Indonesian Insurance Industry Is Considered To Face Serious Challenges

Rupiah illustration (Photo: dock. Antara)

JAKARTA - Indonesia's insurance industry is currently considered to be facing serious challenges, namely the low level of public trust.

Insurance observer Irvan Rahardjo said this was shown by the increasing number of insurance-related complaints in the last five years.

The insurance complaint has increased 57 times in the last five years from only 22 insurance-related complaints to 1,291 in 2022 and even higher this year. That indicates how serious we are in dealing with problems in maintaining public trust," said Irvan quoting Antara.

Irvan revealed that the Indonesian insurance industry has too many players. This makes competition unhealthy and has an impact on the quality of insurance products and services.

"Indonesia's insurance industry also has limited capacity to bear risks. Most of the risks are still on the reinsurance side," said Irvan.

In addition, Irvan also highlighted the low inclusion of insurance in Indonesia. According to OJK data, insurance inclusion in Indonesia has only reached 16.6 percent, while insurance literacy has reached 31.7 percent. This indicates that the Indonesian people already have sufficient knowledge of insurance, but are not interested in buying it.

Irvan suspects this is due to people's bad experiences in insurance. Many cases of rejection of claims, default, and product incompatibility with promised ones.

"People believe that they save their funds in banks rather than store them in insurance products," said Irvan.

Irvan assessed that the insurance roadmap prepared by the Financial Services Authority (OJK) has not provided concrete solutions to these challenges.

"This roadmap has not provided a more concrete direction on restorative justice, namely regarding compensation for customer losses which is the mandate of Law 4/2023," said Irvan.

Irvan suggested that OJK carry out insurance reforms to improve public trust. In addition, he added that OJK also needs to provide concrete solutions to various cases of default which are the center of loss of public trust.