China Life Insurance Company - Poor Investment return

China Life Insurance Co, the nation’s largest life insurer, said profit fell 36% in the first nine months of this year as stock-market declines and low bond yields weighed on investment returns.

Net income dropped to 35.5 billion yuan (RM23.18 billion) this year through Sept 30, from 55.5 billion yuan a year earlier, the Beijing-based company said in a statement on Thursday, based on new accounting standards effective this year. That compared with an 8% decline in the first half.

China’s equity-market rout this year and lower interest rates have weighed on insurers’ investment returns at a time when they are starting to adopt new accounting rules that better reflect market prices of assets. While premiums income has been recovering since pandemic curbs ended late last year, growth slowed in the third quarter as the surge in sales of savings products eased.

Igloo Partnered Oppo & Realme Insurance

Insurance technology provider Igloo has partnered with smartphone manufacturers Oppo and realme to provide protection and after-sales services in Southeast Asia. Under the agreement, consumers can now purchase Oppo Care and realme+ Care online as well at selected service centres.

Oppo Care features screen protection plans starting at US$0.074 per day and realme+ Care provides extended warranty, accidental warranty and screen damage protection plans for US$0.0035 per day.

The partnership provides a smoother customer purchase experience. Before, after-sales services were offered online but with the recent collaboration, customers can now purchase the services from Oppo and realme’s official websites and other distribution channels.

The new services were launched in the Philippines with realme and in Singapore with Oppo. The companies plan to launch the services in other markets including Malaysia, Indonesia, Vietnam, and Thailand.

Through its agreement with Igloo, Oppo and realme’s customers can now seamlessly access and purchase official warranties through a dedicated customer portal, automatically synchronizing with the smartphone brands’ databases for updates in real time.

Igloo streamlines the process by simplifying registration through a QR code that directs customers to the portal, making the distribution more efficient and elevating customers’ in-store experience.

The collaboration comes as smartphone penetration rates in the Philippines and Singapore are expected to increase to 90% and 96% respectively by 2030, according to data from GSMA. The surge shows how mobile insurance should be more easily accessible and straightforward as mobile devices are more likely to get damaged than any other electronic device in Southeast Asia.

Rahmah B40 Insurance Malaysia

Insurance technology company Gmat (pronounced “jimat”) Sdn Bhd has launched its “Insurance Rahmah” and two other insurance products.Insurance Rahmah is an affordable insurance product targeted particularly at B40 communities. It provides personal accident coverage of up to RM50,000 due to death or total permanent disability. It also covers dengue illness and death due to dengue.

The premium is only RM50 per year or RM4+ per month. There is a takaful and a non-takaful option.Gmat will work with DHRRA Malaysia to create awareness and promote Insurance Rahmah to unserved and underserved communities, and aims to have one million Malaysians insured within the next 12 months.

Informal survey conducted among urban poor communities revealed that only one out of 10 families have some form of insurance coverage. 

Gmat’s other new products are hiker’s insurance priced from RM3 for a three-day trip and car insurance comparison service offering between 10% and 30% in savings for renewal of car insurance. Digital road tax can also be purchased with zero service charge.

Former Chairman Bank Of China - Arrested

The former chairman of the Bank of China has been arrested over suspicions of bribery and giving illegal loans. Liu Liange, chairman of the state-owned bank from 2019 to 2023, had resigned from his position in March this year. Weeks later, authorities announced Mr Liu was facing corruption charges.

The 62-year-old is one of the most senior bankers to be ensnared in President Xi Jinping's anti-corruption probe into China's $60 trillion (£49 trillion) financial sector. The push to weed out corruption from the country's financial industry appears to be ramping up, with officials in April warning that the crackdown was far from over.

Several high profile financial executives from state-owned banks have already been fined, jailed or under investigation - with former chairman of China Life Insurance Wang Bin sentenced to life in prison without parole for bribery

Mr Liu's arrest comes just about a week after he was expelled from China's ruling Communist Party following accusations of wrongdoing by the country's top anti-graft watchdog China's Central Commission for Discipline Inspection.

The regulator accused Mr Liu of a range of illicit activities which led to significant financial risks.


These include accusations of illegally granting loans, bringing banned publications into the country and using his position in the bank to accept bribes and other perks such as invitations to private clubs and ski resorts.


Mr Liu had been a prominent figure in China's banking and financial sector, and had held senior positions in China's central bank and the Export-Import Bank of China. He was promoted to become chairman of the Bank of China in 2019.

Faking Disability Claim

The Criminal Bureau of Investigation (CBI) in Southern Taiwan has busted a disability insurance fraud group case implicating a couple who also collaborated with an insurance agent.

The married pair, surnamed Kang and Li, aided 11 policyholders in faking serious medical conditions like strokes to file false insurance claims. Over a two-year period, this group amassed NT$7.59 million (US$236,000) from insurance premiums. The couple took a 20% share from each claim.

All 13 individuals involved were interrogated. When police visited the homes of those possessing disability certificates, their condition appeared normal, allowing them to move freely without assistance. Following the interrogations, Kang and Li, along with the other individuals, confessed to the insurance fraud. All 13 individuals were then handed over to the Tainan district prosecutor's office for further investigation and face charges of fraud.

Fraud investigation timeline - During the investigation, it was disclosed that the couple also had prior convictions for fraud. They were acquainted with an insurance agent named Xu, who would reach out to the policyholders and promote disability insurance.

The couple would then wait for six months to a year before instructing the policyholders to mimic symptoms of a suspected stroke, such as one-sided limb weakness and numbness, after which they would seek medical attention.

To ensure the deception remained undetected during medical examinations, Kang reportedly instructed the policyholders to feign symptoms of physical paralysis, speech impairment, and dementia. They were coached to inform doctors that a stroke would impair their ability to earn a living.

