LPS Boss Says Insurance Policy Guarantee Program Is Still On Target

JAKARTA - The Deposit Insurance Corporation (LPS) said that the insurance Policy Guarantee Program (PPP) is currently running well and is still on target for implementation in 2028.

Chairman of the LPS Board of Commissioners (DK) Purbaya Yudhi Sadive said that his party is ready to draft an LPS Regulation (PLPS) to guarantee insurance policies, but must wait for the issuance of government regulations (PP) which are being discussed by the Ministry of Finance and the Financial Services Authority (OJK).

"As soon as the PP is completed, a week, we will ratify it for two weeks (PLPS), or we prepare the regulations under it. Including PLPS, PDK and other regulations. I think this is almost ready, just waiting for PP," said Purbaya quoting Antara.

He added that one of the points that is still being compiled in the regulation is the issue of risk based capital (RBC) in the insurance sector.

"We (RBC) 200 (percent), other places there are 150 (percent) or 120 (percent), later we will discuss. Based on global practice like what, it will only enter one stage later," he said.

LPS will start guaranteeing insurance policies in 2028, and give insurance companies time to become healthy in order to take part in the program.

"This means that if they arrive in 2028, they cannot fix it (the company's health) and have no preparations, maybe they cannot participate in the guarantee program. I think if that happens, the company will find it difficult to survive," explained Purbaya.

As for supporting and strengthening the financial sector in Indonesia, the government has issued Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (UU P2SK).

This law provides a new mandate to LPS to run the Policy Guarantee Program (PPP), which starts within five years of the enactment of this law.

This program aims to protect policy guarantors, by requiring every participating insurance company to meet certain health standards.