OJK Calls Insurance Mechanism Needs To Be Optimized For Risk Management Equipment

Insurance illustration (Photo: dock. unsplash)

JAKARTA - The Financial Services Authority (OJK) stated that the insurance sector as a supporting mechanism in risk management has an important role in realizing a resilient economy and is able to grow sustainably.

Chief Executive of OJK Insurance Insurance and Pension Fund Ogi Prastomiyono said that the role of the insurance sector as an institutional investor is also an important component to support the intermediation function in the national economic ecosystem by providing long-term funding needs, including those related to national strategic projects.

"The insurance mechanism needs to be optimized as a risk management tool, both for individual risks and risks for businesses," he said, quoting Antara, Thursday, October 12.

If you look at the conditions during the COVID-19 pandemic, the growth of total insurance assets is in a positive trajectory and an increase of 1.86 percent in 2022.

Based on OJK data, the total assets in the insurance sector reached Rp875.17 trillion or grew 1.56 percent year to date. He hopes that the insurance industry's growth will be in the range of 2.5 percent by the end of 2023.

If you look at the health level of the insurance sector, the risk-based capital (RBC) is still maintained at the RBC drinking threshold of 120 percent.

"However, OJK also pays attention to the fact that there are still insurance companies that are still below 120 percent and we are closely monitoring through special supervision for industries that need to be restructured," said Ogi.

On the same occasion, he said that the Indonesian economy was still strong amidst the uncertainty of the world's economic and political conditions.

In the second quarter of 2023, Indonesia's economic growth was recorded at 5.17 percent year on year with a relatively low and stable inflation rate.

Several world organizations such as the Asian Development Bank (ADB) and the Organization for Economic Cooperation and Development (OECD) have released global economic projections and the Asian region, where the projected global economic growth is expected to decline again.

Even so, the two organizations project Indonesia's economic growth to remain stable and tend to be corrected to increase. OECD and the World Bank are said to have released a release based on data October 2023, where Indonesia's economic growth is still around 5 percent and the 2024 projection is still 4.9-5 percent.

"In line with this, we still need to pay attention to the downside risk that may occur in the future, such as high persistent inflation, so that it has the potential to be followed by an increase in interest rate in the long term or we are familiar with higher for longer," he said.