After receiving medical diagnoses of strokes, the policyholders claimed disability insurance payouts. Starting in 2020 until their exposure in August, at least 11 individuals feigned illness and applied for compensation.

Home Visit Inspection - During home inspections by assessors, Li demonstrated how to pretend to be paralysed in a chair and even aided claimants in changing their diapers. Subsequently, the realization that all the policyholders were assisted by the same agent, lived in Tainan, and travelled to Kaohsiung for medical consultations raised suspicions of an organized insurance fraud scheme. This led to the CBI filing a case.

Police evidence indicated that, despite having medical reports suggesting paralysis due to strokes, the policyholders were physically active, engaging in activities like running and kung fu. Their social media accounts also showcased pictures of them driving go-karts.

SOCSO Ceiling Increased To RM6,000

The increase in insured monthly salary ceiling from RM5,000 to RM6,000 will come into effect after the amendments to Employees Social Security Act 1969 (Act 4) and the Employment Insurance System (EIS) Act 2017 (Act 800).

The increase will benefit workers and their dependents if employees suffer a workplace accident, illness, disability, death or job loss. Prime Minister Datuk Seri Anwar Ibrahim, when tabling the Malaysia Madani Budget 2024 in the Dewan Rakyat, said the increase would raise the cash benefits at a rate of 20.2 per cent for the benefit of 1.45 million workers and their dependents.

The government allocated more than RM200 million to the Ministry of Human Resources (KSM) through the Social Security Organisation (Socso) in the Budget 2024 to strengthen the social protection network and drive the labour market, in line with the federal government’s structural reform agenda.

In the meantime, he said the policy of one per cent employment opportunity for the disabled, which will be extended to ex-convicts and the elderly, will be implemented in various ministries, government-linked investment companies (GLIC) and government-linked companies (GLC) as well as the government’s strategic partners.

Shared Farming Investment

The Companies Commission of Malaysia (SSM) has issued four compound notices for RM1 million to East West Horizon Plantation Bhd (EWHPB), its two directors and a manager for breaching Section 46(1) of the Interest Schemes Act 2016.

SSM said EWHPB and another company, known as East West One Consortium Bhd (EWOCB), both offered interest schemes in the form of shared farming investments related to palm oil cultivation and managed by East West One Group (EWOG).

An interest scheme is a way of doing business and involves the pooling of financial contributions from the public in exchange for an interest in a particular scheme. They were investigated by the commission following complaints lodged against them.

The investigation was carried out following 46 complaints and reports received by the agency involving the two companies from April to September last year. On Sept 25, SSM opened an investigation paper and carried out a physical inspection at the management offices of the companies concerned, as well as the palm oil plantation to examine the issues raised.

Grab - Burning Investor Capital

In 2012 - Tan launched Grab Holdings Ltd in 2012 - just a ride-hailing companies and were backed by Masayoshi Son (Japan’s SoftBank Group Corp). Other investors included BlackRock, Fidelity, Morgan Stanley and Temasek, the Singapore state investment firm.

Before it started publicly trading, Grab was valued at US$40 billion, almost as much as American Airlines, Delta Air Lines and United Airlines combined. Tan, only 39 at the time. Even the date of Grab’s listing seemed auspicious. It read the same backward and forward: 12 02 2021. An eight-digit palindrome date will happen only 12 times this century.

Grab Is Down 70% - Tan and his co-founder, Tan Hooi Ling, rang the Nasdaq opening bell remotely from the Shangri-La. A blizzard of confetti showered the room. The Queen song We Are the Champions blasted out. But almost before the confetti hit the floor, Tan’s luck turned. The stock plunged 21% by the close of the trading day. Then it fell more. Even after a recent bounce, Grab is still down almost 70%.

Grab had raised money in a complicated maneuver involving a corporate structure called a special purpose acquisition company, or SPAC. It was, and remains, the biggest SPAC deal in histor

Burn Investor Capital - Devadas Krishnadas, ­director of local consultant Future-Moves Group, says startups need to do more than burn investor capital and tout their growth potential. Singapore’s aspirations for tech-powered growth have been predicated more on promise than performance.

Who Is Tan - Tan grew up in Malaysia and started his business in a storage room 11 years ago. In the country’s capital, Kuala Lumpur, his company, then called MyTeksi, let customers summon a taxi with a smartphone.

Tan comes from a family of entrepreneurs. His grandfather made a fortune in the auto industry, co-founding Tan Chong Motor Holdings Bhd in 1957 to assemble and sell Nissan cars in Malaysia. His father is president of the publicly traded company.

Like many elite Asians, Tan pursued his higher education in the US, studying economics and public policy at the University of Chicago before getting his MBA from Harvard University.

Two years after starting his company, Tan met in Tokyo with Son, the SoftBank founder and chief executive officer. Son had earned renown for his wildly successful bet on Alibaba Group Holding Ltd, China’s Amazon. SoftBank committed US$250 million to Tan’s business. In 2014 the company moved to Singapore and later changed its name to Grab as it prepared to accelerate its expansion across the region. (In 2020 the company opened a second headquarters, in Jakarta.)

On March 26, 2018, Grab bought Uber Technologies Inc’s Southeast Asian business in return for a 27.5% stake in Grab. It was a major victory for Tan as Uber withdrew from the region. Grab integrated Uber Eats into an existing meal-­delivery business and branded it as GrabFood later that year.

SoftBank - would invest about US$3 billion in Grab. Tan started to refer to his company as Southeast Asia’s leading “everyday super-app,” handling transportation, deliveries and financial services. With encouragement from the company’s ubiquitous advertising, Grab customers got used to highly discounted rides.

Public Traded - By 2020 investors saw Grab as a promising candidate to go public. Tan eventually settled on an exit strategy: the SPAC. In a complex arrangement, a sponsor—in Grab’s case, US-based Altimeter Capital Management—sets up a shell corporation and seeks to merge it with an actual company that has real operations, namely Grab. If an agreement is reached, they combine, and - the actual company is now publicly traded.

