem.
In the future, OJK plans to continue developing policies that support the growth of the insurance industry in an inclusive manner and protect the interests of the community. “We believe that with synergy between regulators and industry players, we can create a stronger and more trustworthy insurance industry,” concluded Djonieri.
Mandatory vehicle insurance from 2025: What do you need to know?
In 2025, motor vehicle owners, both cars and motorbikes, will face new regulations that require them to have insurance Third Party Liability (TPL). This policy is part of the government’s efforts to strengthen the insurance sector and protect the public from losses due to traffic accidents.
What is Third Party Liability (TPL) Insurance?
TPL insurance is a type of protection that provides compensation to third parties who experience losses due to accidents caused by insured vehicles. Although currently vehicle insurance is still voluntary, recent legislation, viz Financial Sector Development and Strengthening Law (P2SK), paving the way for the obligation to have this insurance for all vehicle owners.
New Regulations Being Prepared
Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervisor, Ogi Prastomiyono, said that the regulations regarding mandatory vehicle insurance are still in the drafting stage. The government hopes that related regulations can be issued no later than January 2025, in accordance with the mandate UU PPSK. “Every vehicle is required to have a TPL by 2025,” explained Ogi.
Why is TPL Insurance Important?
The implementation of mandatory vehicle insurance has been implemented in many countries, including ASEAN countries. This policy aims to encourage mutual cooperation in society, where when an accident occurs involving many parties, losses can be more easily managed and shared.
According to Ogi, implementing TPL insurance is also important to deepen the national insurance market. Currently, insurance company assets only account for 5.32% of Gross Domestic Product (GDP), a figure that is considered very low. Therefore, it is hoped that this policy can expand insurance penetration and provide more protection for the public.
Next Steps
The Government Regulation (PP) which regulates vehicle insurance obligations is still in the process of being discussed. The Ministry of Finance (Kemenkeu) is currently preparing a draft regulation, which will then be submitted in form Financial Services Authority Regulations (POJK). Implementing this policy requires readiness from the insurance industry and solid collaboration between the government and related sectors.
Challenges Faced
Although this idea has received support, there are still big challenges regarding implementation mechanisms. One of them is the creation of a platform that can identify the type of insurance each vehicle has. Without this system, the implementation of TPL insurance obligations will be difficult to monitor.
However, Ogi is optimistic that through good collaboration and insurance product innovation, this policy can be implemented well. “The insurance industry must innovate in order to provide insurance products that suit people’s needs,” he added.
Conclusion
With the new regulations that will come into effect in 2025, every vehicle owner is required to have TPL insurance, an important step to strengthen protection against third parties and deepen insurance market penetration. Although challenges remain, the government and financial sector are working together to ensure fair and effective regulations for society.
OJK Revokes PT AXA Insurance Indonesia Sharia Unit License, Portfolio Transferred to PT Zurich General Takaful
The Financial Services Authority (OJK) has officially revoked the permit to establish the Sharia Unit of PT AXA Insurance Indonesia, a step taken after the completion of the process of transferring the membership portfolio of the Sharia Unit of PT AXA Insurance Indonesia to PT Zurich General Takaful Indonesia.
This decision was announced in a decree issued on December 9 2024. Head of the Department of Licensing, Special Inspection and Quality Control of Insurance, Guarantees and Pension Funds of the OJK, Asep Iskandar, explained that the revocation of the permit was carried out at the request of PT AXA Insurance Indonesia.
Portfolio Transfer Process
Along with the revocation of the sharia unit permit, the entire membership portfolio of the PT AXA Insurance Indonesia Syariah Unit has now been transferred to PT Zurich General Takaful Indonesia. This marks the end of the operations of AXA’s sharia unit which is currently located at AXA Tower, Jakarta.
“With the revocation of the permit to establish a Sharia Unit at PT AXA Insurance Indonesia, this company is prohibited from carrying out business activities in the sharia insurance sector,” explained Asep.
