Swedish Consulate – The Financial Services Authority (OJK) reported a significant decline in life insurance companies’ investment returns. Which dropped by 29.99% year-on-year to IDR 11.46 trillion in June 2024. Ogi Prastomiyono, the Chief Executive of Insurance Supervision, Guarantees, and Pension Funds at OJK. Explained that the most considerable decline in investment returns occurred in the PAYDI business line, particularly in investments in stocks and mutual funds.
Life insurance companies have a substantial allocation in stocks and mutual funds, representing 26% and 14% of total investments, respectively. Moreover, the decrease in investment returns is also influenced by the economic growth conditions. Especially when the flow of investments in the capital market is under pressure.
“This situation has impacted the performance of the capital market sector, where the movement of the Composite Stock Price Index (IHSG) has decreased by over 6% since the beginning of the year.” Ogi stated in a written statement on Sunday, September 11, 2024.
Reviewing Investment Strategies
To anticipate the decline in investment returns from stocks and mutual funds. Life insurance companies need to reassess their investment strategies and consider shifting to instruments that offer better returns.
According to Ogi, insurance companies must adhere to the principle of liability-driven investment to ensure the adequacy and timing of liquidity required to pay benefits to policyholders in the future.
“Given these conditions, it is possible that there will be changes in the allocation of investment assets in the insurance industry moving forward,” he concluded.
OJK Data: Insurance Premiums Reach IDR 210 Trillion as of May 2024
The Financial Services Authority (OJK) also recorded an increase in the total premiums in the insurance sector. The total premiums reached IDR 210.43 trillion, up by 7.93% year-on-year.
Ogi Prastomiyono stated that both the premiums and claims processed by insurance companies saw an increase, although this data was collected as of May 2024.
“In terms of premiums and claims as of May 2024, both experienced positive growth. OJK recorded a year-on-year premium growth of 7.93%, reaching IDR 210.43 trillion,” Ogi revealed during the IndonesiaRe International Conference 2024 in Jakarta on Wednesday, July 24, 2024.
“On the claims side, there was a year-on-year growth of 9.95%, amounting to IDR 166.11 trillion,” he added.
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Growth in Insurance Industry Assets Reaches IDR 1,120.57 Trillion in 2024
In the same period, OJK also reported that the insurance industry’s assets reached IDR 1,120.57 trillion, reflecting a 1.3% year-on-year growth.
Breaking down the data by commercial insurance aspects, conventional life insurance recorded assets of IDR 483.94 trillion, while sharia life insurance assets amounted to IDR 33.19 trillion.
“Meanwhile, conventional general insurance and reinsurance recorded assets of IDR 271.74 trillion, and sharia general insurance and reinsurance assets stood at IDR 12.12 trillion,” he detailed.
On the other hand, non-commercial insurance assets were recorded at IDR 219.58 trillion, including BPJS Health, BPJS Employment, Taspen, and Asabri.
The Financial Services Authority (OJK) also noted an increase in the proportion of premiums sent abroad from 2022 to 2023. In light of this, OJK urges domestic reinsurance companies to take on a more significant role.