Grab had fewer than 25 million monthly users at the time. Southeast Asia had a smaller middle class and lower per-­capita income (compared to China). Grab had raised US$12 billion in venture financing before the SPAC deal. Grab spent US$480 to win a customer, who’d then spend an average of US$29 a year. It would take Grab more than 16 years to recoup its money.

Dual-Class Share Structure - Tan controls 63% of Grab’s voting rights while holding only about 3% of its common stock. While technology companies often use dual-class share structures, Grab’s arrangement is striking because Tan owns such a small percentage of common shares compared with, say, Mark Zuckerberg, who holds a roughly 13% stake in Facebook parent Meta Platforms Inc. SoftBank remains Grab’s largest shareholder, with a 19% stake. Uber still holds a 14% stake.

To this day, unlike the founders of Uber and WeWork, Tan remains in charge. His co-founder, Hooi Ling, is stepping down from operating roles and as a director at Grab by the end of this year.

US$16 Billion Accumulated Losses - And while many tech stocks have stumbled, some as much or more than Grab, Uber’s shares are down far less. Uber finally reported an operating profit in the second quarter. At the end of last year, Grab had accumulated losses of US$16 billion.

Uber had an easier road back. It can rely on its home market, the largest economy in the world. Singapore, while wealthy, is too small to support fast-growing consumer companies; some of Grab’s other Southeast Asian markets are difficult places to earn a profit quickly. And each market has its own languages, customs and regulations, making it a challenge to grow.

Bounce Back - Grab is trying to bounce back. The company scaled down its super-app strategy, though it still offers payments and other digital banking services, along with rides and deliveries. 

Grab remains a substantial business with about 35 million monthly users. Operating in eight countries and more than 500 cities, it posted revenue of US$1.4 billion last year, and its market value is more than US$13 billion. It’s a household name in the region; its logo—“Grab,” often written with two green lines that curve like a roadway—is a familiar sight from Bangkok to Borneo.

One day in August, Grab’s stock jumped 11% after it posted a narrower quarterly loss. Grab points to strong revenue growth and six consecutive quarters of improvement in its favoured measure of profit, which excludes interest payments, taxes and certain noncash items.

Ransomware Attack Philippine Health Insurance Corporation

A recent ransomware attack on the Philippine Health Insurance Corporation (PhilHealth) occurred while the organization's antivirus software subscription had expired. PhilHealth was attacked around September 22 and shut down many of its systems to battle an infection for which the Medusa ransomware gang claimed responsibility.

The incident saw a huge leak of personal information. PhilHealth was also slow to restore service, delaying medical matters for many. Filipinos are justifiably outraged that their national health insurer was attacked and disrupted.

But they can express stronger emotions still – because on Monday local media outlet reported the attack took place while PhilHealth was not running antivirus software. The insurer's license had apparently lapsed several months before, but government procurement regulations made it impossible to renew.

It's not unusual for government agencies in developing nations to use unlicensed software, when commercial licenses are often priced beyond their means. In 2021, for example, An outage at Pakistan's Federal Board of Revenue that it swore could not have been caused by unpaid licenses because it caught up on its bills. Your correspondent also once spoke to a major vendor of design software that had 500 people show up to a conference in India – a nation in which it had sold no licenses and in which users felt they could pirate with impunity.

Whatever the reason for PhilHealth's security fail, its repercussions are serious: personal information has reached the dark web. The insurer release warning customers to ignore unexpected calls, messages, and emails asking for passwords and other information. The insurer also "appealed to refrain from further circulating leaked data as it has dire consequences under the law," including up to 20 years in jail.

As if that will scare ransomware and phishing scum. PhilHealth is presently using antivirus software – reportedly a trial license that expires in 30 days.

Indonesia - Aims Per Capita Income US$10,000 - 2030

Indonesia revealed the government's plan to increase per capita income above US$10,000 by 2030. This is in line with the government's vision of Golden Indonesia 2045. The government wants Indonesia to become an advanced nation by 2045. Thus, by 2030 the government aims the nation to become a middle-income, escaping the middle-income trap.

Indonesia's estimated economic growth could be in the range of 5-5.5 percent. Thus, the per capita income in 2024 could reach US$5,500. Today, Indonesia [per capita income] is US$4,700. 

To achieve a per capita income of US$10,000 or around Rp150 million per year, he said, the minimum income would be Rp10 million per month. Therefore, we must look for which industrial sectors are capable of paying their workers Rp10 million per month. 

Textiles and footwear must be diverted to products that have higher value. Indonesia need to move away from industries that can also be done by other countries such as Bangladesh and others. This is the target for the banking industry.

Malaysia Retirement Poor Security

Employee Provident Fund (EPF) was established in 1951 to ensuring financial security and retirement benefits for its citizens. Millions of Malaysians contributes a portion of their salaries to the EPF throughout their working lives. Over the past 14 years, the EPF has consistently delivered an impressive average dividend of 6%, significantly surpassing the returns of many managed funds and unit trusts in Malaysia. 

Recent statistics from the Employees Provident Fund (EPF) have cast a shadow over the retirement prospects of its citizens. These alarming figures shed light on a harsh reality: Most EPF members will find themselves with insufficient savings in their retirement accounts. As of the close of 2022, a staggering 51.5% of EPF members had amassed savings below the RM10,000 mark. Even more concerning, a mere 18% of EPF members are expected to reach the RM240,000 milestone by the time they hit the retirement age of 55.  

The RM240,000 benchmark has long been considered the basic savings target to furnish retirees with a modest average monthly income of RM1,000 for 20 years, and many experts now argue that this figure needs to be revised in light of the relentless rise in the cost of living. According to recent report - senior couples residing in the bustling Klang Valley area now require at least RM3,210 per month to cover their necessities. This figure escalates to RM2,520 per month for single retirees, with the bulk of expenses attributed to fundamental needs such as food and housing. These stark numbers underscore the pressing need for Malaysians to reevaluate their retirement strategies and address the growing gap between their EPF savings and the actual cost of living in their golden years. 

