Jiwasraya Boss Calls RI Insurance Industry 15 Years Behind In Risk Management Affairs

Jiwasraya's Director of Compliance and HR Mahelan Prabantarikso (Photo: Screenshot of Youtube Khas Studio)

JAKARTA - PT Asuransi Jiwasraya's Director of Compliance and HR Mahelan Prabantarikso said that the condition of the insurance industry in Indonesia is still quite lagging behind the banking sector in terms of risk management.

According to him, improvements made by a number of stakeholders in the insurance industry have been attempted in recent times. However, he assessed that there is still a gap that must be pursued by this sector to be able to match the maturity level of the national banking industry.

"When compared to banking, because I have been in the bank for quite a long time, there are indeed many differences even though these two businesses are both in the financial services industry," he said in a webinar on Tuesday, August 31.

Mahelan added, in the banking industry there has been a risk management system that is quite good and has been running for a long time. This can be reflected in the provisions of Basel I, Basel II, and Basel III.

To note, the term Basel is one of the global rules that is often used to categorize the health of banking institutions in order to be able to provide a certain level of trust to the public as consumers of financial services.

“In banking, there is already risk management starting from Basel I, Basel II, and Basel III which relates to the company's soundness level. Now, if we compare it with the issuance of policies (in insurance) then this has been left behind by about 15 years," he said.

In Indonesia itself, the reform of the banking sector has begun massively at the end of the decade of the 90s. At that time, the monetary crisis that hit the country required the government and relevant authorities to carry out comprehensive reforms in the banking industry.

Similar improvements have now been made by the Financial Services Authority (OJK) following the mega scandal of default by the government insurance company Jiwasraya, which is suspected to have cost the state up to tens of trillions of rupiah.

Like gaining momentum, OJK is known to have at least released a number of regulations, including POJK Number 43/POJK.05/2019 regarding good corporate governance for insurance companies.

Then, POJK Number 44/POJK.05/2020 concerning the application of risk management for non-bank financial service institutions.

"For this reason, the insurance industry players welcome and are optimistic that all policies that have been issued by the regulator and the government will provide benefits," concluded Mahelan.