Expert: Implementation of PSAK 117 strengthens insurance industry transparency

An accounting expert from Padjadjaran University, Ersa Tri Wahymuni, stated that the implementation of Financial Accounting Standard (PSAK) 117 can strengthen transparency in the insurance industry while encouraging more healthy and measurable business growth. Ersa noted that this new accounting standard enables the performance of insurance companies to be viewed more comprehensively, including their ability to generate profit from both insurance business and investments.

“The impact of PSAK 117 implementation on life insurance companies is not uniform; some companies may record an increase in profit or a decrease in liabilities, while others may experience a decline in profit. Therefore, changes in financial reports cannot be generalised,” Ersa said during a media workshop regarding the socialisation of PSAK 117 in Jakarta on Friday.

She explained that changes in profit or liability figures observed during the initial period of the new standard’s implementation do not necessarily indicate a deterioration in company performance. Such changes may simply be part of the transition process due to the use of different measurement methods.

Furthermore, Ersa assessed that PSAK 117 provides economic benefits by making the quality of an insurance company’s core business easier to measure. Financial statements will no longer only show the amount of premiums received, but also how companies manage risks, set product prices, pay claims, and generate profits from insurance activities.