Insurance in Indonesia Often Has Problems, OJK Asked to Form a Policy Holder Guarantee Institution

Insurance in Indonesia Often Has Problems, OJK Asked to Form a Policy Holder Guarantee Institution

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The government and the Financial Services Authority ( OJK ) were asked by the advisor of the Indonesian Insurance Council (DAI) Kornelius Simanjuntak to immediately form a Policy Holder Guarantee Institution (LPPP).According to him, this is important because it is considered as an effort to encourage public confidence in insurance services.

Insurance in Indonesia Often Has Problems, OJK Asked to Form a Policy Holder Guarantee Institution

“LPPP can also restore the image of insurance companies, considering that recently there are more and more problems that have occurred in a number of companies,” he said, quoted Friday (12/24/2021).

He argues, referring to Law Number 40 of 2014 concerning Insurance, this institution must be established because it clearly mandates the existence of a related institution no later than three years after the insurance law is issued.

He also called for the creation of healthier insurance industry governance in the country, considering that recently there have been many complaints related to unit-linked products and cases of default.

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Thus, in order to create healthier governance in this industry, it is necessary to encourage collaboration between insurance companies and insurance brokers.

Collaboration between these two entities is important, in order to eliminate mutual suspicion between the two. The reason is, mutual suspicion that has always appeared can damage the continuity of the two business entities.

“Eliminate blaming each other. What has emerged so far is that this broker is said to be destroying the market. He said, if you enter a broker, your premium will be destroyed,” said Kornelius.

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Meanwhile, Chairman of the Association of Indonesian Insurance Brokerage Companies (Apparindo) Mohammad Jusuf Adi said, in order to fix national insurance, insurance companies need awareness to do business according to capital adequacy.

That way, he said, it will be easier to select insurance companies for customers.

Regarding LPPP, the Head of General Insurance and Reinsurance Supervision of OJK Muhammad Ridwan also agreed with the importance of the existence of this institution. However, he said, the agency is in the process of drafting.

OJK has invited the Fiscal Policy Agency (BKF) of the Ministry of Finance to formulate the design of this institution. It is hoped that this institution will increase public confidence in buying insurance products in the future.

“We are designing how the institution will form, whether later it will be attached to the Deposit Insurance Corporation (LPS) or later become an institution similar to the LPS,” he said.

Meanwhile, Deputy Chairman of BPKN RI, M Mufti Mubarok explained, reforming the insurance industry really needs to be done because the number of insurance consumer complaints received is quite a lot.

According to him, in 2021 BPKN has received as many as 2,152 complaints. Mufti said that there were four issues that were recorded by BPKN during 2021, including rejection of claims, misleading products, bankruptcy, and failure to pay.

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