LPS Prepares Activation of Insurance Policy Guarantee Programme
Medan (ANTARA) - The Indonesia Deposit Insurance Corporation (LPS) is preparing to activate the Insurance Policy Guarantee Programme (PPP) as an effort to provide protection for insurance policyholders.
LPS Commissioner for the Insurance Policy Guarantee Programme, Ferdinan D. Purba, stated in Medan on Monday that the guarantee for insurance policies not only provides certainty for policyholders but also enhances trust in the insurance industry, while supporting the growth of insurance penetration in society.
“The insurance industry has great potential for continued growth in Indonesia. As of 2020, the insurance asset ratio in Indonesia to gross domestic product is still at 4.6 percent, so the insurance policy guarantee is expected to increase public confidence in this industry,” he said.
Furthermore, Ferdinan cited North America and Europe as regions with the highest number of insurance company failures in the world, yet they still dominate the global insurance market thanks to the support of policy guarantee institutions.
“Do not be misled by cases of insurance company failures, because the main thing is how to protect the interests of policyholders,” he said.
However, determining the PPP scheme presents its own challenges, as each country has a unique industry profile and different determining factors.
“Based on the 2023 International Forum of Insurance Guarantee Scheme (IFIGS) survey, the mandate for insurance policy guarantees in each country varies, including: paybox, paybox plus, loss minimizer, and risk minimizer,” he said.
In line with the planned amendment to Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (UU P2SK), the design of the PPP to be organised by LPS is proposed to receive the most comprehensive mandate, namely risk minimizer.
The proposed risk minimizer mandate in the UU P2SK is expected to operate effectively and truly provide maximum protection for policyholders.
In addition to regulating the implementation of LPS’s mandate in organising the PPP, there are other matters that LPS is also preparing. For example, regarding participation, the scope of guaranteed policies, the nominal guarantee limit, and the contribution scheme from insurance companies.
“However, one thing is certain: the implementation of the PPP is a momentum to drive the growth of the insurance industry in Indonesia. For that reason, we will prepare the activation of the programme as best as possible to increase trust, protect policyholders, and ensure the stability of the industry going forward,” he said.