The OJK Asks Insurance Companies to Avoid Unfair Business Competition Practices such as Tariff Wars

Deputy Chairman of the OJK Board of Commissioners Mirza Adityaswara. (Photo: Doc. Antara)

JAKARTA - The Financial Services Authority (OJK) asked insurance companies to avoid unfair business competition practices in the form of tariff wars and carry out underwriting practices wisely.

"Thus, the amount of premium charged to policyholders is in accordance with the level of insurance risk borne or managed by the insurance company," Deputy Chairman of the OJK Board of Commissioners Mirza Adityaswara said at the December 2022 Monthly Board of Commissioners Meeting (RDKB), quoted from Antara, Tuesday 3 January.

Responding to market conditions that are still fluctuating, Mirza also asked insurance companies to carry out investment strategies wisely, equipped with comprehensive studies and fundamental analysis in determining the valuation of certain investment assets, especially those transacted in the capital market.

In addition, OJK also ensures the effectiveness of implementing OJK Regulation Number 28/POJK.05/2020 concerning the Health Level of Non-Bank Financial Services Institutions (LJKNB), which focuses on a more comprehensive assessment of the soundness level of insurance companies.

The assessment is carried out based on quantitative indicators (level of capital and profitability) and qualitative indicators (related to the application of good corporate governance principles and effectiveness of risk management).

On the same occasion, Chairman of the OJK Board of Commissioners Mahendra Siregar added, OJK asked insurance companies to supervise the performance of insurance marketers or agents.

"Especially in terms of the obligation to convey complete, correct and clear information to prospective customers regarding the benefits and risks of insurance products, especially for insurance products that are classified as complex, such as unit link insurance products," said Mahendra.

In addition, OJK also asked insurance companies to immediately re-register unit-linked insurance products that have been marketed, so that the intended products will later be in line with the applicable provisions in the Financial Services Authority Circular Letter Number 5/SEOJK.05/2022 concerning Linked Insurance Products. with Investment (PAYDI), especially in terms of marketing and management of PAYDI which is carried out wisely, fairly and transparently.

OJK has strengthened regulations to facilitate public access to insurance products/services, especially digitally, which includes improving regulations to optimize synergies between insurance companies and business entities other than banks (BUSB) and increasing the use of information technology in marketing insurance products.

Completion of provisions is also carried out in terms of digital insurance intermediary services and risk mitigation.