Secretary-General Christian Wanandi on the P2SK Bill in CNBC’s Money Talks

CNBC Indonesia Money Talks host Anneke Wijaya interviewed AIC Secretary-General Christian Wanandi, together with President Director of BRI Life Iwan Pasila and President Director and CEO of BCA Life Christine Setyabudhi, via Zoom at 12:30 today, 19 July 2022. The three top management authorities in the insurance industry shared their views on the Financial Sector Omnibus Law, popularly known as RUU P2SK (Bill on the Financial Sector Development and Strengthening). Currently being deliberated in the House of Representatives of the Republic of Indonesia (DPR), the P2SK Bill provides for, among others, the formation of the Insurance Policy Guarantor Board (Lembaga Penjamin Polis (LPP)) under the Savings Guarantor Board (Lembaga Penjamin Simpanan (LPS)). 

The proposal in the P2SK Bill related to the Insurance Policy Guarantee includes the following:

– LPP provisions are regulated and guaranteed by LPS;

– The rates for General/Life and Conventional/Sharia insurance contributions are the same;

– The guarantee applies only to certain forms of insurance protection (while products in the form of investment and large product guarantee are not covered);

– The value of the policy coverage per customer is a maximum of IDR 100 million; and

-The coverage value of the policy may change under certain conditions.

Mr. Christian said that the reforms in the Financial Sector Omnibus Law could be the answer to some of the challenges that the insurance industry is currently facing. He said that it’s an important program that would lead to an increase in the insurance industry’s credibility in the society. While there is still a need to further discuss with the regulators, associations, shareholders, and policy owners, so that it would be fully beneficial to all stakeholders, Mr. Christian pointed out that the basis for insurance regulations should still refer to the existing Financial Sector Omnibus Law.

When asked whether the P2SK Bill is a way out for the delinquent insurance companies not to honor their obligations, Mr. Christian replied that this is actually a way for these companies to be guided back into the right path. All aspects should be considered so that no loopholes will be taken advantage of.

As his message to the new management of the Financial Services Authority (OJK), he suggested some solutions for the low penetration rate of the General Insurance in Indonesia, which is still below other ASEAN member states, such as, Malaysia, Singapore, Thailand, Vietnam, Brunei, and Philippines ( pages #12-13). Possible solutions include imposing compulsory insurance for all motor vehicles and increasing financial literacy and education. The insurance associations and OJK can work together to increase Insurance Awareness in the society.

Finally, Mr. Christian said that, all stakeholders, including the government, regulators, stockholders and policy owners, should work and enjoy together, the fruits of a better insurance industry in the near future.