Low wages: The prevalence of low wages is undeniably a central catalyst behind the burgeoning retirement crisis in Malaysia. Data from the Department of Statistics Malaysia reveals a stark reality: a concerning 82% of employees in the formal sector earn less than RM5,000 per month. This challenge individuals’ ability to meet their day-to-day expenses and severely hinder their capacity to make substantial mandatory contributions toward their EPF retirement accounts. As a result, accumulating substantial retirement savings becomes an uphill battle. In stark reality, these economic circumstances constrain many Malaysians and face the daunting prospect of inadequate financial security in their golden years.

Early EPF withdrawals: During the challenging times of the COVID-19 pandemic, the Malaysian government took a compassionate step by allowing multiple withdrawals from EPF accounts to alleviate the financial hardships faced by citizens. This move provided immediate relief to those in dire need, enabling them to weather the storm. While these withdrawals were a lifeline for many, they came at a cost.

Approximately 8.1 million EPF Members experienced a staggering 50% reduction in their mean savings in 2022 during the height of the pandemic when special withdrawals were permitted.

Withdrawals have affected various races. Around seven million Malay EPF members, who had a median savings of RM16,900 in April 2020, now have an average of only RM5,500 in their EPF accounts. Similarly, other Bumiputera members, numbering approximately 1.4 million, have seen their average savings dwindle to just RM3,300, down from an average of RM10,600..

OJK Monitoring 11 Troubled Insurance Companies

Chief Executive for Supervision of Insurance, Securities, and Pension Funds of the Financial Services Authority (OJK), Ogi Prastomiyono, revealed the development of surveillance of troubled insurance companies.

According to him, the OJK is now conducting special supervision of 11 troubled insurance companies. Special supervision is carried out on companies that are categorized as not normal. Ogi explained that there are three kinds of supervision for non-bank financial services institutions, namely normal supervision, intensive supervision, and special supervision. Special supervision is carried out for troubled insurance companies.

However, Ogi refused to reveal the names of the troubled insurance companies. He only gave a clue that out of the 11 companies, there are 9 insurance companies; 6 life insurance companies and three general insurance companies. There is one reinsurance, and one insurance company in liquidation.

The number of problematic insurance companies this year decreased. In 2022, Ogi said, previously stated that there were 13 problem insurance companies. However, the two companies have been running well and are now under normal supervision.

Indonesia Unit-linked Policy Or Scam-linked Policy

The insurance industry is again in turmoil because customers are protesting asking for refunds from insurance company PT Prudential Life Assurance (Prudential Indonesia) on Tuesday (22/8/2023). 

Prudential Insurance Victims - The demonstration was carried out by four people who are members of the Prudential Indonesia Unit Link Insurance Victim Community, AIA, and AXA Mandiri. in front of the Kota Kasablanka Mall a number of mall security officers blocked them from entering and asked them to leave the location.

However, they refused to leave the place. The protesters also shouted and refused to leave. The confrontation between security and the protesters was intense, with security even dragging them out of the location.

Rita, one of those who claimed to be a victim wanted to go to the Prudential office to ask about her and her late husband's insurance policy claim which had not been disbursed. Combined, the value of Rita and her husband's insurance deposits is IDR 50 million. Therefore, Rita felt she had the right to enter the Prudential office to ask about her rights. He had tried to enter Kota Kasablanka twice but was always thrown out.

Prudential Indonesia's Chief Customer & Marketing Officer Karin Zulkarnaen clarified that his party had taken persuasive steps to the group of protesters so that they could carry out dialogue using official channels.

The latest news is that Rita reported this case to the Tebet Police. He has also made a police report regarding the treatment he received, namely a criminal act in accordance with Law Number 1 of 1946 concerning the Criminal Code, Article 351 of the Criminal Code. The legal process is still ongoing to explore how to resolve this case.

Apart from the Prudential insurance problem, it is still unknown where the error came from. However, the reality is that a number of risky insurance cases leading to failure to pay have become commonplace.

It's very unfortunate, what should be meant as protection is actually a disaster. Insurance as a product to transfer risk has been proven to exist, many people have been greatly helped by insurance.

However, the mistake that often occurs is that people don't understand the policy they are taking or buy a product that doesn't match what they need, resulting in the insurance not being able to be claimed. Or worse, it is the insurance company's fault for not having integrity, because there have been several cases that prove the company embezzled customers' policies.

PT Kresna Life Insurance (Kresna Life) - The most recent case of failure to pay was PT Asuransi Jiwa Kresna or Kresna Life. Kresna's case adds to the series of cases of life insurance failure to pay in Indonesia after previously being experienced by customers of PT Asuransi Jiwasraya (Persero).

Kresna Life experienced default on two of its insurance products, namely Kresna Link Investa (K-LITA) and Protecto Investa Kresna (PIK).

"On February 20, Kresna gave a letter to extend the policy unilaterally for 6 months until August. But after that, on May 14, the benefits stopped, so from May 20, the benefits were actually still there [until August]," said one Kresna Life customer.

Due to the Kresna Life inspection, the OJK also issued a Business Activity Restrictions (PKU) sanction to Kresna Life which was deemed to have violated the provisions regarding the implementation of recommendations based on the results of the previous inspection.

Sanctions were determined through OJK letter number S - 342/NB.2/2020 dated 3 August 2020, as conveyed by OJK Deputy Commissioner for Public Relations and Logistics Anto Prabowo in an official statement, Friday (14/8/2020).

"After the imposition of this sanction, Kresna Life Insurance is prohibited from carrying out new coverage closing activities for all business lines for the insurance company from August 3 2020 until the recommendations from the OJK inspection are fulfilled,".

