The Indonesian Shariah Insurance Association (AASI) says that it fully supports the establishment of a guarantor institution for policyholders in Indonesia.
AASI executive director Erwin Noekman said that the association had conducted discussions with the Ministry of Finance, in this case represented by the Fiscal Policy Agency and the Financial Services Authority (OJK), regarding the need for a contributors' protection institution in Indonesia.
He said that such an agency is needed "because there could be a difference between Islamic insurance and conventional insurance in terms of operations or mechanisms".
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Meanwhile, the government is working on establishing a policyholders' protection institution. The 2014 Insurance Law requires the establishment of a policy guarantee agency (LPP) for the insurance sector by 2017.
In January 2020, Finance Minister Sri Mulyani Indrawati said that the government would formulate the legal framework for the establishment of the policy guarantee agency to protect policyholders against default by insurance companies. No details have been released as to the scope of protection to be offered by the proposed LPP.
AAJI's views
Separately, the executive director of the Indonesian Life Insurance Association (AAJI), Mr Togar Pasaribu, revealed that his organisation had offered feedback to the Fiscal Policy Agency. For example, one suggestion is that the products that can be guaranteed by the LPP should be insurance plans that have an element of protection, reported Investor Daily Indonesia.
Mr Togar said, "For example, for unit-linked products, the investment element cannot be covered because the investment is the responsibility of the policyholder. Meanwhile, the protection elements may still be guaranteed by the LPP, such as accident insurance.”
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