Impact on the Sharia Insurance Industry
This OJK decision marks a significant change in the landscape of the sharia insurance industry in Indonesia. Even though PT AXA Insurance Indonesia continues to operate in the general insurance sector, this company can no longer offer sharia insurance products on the market.
The revocation of this permit also provides an opportunity for PT Zurich General Takaful Indonesia to expand its customer base and sharia insurance portfolio, after receiving a portfolio transfer from AXA.
Next Steps for the Sharia Insurance Industry
This change highlights the dynamics of the Indonesian sharia insurance industry, which continues to develop and requires regulatory adjustments to remain in line with market needs. The OJK will continue to monitor developments in this market and ensure that the policies implemented can support the growth of the sharia insurance sector in Indonesia.
This decision also reminds industry players to continue to comply with applicable regulations in order to maintain the stability and integrity of the sharia insurance market in Indonesia.
Askrindo Conducts Reshuffle of Directors and Commissioners, Focuses on Strengthening Performance and Corporate Governance
The Ministry of State-Owned Enterprises (BUMN) together with the Indonesia Financial Group (IFG), as shareholders of PT Asuransi Kredit Indonesia (Askrindo), have just carried out a major overhaul of the company’s board of directors and commissioners. This step is part of the organizational process to improve performance and achieve the company’s vision as the best and strongest general insurance provider in Indonesia.
Changes in the Board of Directors
In a decision published on December 24 2024, the Minister of BUMN authorized changes to Askrindo’s board of directors through Decree SK-313/MBU/12/2024. One of the main changes is the appointment R Mahelan Prabantarikso as Director of Compliance, HR and Risk Management replacing Write Revelation Warden who was honorably dismissed.
Main Director of Askrindo, M Fankar Umran, revealed that this change is part of the organization’s ongoing development journey. “The hope is that, apart from continuing the work procedures that have been initiated, the new directors can bring fresh perspectives and ways of working to realize the company vision stated in the Company’s Long Term Plan (RJPP) 2025-2029,” he said.
Changes in the Board of Commissioners
Apart from changes to the board of directors, IFG also announced changes at the commissioner level. Based on Decree SK-312/MBU/12/2024, two Askrindo commissioners, Anindita Eka Wibisono And Kemal Ataturk Arsjad, honorably dismissed. As a replacement, Viviet Savitri Putri appointed as the new Independent Commissioner.
IFG management would like to express its gratitude for the dedication and great contribution made by the replaced members of the board of commissioners. IFG also welcomes the presence of new members, namely R Mahelan Prabantarikso And Viviet Savitri Putri, which is expected to strengthen Askrindo’s management team in the future.
Change Goals and Future Hopes
Acting Corporate Secretary of IFG, Denny S Adjie, explained that this change aims to strengthen Askrindo’s performance in providing sustainable insurance and guarantee services, as well as ensuring the company remains based on good governance. “As part of the IFG holding, which has an important role in supporting national economic development, especially through the development and protection of the MSME sector, we have high hopes that the new board of directors and commissioners can strengthen business performance and create a company that is healthy, sustainable and provides the best service for customers,” explained Denny.
Latest Composition of Askrindo’s Directors and Commissioners
The following is the latest composition of directors and commissioners of PT Asuransi Kredit Indonesia (Askrindo):
Directors:
- President director: Umran fan
- Director of Finance: Leonardo Henry Gavaza
- Technical Director: Vincentius Willianto
- Business Director: Budhi Novianto
- Director of Compliance, HR & Risk Management: R Mahelan Prabantarikso
Board of Commissioners:
- The main commissioner: Widodo Ekatjahjana
- Commissioner: Encep Sudarwan
- Independent Commissioner: Heru Krishna Reza
- Independent Commissioner: Renny Octavianus Rorong
- Independent Commissioner: Viviet Savitri Putri
With the new management, Askrindo is expected to continue to develop and become more solid in providing insurance services that are innovative, reliable and meet market needs, especially in the MSME sector which is the company’s main focus.
Source : https://mediaasuransinews.co.id/asuransi/ifg-rombak-susunan-direksi-dan-komisaris-askrindo/
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