In The Aftermath Of The Wanaartha Life Case, Insurance Industry Needs Genjot Efficiency Via Digitalization: OJK Must Improve Supervision Functions

Illustration. (Photo: Doc. Antara)

JAKARTA - The insurance industry is advised to boost efficiency through digitization in the midst of many insurance companies experiencing defaults recently.

The problem of Wanaartha Life has added to the series of insurance industry cases in recent years such as Bumiputera, Kresna Life, Jiwasraya, to Jasindo, so serious improvements to the insurance industry are needed to avoid similar problems from happening again in the future.

According to Insurance Observer Dedy Kristianto, one solution that can be taken is by digitizing product sales. It is believed to create significant efficiency against the company's operating expenses.

This is because a number of insurance companies that have problems, he said, stem from the aggressive efforts made by the company to obtain profits to cover the high operational burden. Therefore, operational cost efficiency is very important in order to avoid the problem of default.

"Digitalization if carried out properly and appropriately can reduce the operational costs of insurance companies in large amounts. When the costs can be reduced more, later the price of products and premiums paid by policyholders will be cheaper," said Dedy, quoted by Antara, Thursday, December 8.

With the emphasis of operational costs, he continued, insurance company revenue will also increase and can be allocated for other things. The shift in product sales through digitization will reduce paper costs which usually contain explanations of policy benefits, to the cost of employees in marketing to prospective customers directly.

Through digitization, he continued, the expenditure could be replaced by electronic mail and meetings via video calls which only cost internet quota.

Dedy believes that the implementation of digitalization as a form of reform in the insurance industry must be accompanied by an increase in the supervisory function and regulation of the Financial Services Authority (OJK) as a regulator.

"OJK must issue regulations that are strong, binding, and firm regarding this digitization," he said.

On the other hand, he said, financial literacy must also continue to be improved so that people can use digitization for productive needs, such as participating in insurance. Financial literacy is also needed so that people can be more literate with insurance products and the sustainability of insurance companies.

In the aftermath of the revocation of Wanaartha Life's business license due to default, the OJK is currently reviewing the saving plan products in a number of insurance companies, because the marketing of a type of saving plan by Wanaartha Life is not in accordance with the permission given by the OJK, one of which is related to the promised yield which is quite high.

Not only that, OJK also carries out special supervision of 13 insurance companies that are in trouble, consisting of seven life insurance companies and six general insurance companies, including reinsurance.

"We continue to monitor these companies and coordinate with shareholders, directors, and company commissioners to be saved," said OJK's Chief Executive Financial Industry Supervisory (IKNB) Ogi Prastomiyono at a press conference some time ago.