Insurance Problem Solving Through The Establishment Of A Police Guarantee Board

Illustration. (Photo: Asabri)

JAKARTA - Minister of Finance Sri Mulyani Indrawati said the formation of a Policy Guarantee Agency (LPP) is currently being discussed by a team from the Ministry of Finance. This follows the problems that have befallen several insurance companies in the country recently.

"We are currently compiling it, of course through and using signs aimed at creating trust in insurance institutions," he said at a press conference of the Financial System Stability Committee (KSSK) in Jakarta, Wednesday, January 22.

The formation of the LPP, he said, was the mandate of Law Number 40 of 2014 concerning Insurance. In addition to fostering public trust in insurance institutions, the LPP is also expected to prevent the dangers or moral risks that arise as a result of bad governance.

"We will learn a lot from LPS as a deposit insurance institution. LPS is for banks and LPP is for insurance," he said.

Meanwhile, regarding the Supreme Audit Agency (BPK) which said that one of the insurance cases, namely the failure to pay at PT Asuransi Jiwasraya, had a systemic impact, the Minister said that the systemic impact was specifically aimed at banks.

The former Managing Director of the World Bank said that the systemic risk that is thought to trigger a financial system crisis has examined Law Number 9 of 2016 concerning Financial System Crisis Prevention and Management (PPKSK).

In this regulation, it is defined that a financial system crisis is a condition of the financial system that fails to carry out its functions and roles effectively and efficiently, characterized by deteriorating economic and financial indicators.

"Based on the PPKSK Law, financial service institutions that can trigger a financial system crisis are specifically targeted at banks," added the Minister.

He revealed that the conditions were classified based on the size of assets, capital and liabilities, complexity of transactions for banking services, network area and linkages with other financial sectors.

With this impact, he said, the financial services sector will also be threatened with failure. "That is what we use as a signpost to determine whether a problem in the financial sector or financial services has a systemic impact or not," added Sri Mulyani.