In order to protect policyholders in the event that an insurance firm gets its license revoked or defaults, the Financial Services Authority (OJK) is working to hasten the development of a Policy Guarantee Agency (LPP).
In order to do this, the government has given the Deposit Insurance Corporation (LPS) a new duty to guarantee insurance products. According to a Bisnis article, Sri Mulyani Indrawati, Minister of Finance, stated this on November 10th, 2022.
LPS's sole responsibility up until this point has been to guarantee bank deposits and resolutions. The minister declared, "LPS would be given a new mandate, namely to run a policy guarantee plan.
The government had previously suggested creating a Policy Guarantee Agency (LPP) to provide such protection. The LPP might, however, be implemented as early as three to five years from now. The Bill on Policy Guarantee, one of 19 Bills in the 2020–2024 Mid-Term National Legislation Programme, contains the directive for the creation of the LPP. The years 2021–2024 are the preferred window for the Bill's enactment.
But those who work in the insurance sector hope that the government will set up the agency right away because it can guarantee benefits, lower the risk of default, and boost the reputation of the sector.
According to Mr. Paul Kartono, the head of the Indonesian Life Insurance Association's (AAJI) Shariah life insurance division, the existence of a policy guarantee institution could increase insurance sales by three to four times. In 2021, the life insurance sector generated IDR241.2 trillion ($15.6 billion).
Asuransi Jiwasraya, Asuransi Jiwa Bersama (AJB) Bumiputera 1912, Asuransi Jiwa Adisarana Wanaartha (WanaArtha Life), and Asuransi Jiwa Kresna are just a few examples of recent cases of insurer default and disputes.
By 2017, a policy guarantee agency (LPP) must be established in accordance with Indonesia's 2014 Insurance Law. Ms. Mulyani stated that the government would formulate the mandated agency's establishment in January 2020.
