OJK encourages insurance industry innovation to mitigate El Niño risks
Overall, the industry is expected to continue strengthening risk management and preparedness to face potential increases in claims due to extreme weather conditions.
Jakarta (ANTARA) - The Executive Head of the Insurance, Guarantee, and Pension Fund Supervisory Division (PPDP) of the Financial Services Authority (OJK), Ogi Prastomiyono, is encouraging insurance industry players to bolster innovation and collaboration in addressing insurance claim risks arising from El Niño.
He stated that this climate phenomenon has the potential to increase risks in the insurance industry, particularly related to droughts, forest and land fires, as well as disruptions in the agricultural and health sectors.
“OJK is encouraging the strengthening of product innovations such as parametric insurance and coordination with stakeholders, including MAIPARK (Indonesian Insurance Companies and Special Risk Insurance Companies), in updating disaster risk maps,” said Ogi Prastomiyono in Jakarta on Thursday.
He explained that property insurance, motor vehicle insurance, agricultural insurance, and health insurance are among the business lines potentially impacted by El Niño.
With the increasing potential for incidents and the severity of natural disasters due to El Niño, he assessed that there may be adjustments to insurance product premiums.
Ogi also requested that insurance companies make such adjustments in a measured manner in accordance with applicable regulations and considering the public’s purchasing power.
In addition, he stated that the insurance industry also has adequate mitigation efforts through reinsurance programmes, including catastrophic protection and the establishment of technical reserves.
“Overall, the industry is expected to continue strengthening risk management and preparedness to face potential increases in claims due to extreme weather conditions,” he said.
Previously, the Ministry of Agriculture (Kementan) had advised farmers to utilise the Rice Farming Business Insurance (AUTP) as a step to protect production amid the threat of El Niño, which is expected to last for the next few months.
“One of the steps (to anticipate El Niño) that the government continues to promote is the utilisation of the Rice Farming Business Insurance (AUTP),” said Minister of Agriculture Andi Amran Sulaiman in a statement in Jakarta on Wednesday (1/4).
He conveyed that the programme is designed to protect farmers from various risks, ranging from droughts, floods, to attacks by plant-disturbing organisms.