Reinsurance Is Fuel For The Insurance Industry In Indonesia

Insurance (Photo: dock. unpslash)

JAKARTA - Indonesia Re stated that reinsurance plays an important role in the stability and sustainability of the Indonesian insurance industry.

According to Indonesia's President Director Re Benny Waworuntu, reinsurance is a 'fuel' that ensures the insurance industry can continue to provide protection and peace of mind for individuals and businesses.

"Basically, reinsurance is fuel for the insurance industry, ensuring that they can continue to offer protection and calm to individuals and businesses, regardless of how big the risks they face," Benny quoted Antara as saying.

Benny stressed that the fundamental goal of reinsurance is to reduce and distribute risks from insurance companies.

The reinsurance will manage risks to maintain, diversify and distribute risks to reduce impact and prevent large financial losses.

By transferring financial responsibility to reinsurance companies, insurance companies can ensure financial stability and the ability to pay claims.

Therefore, he continued, it is important to increase public awareness and the insurance company itself for the presence of reinsurance companies.

"Public awareness about the insurance industry is still low, especially because of the loss of trust due to unresolved insurance failure cases," he explained.

Furthermore, Benny explained, some cases of payment failure in insurance companies are often caused by the company's inability to manage risks and implement good governance.

This failure was also caused by the management of insurance companies that did not implement good governance and insurance products that violated regulations and regulations.

According to Benny, if companies take more risks than they can pay in claims, they will suffer total losses.

Therefore, insurance companies are buying reinsurance to ensure they have enough capital to pay claims.

Realizing capacity in the insurance industry, OJK through OJK Regulation (POJK) Number 23 of 2023 concerning Business and Institutional Licensing of Insurance Companies, Sharia Insurance Companies, Resurance Companies and Sharia Resurance Companies set minimum equity for insurance and reinsurance companies.

"This reflects regulatory efforts to strengthen the financial base of the insurance and reinsurance sector in Indonesia," he explained.

However, some insurance and reinsurance companies consider that this regulation is quite challenging to fulfill. The reason is, this insurance industry operates under the increasing pressure of economic uncertainty.

Therefore, Benny hopes that regulators will understand how regulatory changes affect the industry.

He added that collaboration between insurance companies, regulators and other stakeholders is the key to creating a customers and technology-centric future.

Currently, insurance companies are required to continue to adapt by navigating the impact of artificial intelligence (AI), ESG, and climate change to provide the right coverage for customers.

The word "Transformation is also needed by insurance and reinsurance companies to face challenges and take advantage of promising opportunities. To improve performance, business growth, provide the best service for customers, and strengthen resilience and sustainability, we open up space for discussions on the creation of resilience and sustainability in the insurance industry through transformation," said Benny.