OJK Will Soon Launch POJK Credit Insurance

Credit insurance (Photo: dock. unsplash)

JAKARTA - The Financial Services Authority (OJK) said that it has completed the preparation of the Draft Financial Services Authority Regulation (POJK) related to credit insurance and is expected to be implemented in 2024.

OJK's Chief Executive of Insurance, Guarantee and Pension Fund Ogi Prastomiyono said that regulators have identified and mapped that the general insurance and reinsurance industry is under pressure due to many claims in the credit insurance business line.

Ogi said that the RPOJK credit insurance will soon launch, considering that credit insurance production in the general insurance and reinsurance industries is the third largest product after the asset insurance and motor vehicle insurance products.

"Currently, the OJK has completed the preparation of the Draft Financial Services Authority Regulation regarding Credit Insurance, where the RPOJK has been harmonized by the Ministry of Law and Human Rights," Ogi said in a written answer, Monday, December 11.

Furthermore, Ogi said, OJK targets the RPOJK to be determined and promulgated by the end of 2023 and by 2024 it is hoped that both general insurance companies and reinsurances can implement credit insurance POJK.

"So that improvements in underwriting results and operational burden efficiency are realized in the credit insurance business line which always applies the principles of prudence and good governance," he said.

One of the substances related to RPOJK credit insurance is the risk sharing obligation (risk sharing) between creditors and insurance companies, each of which is at least 25 percent to creditors and 75 percent to insurance companies.

"This provision is intended as an effort to strengthen risk mitigation and increase governance for insurance companies in the implementation of credit insurance products," he said.

In addition, Ogi said that creditors are expected to always prioritize credit analysis in principle of prudence in accordance with applicable credit distribution procedures at creditors.

"The risk that is covered through credit insurance products is the risk of failure to fulfill debtor financial obligations to creditors (default risk) in accordance with the category of traffic jams that apply to creditors," said Ogi.

Ogi said that all banking credit products, both consumptive and productive, can be guaranteed through Credit Insurance.

"The risk that is covered through credit insurance products is the risk of failure to fulfill debtor financial obligations to creditors (default risk) in accordance with the category of traffic jams that apply to creditors," he said.