Entering 8th Age, PAAI Faces Poaching Challenges And Medical Cost Inflation

Left to right: PAAI General Chair Muhammad Idaham and 8th PAAI Anniversary Committee Chair, Herold (Photo: Maria Trisnawati/VOI)

JAKARTA - The Indonesian Insurance Agents Association (PAAI) is entering its 8th year old age. During the celebration of PAAI's 8th Anniversary, insurance agents still face major challenges.

The chairman of the 8th PAAI Anniversary Committee, Herold, highlighted two main challenges, namely the practice of POaching or recruitment of agents unhealthyly, and repriving or adjusting premiums due to inflation of medical costs. In addition, the quality of agents in Indonesia is still not uniform.

The practice of poaching where agents move companies due to higher compensation offers has the potential to create instability in the industry and hinder agent development in a sustainable manner. Regarding quality, many insurance agents do not meet quality standards in product knowledge, service ethics, and communication ability," he said at a press conference in Jakarta, Thursday, October 10.

He added that another challenge faced was the inflation of medical costs, which led to an increase in the premium for health insurance. The increasingly expensive medical costs, the development of hospital technology, and the increase in drug prices have forced insurance companies to adjust their premiums.

Not only that, over-utilization in several hospitals, where actual medical action is not necessary, also adds to the burden of medical costs.

According to him, this has an impact on increasing the ratio of claims significantly in insurance companies, so premiums must be adjusted.

"This certainly affects people's purchasing power and interest in insurance products, and agents must be able to explain this adjustment wisely to customers," said Herold.

Furthermore, Harold said, in practice there are still many negative views on the insurance agent profession, which is often underestimated.

Many people underestimate what we do. In fact, insurance agents not only sell products, but also save someone's future by providing certainty and hope," he said.

He added that actually the profession of insurance agents also plays an important role in strengthening the country's financial foundation.

With more and more people participating in insurance, the greater the funds collected from the community that can be used for development. In addition, there has been an increase in the income of insurance agents, which means an increase in income tax that can contribute to the country.

"PAAI hopes that the insurance industry in Indonesia will grow with increased public awareness of the importance of self-protection and family," he said.

Harold said, sustainable education about insurance benefits, product innovation relevant to the needs of the community, as well as the active role of agents in reaching various levels of society is the main key. PAAI also emphasized the importance of close cooperation with regulators such as the Indonesian Insurance Council (DAI), the Financial Services Authority (OJK), and the Indonesian Life Insurance Association (AAJI).

"This collaboration is needed to ensure regulations that support industrial growth, protect consumer interests, and maintain agent professionalism in carrying out their duties," said Herold.

Present on the same occasion, PAAI Chairman Muhammad Idaham said, the insurance industry in Indonesia continues to grow with the increasing number of insurance companies and agents that play an important role in providing protection to the public.

Data from the Central Statistics Agency shows that until 2023 there are 148 insurance companies in Indonesia consisting of life insurance companies, loss insurance, reinsurance, BPJS, and mandatory insurance providers.

Along with that, he said, the number of insurance agents has also reached hundreds of thousands throughout Indonesia.

Indonesia is a country with a large population, and there are still many productive age communities that have not been covered by insurance protection. Therefore, an increase in the number of agents, as well as their quality, is very necessary. Because the function of the insurance agent is not only to sell products, but also as an advisor who provides opinions and guidance to customers, so that they get the right protection," said Idaham.