JAKARTA - The insurance industry in Indonesia welcomes a new era of financial reporting with the enactment of the 117 Financial Accounting Standard Statement (PSAK).
This standard will replace PSAK 62 and adopt the principle of IFRS 17 Insurance Contracts, which aims to increase transparency and consistency in financial reporting in the insurance sector.
Effective from January 1, 2025, all insurance companies should have reported the first quarter of 2025 financial statements in PSAK 117 format. The transition to this new financial accounting standard has been carried out since 2024.
Difference Between PSAK 117 And PSAK 62
In PSAK 62, the recognition of insurance liabilities still refers a lot to historical-based approaches, such as the unlawful premium and claim-incurred methods.
While PSAK 117 introduces a new approach called General Measurement Model (GMM) which includes future cash flow projections, stunting, and risk adjustment. This makes estimates more reflect current economic value.
In practice, in PSAK 117 insurance income or premium is not immediately recognized at once, but it is recognized in stages according to the coverage period.
Second, the liabilities of insurance companies are calculated based on future claim payment estimates, plus margins for uncertainty.
Next, PSAK 117 introduced the Contractual Service Margin (CSM), which is the future advantage of the insurance contract which was suspended and recognized systematically during the policy benefit period. This concept was not in the previous PSAK.
One of the insurance companies in Indonesia that has started implementing PSAK 117 is PT Asuransi Tugu Pratama Indonesia Tbk (TUGU).
Salah dampak dari penerapan ini dalam laporan keuangan TUGU adalah total aset mencapai Rp30,1 triliun pada akhir Maret 2025, meningkat 12,29 persen hanya dalam waktu 3 bulan atau year to date.
However, in the current year's profit, it was seen that there was a 31 percent decrease to Rp271.3 billion, when compared to the profit for the same period last year which was retrialed or restored worth Rp397.04 billion.
While reminding, last year TUGU reported a profit for the first quarter of 2024 of IDR 241.66 billion.
NH Korindo Sekuritas analyst Leonardo Lijuwardi said PSAK 117 has a goal to strengthen transparency and responsibility in the presentation of financial reports.
Through this more detailed standard, it is hoped that stakeholders, such as policyholders and investors, can get a clearer picture of the financial condition and risks faced by insurance companies.
"This standard is also intended to align the practice of financial reporting in Indonesia with international standards, so as to increase the reputation and competitiveness of the insurance industry in the global arena," he said.
According to him, the impact of PSAK 117 on the insurance company's financial statements will be different.
So that it cannot be generalized that PSAK will reduce the profit of insurance companies.
"For example, in the case of TUGU, the profit in the first quarter of 2025 was seen to fall with the new PSAK, because there was a rebounded profit in the first quarter of 2024. However, in the calculation, the profit in the first quarter of 2025 was equivalent to 35 percent of the full year 2024 profit. Of course, this has a chance that the profit recorded in 2025 will be greater than the previous year, even though it is only because of the new PSAK," he said.
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According to him, this one year is still a transition in PSAK 117 because there are still many who are not used to this new financial accounting standard.
"Of course there is still a lot that needs to be understood in order to provide more accurate financial performance projections with this new PSAK," he said.
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