AAJI: Part Of Policy Guarantee Is The Element Of Protection, Not Investment Or Savings

Insurance (Photo: dock. unpslash)

JAKARTA - The Indonesian Life Insurance Association (AAJI) submitted several inputs from insurance industry players regarding the policy guarantee program mandated to the Deposit Insurance Corporation (LPS), including regarding benefit restrictions.

Chairman of the Board of Management of the Indonesian Life Insurance Association (AAJI) Budi Tampubolon hopes that what will be part of this policy guarantee will be a protective element.

"That is mandatory, not an element of investment or an element of savings. How far is it? What we at least up to the limit on the value of retention for each company," said Budi Tampubolon quoting Antara.

He said that there needs to be a limitation on benefits that are guaranteed only up to the value of the retention (OR) of each insurance company.

According to him, the value of the OR is different between companies, with an average of IDR 500 million to IDR 2 billion, because it depends on the capacity of each company.

Considering this, Budi said that his party also suggested that the amount of the guarantee program fee should be adjusted to the level of health and prudence of the company.

He said that so that the program can run on time and sustainably, it is better to start first in companies that have a healthy financial condition and management with a Risk Based Capital (RBC) rate of 180 percent.

This is to give time for companies whose health levels are still below the requirements to improve so that they are included in the policy guarantee program.

Budi also said that insurance industry players also hope that the provisions of the Financial Services Authority (OJK) regarding minimum mandatory funds will no longer apply because they have been replaced with the guarantee program.

"In addition, representing all insurance companies, especially life insurance, if possible, the contributions that will be paid by the life insurance company to LPS will also be calculated from the contributions that have been paid to the OJK," he said.