Previously, OJK had carried out an inspection for the 2019 period which was carried out in February 2020. During this inspection, OJK found a number of violations committed by Kresna Life, especially regarding K-LITA products.

Based on these violations, OJK took supervisory actions, including requiring Kresna Life to pay claims submitted by policy holders.Apart from that, the OJK also ordered Kresna Life to prepare a financial restructuring plan which includes steps for the Company's financial restructuring, the commitment of the Controlling Shareholders/Controllers to overcome Kresna Life's problems, as well as a detailed claim payment plan.

In February 2020, to prevent the risk of difficulties in paying claims for maturing policies and protect the interests of policy holders, OJK ordered Kresna Life to discontinue the K-LITA product.

OJK continues to ask the management and controlling shareholders of Kresna Life Insurance to be responsible for their obligations to policyholders because this is an agreement or civil bond between Kresna Life Insurance and policyholders.

PT Asuransi Jiwasraya (Persero) - Jiwasraya first announced that it was in default in October 2018. In that announcement, Jiwasraya was unable to pay off customer policy claims amounting to IDR 802 billion. Then the number of defaults on JS Saving Plan products continues to increase. Jiwasraya's new management also confirmed that it would not be able to pay customers' JS Saving Plan policies worth IDR 12.4 trillion which mature in October-December 2019.

In the Jiwasraya Health Period document, it is stated that the Jiwasraya health period is divided into five periods, namely Period I 2006-2008, Period II 2009-2010, Period III 2011-2012, Period IV 2013-2017, and Period V 2018- Now.

In Period I, it was revealed that the first deficit that occurred as of December 31 2006 was IDR 3.29 trillion.

The company's main issue is a deficit caused by the company's assets being much lower than its liabilities. In 2006, it was discovered that the company's deficit reached IDR 3.29 trillion. 
Jiwasraya's deficit is getting bigger every year. In 2008, the internal deficit was calculated at IDR 5.7 trillion, this is below the figure provided by independent actuaries who estimated the deficit in 2008 to reach IDR 8-10 trillion.

The Jiwasraya case is currently leading to allegations of corruption and is currently being tried.

The Financial Audit Agency (BPK) also released a calculation of state losses (PKN) due to the Jiwasraya mega scandal case. As a result, the amount of PKN calculated by the BPK reached IDR 16.81 trillion. This amount consists of stock investments of IDR 4.65 trillion and state losses due to mutual fund investments of IDR 12.16 trillion. The amount is slightly different from the Attorney General's initial projection of IDR 17 trillion.

PT Asuransi Bumi Asih Jaya - OJK revoked the business license in the insurance sector for PT Asuransi Jiwa Bumi Asih Jaya (BAJ) on 18 October 2013 which was no longer able to comply with provisions related to financial health (Risk Based Capital) and the ratio of investment balance to technical reserves and claims debt.

In its journey after being revoked, Bumi Asih Jaya has not been able to carry out its obligations, so OJK filed a bankruptcy lawsuit with the Central Jakarta Commercial Court.

Bumiputera Life Insurance 1912 - Problems with Bumiputera are more focused on miss management or mistakes in managing the company. In January 2018 the company admitted that it experienced delays in claim payments of 1 - 2 months due to the minimal premiums generated by the company.

At the end of 2018, the company experienced solvency problems of IDR 20.72 trillion, where the recorded assets were only IDR 10.279 trillion but the company's liabilities reached IDR 31.008 trillion.

As of semester I-2019, Bumiputera's RBC ratio was minus 628.4%, while its investment adequacy ratio was only 22.4%, and its liquidity ratio was 52.4%. The new management of AJB Bumiputera is committed and working hard to resolve the 2020 claims arrears of IDR 5.3 trillion from as many as 365,000 policy holders throughout Indonesia.

PT Bakrie Life Insurance - The case of default by an insurance company belonging to the Bakrie Group occurred in the Diamond Investa product which is a unit link type (insurance and investment). This product failed to pay in 2008 because the company was too aggressive in investing in the stock market, at that time shares collapsed due to the global crisis which was triggered by the subprime mortgage case in the United States (US).

The Capital Markets and Financial Institutions Supervisory Agency (Bapepam-LK), which has now changed its name to OJK, stated that Diamond Investa's payment default reached IDR 500 billion. To resolve this problem, an agreement was reached that Bakrie Life would pay off its obligations in installments.

However, the installments made by Bakrie Life are problematic. Not all policy holders had their funds returned until finally in 2016, the OJK revoked Bakrie Life's operational permit.

Including Prudential cases and several cases of problems above, they need to be a lesson for the public to be more careful in choosing insurance products that suit their needs, as well as the importance of understanding healthy insurance management companies to avoid the risk of default.

Astro Closes Go Shop

Astro Malaysia Holdings Bhd (AMH) has decided to cease “Go Shop” effective Oct 11 due to the challenging overall economic landscape and the changes in consumer shopping behaviour. Astro GS Shop Sdn Bhd (AGSS) which operates “Go Shop” is a joint between Astro Retail Ventures Sdn Bhd (a wholly owned subsidiary of AMH) and its Korean partner, GS Retail Co Ltd (GSR).

The joint venture saw the former holding 60% equity interest while the latter held the remaining 40%. As part of the ongoing strategic realignment underway within Astro, including the execution of significant cost-saving measures, both parties have taken the decision to exit the business.

There has been a significant downturn in this mode of shopping since the pandemic and closure will ensure that Astro’s resources are focused on business lines that contribute the biggest difference to the overall operations. Go Shop is not considered a material subsidiary of AMH and is not expected to have material effect on the group’s consolidated earnings per share, net assets per share or gearing for FY24.

