The Jakarta Post
People’s Consultative Assembly (MPR) Speaker Bambang Soesatyo has voiced his support for the Financial Services Authority’s (OJK) plan to create a policy guarantee agency (LPP) to protect insurance customers’ funds.
Bambang, who had a meeting with OJK commissioners on Monday, said the establishment of the institution could help restore public trust in the insurance industry. This follows the recent investment mismanagement cases of state-owned insurers PT Asuransi Jiwasraya and Asuransi Sosial Angkatan Bersenjata Republik Indonesia (Asabri).
Jiwasraya's investment mismanagement led to the insurer incurring negative equity and being unable to pay its policyholders’ claims, which totaled Rp 16 trillion (US$1.17 billion) as of January. Although Asabri has still managed to pay its claims, its investment mismanagement led it to suffer a loss of Rp 10 trillion.
Bambang also said the LPP could create a sense of security for customers, like the Deposit Insurance Corporation (LPS) did for the banking industry by guaranteeing customers' funds in times of crisis and when money exits the financial system.
It would also help the OJK to reform the insurance industry as part of its efforts to reform the nonbanking financial services industry.
“The Jiwasraya and Asabri cases could make customers afraid to put their money in the insurance industry, so the OJK must reform the industry immediately,” Bambang said.
He said the institution could help the OJK to strengthen its supervision of the insurance industry, especially insurers’ investment management, as he deemed investment action plans and risk management to be at the heart of the industry.
“A healthy industry could increase the circulation of money in the market and boost economic activity in the country,” Bambang added.