General insurance players plan to set the commission rates for broking channels in an effort to establish healthier cooperation with insurance brokers.
The Chairman of the Association of Insurance and Reinsurance Brokerage Companies of Indonesia (Apparindo), Mr Harry Purwanto, said that his association had talked with the Indonesian Association of General Insurance (AAUI) on the issue, reported Kompas. According to Mr Harry, the two associations want to find a middle ground to resolve the issue.
A proposal, he added, could be submitted to the Financial Services Authority (OJK) this month. "We want the market to be more secure and orderly," he said.
He hopes that professional insurance brokers can receive higher commissions than those for other distribution channels such as banks or agencies. He explained that this is because insurance brokers have to abide by certain rules and regulations set by the OJK. They also pay fees to the OJK.
AAUI Chairman Dadang Sukresna said that to date there has been no uniformity about the commissions paid to insurance brokers. This has caused several difficulties for the insurance industry, including the lack of certainty about the amounts of commissions due to insurance brokers. The commission amounts are changed often, affecting the net premiums received by insurers.
He said that setting commission rates would make the system more clear and stable. Feedback is being sought from insurance companies and brokers on the issue.
Rules about commission rates are expected to be released later this year.