LPS Chief: Policy Guarantee Scheme Will Provide Maximum Protection
Badung, CNBC Indonesia — The Deposit Insurance Corporation (LPS) says its planned insurance guarantee scheme is intended to provide maximum protection while minimising disruption to insurance benefits.
Ferdinan D. Purba, a member of the Board of Commissioners responsible for the Policy Guarantee Programme, said the LPS was preparing several mechanisms for dealing with failed insurance companies. Its preferred approach is policy transfer, or transfer of business.
Under this method, when an insurer collapses, customers should continue to receive cover without benefits being stopped abruptly.
Ferdinan said that if an insurance company could no longer operate, the LPS would seek to transfer its customers’ policies to another insurer willing to take them on.
He gave the example of a customer with a health insurance policy offering benefits of up to Rp500 million whose insurer closes while the customer is receiving hospital treatment.
“We will minimise interruptions to the benefits enjoyed by customers. That is how public protection should work. It is the best approach,” Ferdinan said at an LPS media gathering at the Movenpick Hotel Jimbaran in Badung, Bali, on Friday (18 October 2026).
The LPS would examine policy data, including benefits already used and the remaining cover available.
Ferdinan said that if the customer had Rp280 million of cover remaining after making a claim, the LPS could contact another insurer to offer it a group of policies for transfer, including that customer’s policy.
The receiving insurer would be asked to calculate the cost of taking on the policies, based on the remaining cover. The LPS could then pay the cost under the applicable mechanism, allowing the customer to become a policyholder of the receiving insurer.
Maximum policy guarantee of Rp500 million
The LPS has proposed a maximum guarantee of Rp500 million cumulatively for each insured person under the Policy Guarantee Programme.
Ferdinan said the proposed limit took the scope of policyholder protection into account. LPS calculations indicate that a Rp500 million cap would cover around 97–99 per cent of policies or insured people.
The figure is substantially below the maximum Rp2 billion guarantee under the bank deposit guarantee scheme. However, Ferdinan said the value of insurance benefits cannot be directly equated with the level of protection needed when dealing with a failed insurer.
He illustrated this with a policy providing Rp600 million of cover and an annual premium of about Rp20 million. Calculating the cost of transferring a policy should take account of the relevant cost of coverage, rather than simply comparing the nominal insured amount, he said.
For example, if 10 insured objects each had cover of Rp600 million, the total insured value would be Rp6 billion. But the premium cost of providing cover for those objects would not automatically be equivalent to that insured value.
Aiming to build trust
Ferdinan added that the policy guarantee scheme would not only protect policyholders, but also help maintain stability in the insurance industry and strengthen public confidence.
Public trust is an important factor in the industry’s growth, he said. If customers feel protected, people are expected to become more confident about using insurance products.
He said customer protection and industry stability would reinforce each other. Greater public confidence could ultimately support the sustainable development of the insurance industry.
“When the industry grows and stability is maintained, customers and the public will naturally feel confident about taking out insurance,” Ferdinan said.