Insurance News

Credit insurance industry under scrutiny as default claims rise fast – Markets

Vincent Fabian Thomas (The Jakarta Post)


Jakarta   ●  
Sun, January 15, 2023

Indonesian credit insurance firms are under scrutiny after a government watchdog found competition in the industry to be unhealthy at a time when lenders are filing more claims on loan defaults.

Credit insurance helps banks mitigate risks from loans they issue to borrowers, such as by providing guarantees on loans in default or by protecting borrowers’ ability to make repayments, which in turn helps safeguard the overall financial system.

The Financial Services Authority (OJK) announced in a press briefing on Jan. 2 that it had found that credit insurance firms had been charging policyholders very low premiums, to the point that their competition resembled a price war.

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