Many Cases of Default, Should We Still Trust Insurance?

Indonesia, Andrianus.my.id --Cases of default in the insurance industry are now happening again. This time, the case happened to a customer of PT Asuransi Jiwa Adisarana Wanaartha (Wanaartha Life/ PT WAL).

Customers no longer know how to get their money. Moreover, the Financial Services Authority (OJK) revoked the insurance company's business license as of Monday (5/12) because it was unable to meet the solvency ratio ( risk based capital ) in accordance with applicable regulations.

This condition occurs because the company is unable to cover the difference in liabilities with assets, either through capital injections by controlling shareholders or inviting investors.

The high difference between liabilities and assets is an accumulation of losses due to the sale of products similar to a saving plan.

In this case, the company sells products with definite returns that are not matched by the company's ability to get returns from managing its investments.

"This condition was engineered by PT WAL so that the financial reports submitted to OJK and published financial reports did not match the actual conditions," OJK wrote in its official statement.

OJK also had time to impose sanctions on Wanaartha Life before the business license was revoked per Monday (5/12). The OJK was noted to have responded to 1,631 complaints and 76 consumer reports regarding Wanaartha Life during the period 1 January 2020-25 November 2022.

Responding to the recent rise in insurance cases, the Insurance Observer who is also the Founding Board of the Indonesian Insurance Writers Community (Kupas) Irvan Rahardjo believes that the public must remain calm and not need to rush to withdraw funds from insurance companies.

"People don't need to withdraw their funds from insurance. However, OJK must announce the names of 13 insurance companies under supervision so that people are careful," he told Andrianus.my.id, Thursday (8/12).

In line, Financial Planner Safir Senduk asked the public to continue to believe in insurance. According to him, in any industry, there must be bad people. However, don't let the behavior of unscrupulous people make you lose confidence in the profession.

OneShildt Consulting Financial Planner Imelda Tarigan also agrees with Irvan and Safir's statement. He emphasized that insurance products are actually very noble because they take over the risk of financial loss from the policy owner.

According to Imelda, an insurance product is a must-have product for anyone who wants to plan their financial future well.

"Don't just because a speck of indigo spoils the milk after that. The recent insurance company case cannot be interpreted as representing all insurance companies in this country," he said.

Imelda said that there are still many insurance companies worth trusting because they have good financial management and risk management.

Finansia Consulting Financial Planner Eko Endarto considers cases like Wanaartha Life to occur due to the mistakes of individuals, not the insurance business.

Eko emphasized that the insurance business is a risk transfer business that will not be problematic if it is carried out according to its function.

"But because we lack education, supervision doesn't work well, in the end this is what happened. Insurance was sold incorrectly, the product was not suitable, the method was wrong, and the market was also not right. It ended up having problems and ruining the name of insurance," said Eko.

To overcome this risk, there are several tips that can be done for insurance customers. This can be applied from the first time you choose an insurance product.

1. Recognize Insurance Products

Imelda Tarigan said that prospective customers need to know which products are needed because there are so many types and features of insurance products.

"If you are still very newbie , you should not buy an insurance product that includes investment. Choose a pure risk only," he said.

Safir Senduk also asks prospective customers to have basic knowledge and be familiar with existing insurance products. The reason is, there are also insurance products that contain elements of investment.

In the same vein, Eko Endarto asked prospective customers to first understand the function of insurance and adjust it to their needs. After that, find the appropriate insurance product.

"So it starts from the customer's needs, not the product. When we don't know our needs, the possibility of wrong products and malfunctions becomes big," explained Eko.

2. Understand Rights and Obligations

In addition to looking for insurance products that suit their needs, customers need to understand what their rights and obligations are before buying these insurance products.

"One way that can be done is to take a good look at the insurance product, learn about our rights and obligations as customers before deciding to buy an insurance product," said Safir.

3. Check the Financial Statements of Insurance Companies

Imelda said that there is nothing wrong with prospective customers doing window shopping first. This moment can also be used to compare premium prices and products.

"After understanding the product, look for a company that provides the product. Look at the financial statements, pay attention to the RBC level, preferably above 125 percent. Pay attention to the company's reputation, who is the management and owner. Choose an independent and professional one," Imelda advises.

4. Choose those that are Supervised by OJK

Risk Based Capital (RBC) is a measure that informs the level of financial security or soundness of an insurance company.

Apart from checking RBC, Irvan Rahardjo considers it important for prospective customers to choose an insurance company that is under OJK supervision and has a good reputation.

"You have to choose insurance that is supervised by the OJK, have a good RBC of at least 120 percent, and have a good rating published by the media," said Irvan.

5. Buy Insurance from a Different Company

Sapphire said there is nothing wrong with taking products from other insurance companies. According to him, don't get hung up on one insurance company, try dividing it into 2-3 different insurance companies.

He also advises potential customers to choose products with short terms.

This suggestion was also agreed by Imelda. According to Financial Planner OneShildt Consulting, sharing insurance between several companies can minimize unwanted risks.

"It's also a good idea to buy some insurance from different companies, so not all risks are borne by just one company. Risk management must be thorough," he said.

Imelda also advises potential customers to consult with independent financial planners who do not sell financial products. The goal is that the advice obtained is more objective.