Great Eastern Bought Over MetLife Malaysia

AMMB Holdings Bhd and MetLife International Holdings, LLC (MetLife) plan to dispose of their combined 100 per cent stake in AmMetLife Insurance Bhd (AML) and AmMetLife Takaful Bhd (AMT) to the Great Eastern Group for about RM1.12 billion.

AMMB wholly owned subsidiary AMAB Holdings Sdn Bhd today inked an implementation agreement with MetLife and Great Eastern Holdings Ltd’s subsidiaries Great Eastern Life Assurance (M) Bhd (GELM) and Great Eastern Takaful Bhd (GETB) for the proposed sale.

AMAB currently holds 50 per cent minus one share in AML while MetLife owns the remaining 50 per cent plus one share. Conversely, in AMT, AMAB has 50 per cent plus one share while MetLife holds the rest of the shares.

AMMB said the proposed sale is subject to regulatory approvals from Bank Negara Malaysia and/or the Minister of Finance as well as the Monetary Authority of Singapore, among others.
After securing the necessary regulatory approvals, the involved parties will proceed with a sale and purchase agreement, it said.

On completion of the proposal, GELM will hold 100 per cent of AML and GETB will own 100 per cent of AMT.

In addition, the proposal will see GELM, AML, GETB and AMT entering into exclusive 20-year bancassurance and bancatakaful agreements for the distribution of life insurance and family takaful products through the distribution network of AMMB’s banking subsidiaries, AmBank (M) Bhd and AmBank Islamic Bhd, across Malaysia.

Great Eastern is a subsidiary of OCBC Bank, the longest established Singapore bank.

Vietnam Bancassurance Scam

Bancassurance have helped banks and insurers increase their incomes, but it has turned out that many customers were arm-twisted or misled into buying insurance. 

A Vietnamese that just turned 18, went to the Saigon Joint Stock Commercial Bank (SCB) to make her first ever savings account. After high school she had dropped out to help her mother, a vendor, sell rice cakes and saved VND150 million (US$6,350).

Bank Staff Scam - The bank staff advised her to deposit VND100 million in a traditional savings account and VND50 million in "long-term investments with high returns" And if she agreed, she would receive a gift in the form of health insurance.

A year later she received a text message saying she owed VND50 million toward her life insurance premium.It was then that she discovered it was a life insurance policy she had been duped into buying. For a girl her age an annual premium of VND50 million is an overwhelming burden.

Customer Complaints - Many other people are also in a similar plight. In October 2022 the first complaints were made against SCB, and soon the trickle became a torrent as numerous complaints were made to the Ministry of Public Security.

The complainants, mostly seniors, denounced the "Tam An Dau Tu" insurance policy with premiums of up to VND100 million a year distributed by Manulife through banks. It is an investment-linked insurance policy (ILP), a product that has become popular in recent years.

An outstanding insurance salesperson for two years in a row by a bank in Ho Chi Minh City, said -: "When they found out they had bought insurance, not just deposited in a savings account, customers would become confused and agitated. I remember their eyes. The gentler they were, the more guilty I felt."

As she became increasingly unhappy, Huyen decided to quit her job. Looking back now, she calls those two years a period of "earning a lot of money but not being happy." Every day she would sell three or four insurance policies with annual premiums of VND50-100 million.

"[It was] so easy. But now, when I work as a traditional insurance consultant, I find it hard to sell even one policy a month."

Banks Have The Upper Hand - 2015-2021 was the golden age of bancassurance, an arrangement for an insurance company to sell its products through a bank. The bank is also entitled to a commission on the premium paid by a customer in the first year.

In the last few years, to smoothen the process of getting bank loans, customers have had to buy life insurance. Many paid the premium for the first year and stopped with that. Some banks pulled the wool over customers’ eyes by calling life insurance "smart savings" and "investment savings" with incentives.

The State Bank of Vietnam has repeatedly warned banks not to make buying life insurance a precondition for getting loans, but in vain.

Poor Persistency Rate - Bancassurance was more successful than insurance companies had envisioned. One top insurance executive recalls: "At the time I didn’t know if bancassurance would sell, but this was a marriage where the bank had the upper hand." He was referring to the fact that banks had nothing to lose even if people stopped paying premiums after the first year.

The general director of an insurance company further explained that the agreements between the two sides in bancassurance were very simple.They only agreed on the number of years of cooperation, sales and expected number of insurance buyers.

Most agreements in the 2015-21 period did not allude to customer retention rate, the criterion considered the most important to assess the quality of the sales and consulting processes.

A senior executive at a top 10 insurance company explained that he repeatedly sought a tie-up with a bank, but was rebuffed when he asked for incorporating a customer retention rate in the bancassurance contract. Many contracts have been terminated prematurely because banks found other insurers willing to pay more, and this competition has pushed upfront fees higher, he said.

Effective Scam Accelerate Sales Growth - The higher the upfront fees, the more insurance policies a bank has to sell. Bancassurance has grown at an extraordinary pace in the last seven years. In 2016 it only accounted for 10% of new sales for the life insurance industry. But by 2022 it had caught up with the traditional channel.

The growth in life insurance penetration since the introduction of bancassurance has been equivalent to 20 years’ growth earlier.

Power Of The Bank - Industry veteran attributes the success of bancassurance to the power banks wield over customers and not because people "see good policies and so buy them." The high rate of cancelations testifies to this.

A recent inspection of four insurance companies by the Ministry of Finance found that at least 30% of customers buying insurance through banks only paid the first year’s premium. At some banks, the rate was 70%.

Overexploitation - During the two years of Covid, savings interest rates were at a record low.
Instead of depositing money in banks at 6% interest, people turned to other investment channels, especially securities. The low interest rate environment actually made investment-linked insurance popular for a while.

The deputy director of a bank’s retail division says he found that when his staff introduced high-interest products, "customers liked them very much. Therefore, this product [ILP] was strongly promoted by insurers and banks though the sales process had many loopholes."

