OJK Urges Life Insurance Industry to Enhance Unit-Linked Performance

Decline in Unit-Linked Contribution

The Financial Services Authority (OJK) has observed a decline in the contribution of unit-linked insurance products to total life insurance premiums. According to Ogi Prastomiyono, Head of the Executive Office for Insurance, Pension Funds, and Guarantee at OJK, this decline reflects a new equilibrium with more moderate growth and a focus on quality. The adjustment is attributed to strengthened consumer protection, increased transparency, and greater customer caution.

Current Market Composition

Despite the decline, unit-linked premiums still account for 23.46% of total life insurance premiums, making them one of the largest contributors. Claims from unit-linked products reached 40.59% of total life insurance claims, reflecting their investment-based nature and the dynamics of the financial market.

Recommendations for Improvement

OJK is pushing the life insurance industry to improve unit-linked performance through several measures:

1. Simplifying product design to better meet customer needs
2. Enhancing marketing quality and financial literacy
3. Prudent investment management
4. Strengthening governance and risk management

These measures aim to ensure the sustainable growth of unit-linked products.

Industry Outlook

Industry experts, such as Kapler Marpaung, believe that unit-linked products can regain their prominence if they are designed with the best interests of consumers in mind. Marpaung emphasizes the importance of market-driven products that are both beneficial and non-detrimental to consumers. He also highlights the need for caution in investment placements, adhering to existing regulations while maintaining prudence.