Around 10 general insurance companies are ready to market unit-linked insurance products (PAYDI), as they intensify preparations to meet requirements outlined in draft regulations that would allow them to sell such plans, according to the chairman of the Indonesian General Insurance Association (AAUI), Mr Hastanto Sri Margi Widodo.
The general insurance industry is waiting for the issuance of a circular from the Financial Services Authority (OJK) regarding the marketing of PAYDI as well as permits to sell these products. At present, only life insurers are allowed to sell PAYDI.
General insurers have to comply with a number of requirements before they are approved to sell PAYDI. The draft circular from the OJK stipulates several conditions that general insurers have to meet, according to Bisnis which obtained a copy of the draft.
Among the proposed rules, the insurance company must have appointed an actuary and a custodian bank. It has to hire investment experts with a number of qualifications. These experts must have at least three years of experience in managerial positions, coordinate investment management, and have never been sanctioned in the previous three years or had their investment management licence revoked.
The insurer must have installed an IT system capable of supporting PAYDI operations. The insurer must also have e resources that allow it to undertake various functions related to unit-linked products, such as marketing, insurance coverage, investment, and complaint handling.
Insurers that market PAYDI must meet the minimum capital requirement of IDR250bn ($17.85m) for conventional insurance companies, and IDR150bn for takaful units.
Agents or marketers must also have a licence to sell unit-linked products. At present, the AAUI does not have an agency that provides certification services for marketers wishing to sell PAYDI products. Until the AAUI sets up its own certification unit, AAUI is working with the Indonesian Life Insurance Association (AAJI). Training for the certification for non-life insurers’ sales personnel is currently carried out by the AAJI certification body with a licence under the AAUI umbrella.