The essence of life insurance is to provide financial protection in the event of death or disability. But over time products morphed from purely "protecting against risks" into "protecting and saving" and eventually into "protecting and investing."

Many customers were persuaded to buy offers protection and investment but they do not clearly know about the two components. In theory, sellers are supposed to advise customers that risk protection is the important component in insurance, and leave the investment part to the latter’s discretion, only advising them about it if sought.

But in reality, ILP sellers would only say vaguely that customers stand to get high returns and also protection against health risks. It became a common complaint from buyers that they were misled into believing savings deposits were bundled with insurance. Others said they thought the bank would invest their money and insurance was a by-product.

High Growth - ILP premium payments skyrocketed from VND3.8 trillion in 2019 to nearly VND22 trillion in 2022. The Ministry of Finance, while admitting that ILP is a complicated product, has hauled up insurance companies for failing to monitor the quality of bancassurance consultancy.

ILP requires deep understanding on the part of buyers and proper consultation. The lack of correct advice meant buyers did not clearly understand ILPs, which led to lawsuits later.

ILP is a superior product compared to traditional ones but also a "double-edged sword." In the U.S., ILPs came into being long after the insurance market did, meaning people understood them very well.

Insurers provide training for selling this complex product, but many agents are not interested in it. In foreign countries, for six months a trainee agent is accompanied by a supervisor and does not receive the full commission.

In Vietnam, a person with similar experience could be a manager who trains others despite not being familiar with ILPs. During consultations on insurance contracts, many agents asking silly questions and their customers knowing almost nothing about the product.

Many insurers only focus on training agents in how to sell products. Even outstanding bancassurance admitted to have received little training, which lasts only one or two days. The bank had some professional training sessions but did not go into depth about the products it was selling.

Bank Staff merely memorized the product features and resorted to exaggerating their benefits when talking to potential buyers. The insurance industry started "running while only capable of crawling," and so agents without any knowledge sell complex products.

Crisis Is Opportunity For Correction - The complaints that started at SCB and partner Manulife quickly spread to other banks and insurance companies. Everywhere, bewildered customers called to ask for cancelation of contracts.

Premium incomes declined in the first half of this year for the first time after a long period of double-digit growth. The insurance industry, according to the association’s deputy general secretary, is facing its "biggest crisis ever."

The ministry is drafting new regulations such as requiring insurance agents to record their conversation with prospective clients and separating the insurance and banking counters at banks. But experts fear these are not enough, and say what is required is a mechanism to address the deep-rooted problems in the system. Some suggests having a contract retention threshold the same way the central bank does for bad debts.

Until 2016 the Ministry of Finance’s insurance management and supervision department used to publicize the number of contract cancellations within the first three years of buying a policy.

But since 2016, when the bancassurance market exploded, this number has not been revealed. Authorities do not haul up fast-growing businesses with low customer retention rates.

Certification - According to experts, a quality-focused approach is required to enable healthy development of the insurance industry. Businesses should stop pampering their sales teams. Some wants insurance agents to take exams before being allowed to sell complex products like ILP, and retested every year.

Since the beginning of this year the Ministry of Finance has mandated stricter norms for agents selling ILPs. The rate of agents passing ILP exams has halved from last year, according to the director of an insurance company.

Many insurance executives say blacklisting agents involved in wrongdoing is not enough of a deterrent and a proper sanctioning mechanism is needed. Besides, a common arbitration mechanism is needed in bancassurance so that banks and insurance firms are united when it comes to penalizing employees and do not seek to protect their own.

The deputy general director of a bank says customers should improve their understanding of commercial deals or at the least jettison their habit of signing whatever is put in front of them.

They need to carefully read contracts, and should not completely trust anyone, even if the consultant is a relative. The crisis has brought some positive changes. The general director of a top three insurance company acknowledges that it has completely changed the relationship between banks and insurance companies. They agree to correct past mistakes, especially in terms of sales quality, and some bancassurance contracts stipulate customer retention rates.

Private bank VIB, which recently renewed its bancassurance contract with Prudential, is one of those agreeing to a minimum retention rate.The two sides have also set up a customer conduct standards council to deter employees from wrongdoing.

Vietnam Life Insurance Crisis Of Faith

The number of active life insurance contracts in Vietnam was 13.35 million by the end of June, declining by 550,000 since the beginning of the year. This was the first drop the industry has recorded since 2014. In the last five years growth averaged 12.6% annually, according to data from the Insurance Association of Vietnam.

Crisis Of Faith - The decrease came as Vietnam’s life insurance industry goes through its biggest ever "crisis of faith" after customers claim they had been tricked into buying insurance contracts when they only wanted to make deposits at banks.

The number of new contracts signed in the first six months plunged 31% year-on-year to nearly 1.03 million. Revenues from insurance premiums dropped nearly 8% year-on-year to VND77.83 trillion (US$3.27 billion)

Prudential led in terms of new premiums in the first six months at VND2.74 trillion, followed by Dai-ichi Life (VND2.05 trillion) and Manulife (VND1.98 trillion). In terms of accumulated premiums, Baoviet Life Corporation led with a 20.6% market share, followed by Manulife (17.2%) and Prudential (16.5%).

Insurance companies paid around VND25.85 trillion in proceeds in the first six months, up 37% year-on-year.

Indonesia Mulls Regulating Influencers Over Insurance

The Financial Services Authority (OJK) of Indonesia is mulling over regulations mandating celebrities, influencers, and other social media content creators to obtain an appropriate licence for the financial products they promote.

OJK chief executive of supervision of financial services business behaviour Friderica Widyasari Dewi said that these influencers should have a licence if they want to continue promoting or marketing financial services or products. Dewi cited an insurance licence as an example, during a discussion on digital financial crimes at the Kominfo Ministry. She added that the agency will investigate the possibility of implementing the regulation in Indonesia.

“So, it (the requirement) is not just the blue ticks. Right now, a lot of people have already had blue ticks,” Dewi said. The regulator has also discussed this matter with other regulators in different countries during a previous meeting. Dewi also said that it is already in effect in some countries as the marketing or endorsement of financial products can be a very serious matter.

AIA Indonesia Uses AI For Agenct Recruitment

Leading and trusted life insurance company PT AIA Financial (AIA Indonesia) is the first insurance company in Indonesia to integrate artificial intelligence (AI) in the recruitment process for insurance agents, known as Life Planners. This new innovation serves to ease the process of recruitment for both insurance agent candidates and the company recruiters. Through the use of AI, the company can also ensure a more objective and measurable evaluation of new recruits. 

This innovation is in line with AIA’s focus on providing the best service and top quality Insurance agents for customers. The use of AI interviews will equip recruiters with a more efficient system, helping them in assessing quality insurance agent candidates for the initial selection phase. 

The new system that can help ease recruitment processes, while also maintaining the quality of chosen insurance agents. This is how AI interviews became a groundbreaking solution in Indonesia’s insurance industry, harnessing the power of AI to provide objective initial assessments of insurance agent candidates. Using AI in the recruitment system will bring added benefits to both parties as it facilitates flexibility, ease of access and time efficiency. 

Candidates will no longer be required to schedule meetings with the recruiter, cutting the time required from the conventional process. Candidates will only need to access and register themselves through the iRecruit platform, after which they can begin their online AI interview session, from anywhere and at any time. The recorded interview will only take candidates a few minutes to complete. 

In line with AIA’s vision to produce top-quality insurance agents who are able to provide precise and tailored solutions for customers, the program is equipped with a tested and comprehensive scoring matrix. This will ensure that every candidate who has passed through the interview meets AIA’s rigorous qualifications.

After Hong Kong, Indonesia will be the second market to roll out a full implementation of AI interviews. The implementation of AI and analytics technology in the Hong Kong market has helped every part of AIA’s agency value chain. In 2022, 80 percent of new insurance agents in Hong Kong were recruited through AI-driven aptitude tests and interviews. In 2022, the use of AI and analytics-based digital tools helped to increase by 30 percent AIA’s quality leads compared with 2021. 

Indonesia Introduced Mandatory Health Insurance For Foreign Worker

Indonesia has issued a new health insurance requirement for foreign workers who are working short terms (2-6 months) in the country. Previously, the policy only applied to long-term work permit holders. It will be the responsibility of the employer to apply on behalf of their foreign employee.

The policy has been in place since November 8, 2022.

Employers must apply for the insurance through ASTAKA - online portal and purchase the insurance before hiring a foreign employee. The price of the insurance varies on the length of stay of the foreign worker.One month: 762,000 rupiah (US$49.14). Three months: 1,715,000 (US$110.60); and Six months: 2,477,000 (US$159).

The insurance covers emergency medical evacuations of up to 200 million rupiah (US$12,898) and hospitalization services of up to 25 million rupiah (US$1,612). The insurance also covers mortality due to natural causes, illness, or accidents of up to 200 million rupiah (US$12,898), which will be paid in full to the beneficiary. The insurance covers the expatriation of the body covering a maximum of 25 million rupiah (US$1,612).

Once the employer has purchased the health insurance, it can be activated once the short-term work permit is issued. The foreign applicant will need to provide proof of this health insurance when applying for the work permit.

AXA Indonesia Closes Shariah Business

AXA Insurance Indonesia (formerly known as Mandiri AXA General Insurance/MAGI) has announced plans to close its Shariah business unit. The portfolio transfer, a cancel-and-replace plan, has in principle received approval from the Financial Services Authority (OJK).

AXA Insurance’s takaful portfolio of policies will be transferred to another takaful company through a “cancel and replace” mechanism with the new insurer giving policyholders the same benefits as AXA Indonesia. However, AXA Insurance did not say which Islamic insurers would be accepting the portfolio.

The closure of AXA Insurance's Shariah business unit is a move related to the OJK’s requirement for insurance companies to spin off their Islamic insurance units (UUS) no later than 2026.

To comply with the regulations, insurance companies can spin off their takaful units to a newly established company, merge their takaful units with others, or cease their Shariah insurance business.

Private Hospital Worries About Payment

The Association of Private Hospitals Malaysia (APHM) has called for the establishment of a regulatory body to govern reimbursements by health insurance companies. Private hospitals were concerned that these private payers could hamper the delivery of treatment and healthcare coverage to patients in attempting to lower healthcare costs.

Private healthcare financing hopes there is a regulatory body that can govern the practice of reimbursement by the private payers that our patients have invested in. Reasonable payments by payers must be watched.

QBE Malaysia - Faces Wind-Up Demand

The Malaysian arm of insurance giant QBE has been ordered to pay over US$9mn to trade finance platform Marketlend, and now faces a winding-up demand from the Australian lender.

Sydney-headquartered Marketlend had submitted an insurance claim totalling US$9.38mn to QBE Insurance (Malaysia), after providing financing facilities to a commodity trader that later defaulted on repayments and went into liquidation.

The insurer, a subsidiary of Australia-listed QBE Insurance Group, did not pay out on that claim.

But on January 19, a Kuala Lumpur High Court judge issued a default judgement against QBE after it failed to make an appearance as defendant in the case. According to the judgement, QBE is required to pay Marketlend the sum claimed plus interest and costs.

Liquidation Order - Marketlend is now issuing a statutory demand to wind up QBE’s Malaysia business.

Marketlend is currently involved in several caases against insurers, ncluding in Australia, Malaysia and Singapore. As well as QBE, it has filed several lawsuits against Bond & Credit Company (BCC), an Australian subsidiary of Tokio Marine, after the insurer refused to pay out on claims arising from the collapses of several commodity traders.