Indonesia Medical Claim Spiked

Health insurance claims are on the rise in Indonesia, jumping by 29.6% to IDR5.96tn ($386m) in the first quarter of this year, according to the Indonesian Life Insurance Association (AAJI).
The data shows that health insurance claims have been rising by 25% to 30% since mid-2022.

This has exceeded the medical inflation rate of 13% in Indonesia in 2023. Insurance, Guarantee & Pension Fund Supervision unit of the OJK deputy commissioner and caution insurance companies to be able to undertake risk profiling and mapping.

Indonesian Life Underwriters Association said that the current trend of rising claims in the life insurance industry is an alert to the industry to increase synergy between underwriters and claims management. He says that such synergy is currently still not optimal and can be improved as risk categorization by underwriters will guide the claims management department in processing claims.

Era Of Smiling & Dialing Is Over

Life insurance is a subject upon which neither prospects nor Agents care to dwell. Product designs can be complex, and events that trigger benefits don't evoke pleasant images, unlike retirement planning advertisements that contain sailboats and strolls on the beach.

However, the need for life insurance exists across a large segment of consumers who generate income and borrow money. Finding ways to increase life insurance sales reverts back to some time-tested methods and involves a few new wrinkles to help agents tap evolving markets.

Know Your Stuff
Find a key product (attractive & saleable) and learn it inside and out. Prospects are impressed with Agents who possess a thorough knowledge of the contracts they promote. Unit-linked policy designs and riders are complex, but educating yourself on features, benefits, and sub-accounts helps move sales opportunities forward. Aimlessly pivoting between products may muddle the presentation.

Develop the habit of conveying policy benefits to potential buyers in plain terms. Rather than using industry jargon and acronyms, discover a way to engage prospects without sacrificing transparency. Buyers need to know what they're getting. Less confusion at the point of sale aids in sales successes, as well as policy retention.

Hone Your Presentation Skills
Putting prospective clients at ease in an appointment setting translates into improved closing ratios. Before launching into a formal presentation, finding some common interests is an effective way to connect with potential buyers. The sales track should be organized, simplified and most importantly, brief.

Avoid dominating the conversation in the sales meeting. Through open-ended questions, involve the prospect in the process and retain interest through interaction. Agent needs to be more authentic in their communications. Candid discourse between advisors and potential purchasers helps ease anxiety and facilitate sales.

Have A Story
Many seasoned Agents have relatable stories that humanize the life insurance purchasing process. The tales don't necessarily have to center around tragedy. After all, life insurance policies have living benefits, as well: providing liquidity for an emergency fund or supplementing retirement income.

On the other hand, some buyers are moved by emotion. Parents want to see their children attend college and spouses wish to ease the fiscal burden for their partners. Most Agents have had to deliver a check that helped to stabilize the lives of beneficiaries. Be prepared to tell your story when the proper circumstances arise.

Create A Partnership
It's true that the best advertising is free. Word of mouth goes far in building a client base. Going it alone can be cumbersome, especially when your strengths may extend to financial products and services other than life insurance. If this is the case, pursue a symbiotic relationship with an Agent who specializes in life insurance sales. The partnership may spawn a small referral network from which sales increase and split commissions flow. Adopting a team approach and creating synergies lets clients know that you are a committed fiduciary. 

Leverage Social Media
Successful life insurance sales remain a numbers game. The more prospects you solicit, the more likely you are to close deals. With the crush of digital advertising, social media platforms such as Facebook offer an effective means for inexpensively marketing services to thousands of buyers within your geographic area. Nearly 29% of consumers say they prefer to buy life insurance online.

Take advantage of the fact that most people own mobile devices and log in frequently during the day. The era of "smiling and dialing" is over.

Productive Salesman & Inept Manager

Managers play a crucial role in shaping an employee’s experience. Research shows that nearly 70% of the variability in employee engagement can be predicted by their managers’ behavior, decisions, and personality traits. In other words, whether people are happy, energized, or miserable at work depends mostly on their boss—and whether or not they’re an incompetent manager.

Employee Quit Their Boss Not Their Job
The impact of managers on employees often skews more detrimental than empowering. Many employees quit their boss, not their job. Research suggested that more than 50% of employees quit to escape an incompetent manager.

There are several reasons of managers being incompetent. One of the most glaring is inept individuals advancing their careers and climbing the organizational ladder to "fail upwards". 
Some incompetent managers get ahead due to their overconfidence or narcissistic traits. Some individuals can get ahead through their powerful connections, political skills or purely by some luck theory can’t explain.

Failing As Manager

It Is not uncommon for individuals who perform well in their jobs as individual contributors to fail to perform as expected when given managerial or leadership responsibilities, much like great individual athletes can disappoint after retiring and transitioning to team coaches or managers.

The core premise of the principle is simple: “In an organizational hierarchy, every employee tends to rise to his level of incompetence.” That is, people get promoted until they are no longer worthy of promotion, which means that their actual potential is where they end up minus one level, or the role before their stagnation.

The Peter Principle
The Peter Principle is an old concept, but it still explains some of the biggest problems in organizations: The presence of incompetent managers who frustrate their subordinates and the leaks and silos in talent development.

Many workers have experienced working with someone who ended up as your boss without having the leadership or management skills to manage people. According to the original example from the authors’ book, in a pill-rolling factory, a high-performing factory worker, once promoted to their first managerial role, would stay there until the end of their career because they did not have the people skills to manage effectively. Remember, these workers were promoted based on how fast they produced roll products but didn’t know how to manage other workers.

Sales Organization

A research done on promotion practices in 153 different sales organizations over six years, covering nearly 40,000 workers considered for promotion to managerial positions.

First, they found that companies still prioritize employees’ prior performance (individual sales performance in this case) over their managerial potential in their promotion decisions. It seems little has changed since the 1960s when many factories promoted workers into managerial roles based on manufacturing efficiency rather than managerial potential.

Second, they discovered that new managers’ pre-promotion sales performance was negatively related to their effectiveness as managers, such as in team management and creating collaborative commissions. High-performing sales workers often turn out to be less effective or incompetent managers.

Promotions focusing on past performance can lead to employees reaching their level of incompetence. This practice can be costly for organizations and individuals by promoting managers with inadequate skills or stripping promotion chances from those with excellent managerial skills who fall a bit behind in a cutthroat sales competition.

The core mechanisms of the Peter Principle are useful and insightful by showing that incompetent managers sometimes emerge not solely due to toxic characteristics or nepotism, but also because of inefficiencies in organizational incentive systems. The principle suggests that merit-based incentive systems can be problematic by promoting unprepared or unsuitable people into managerial positions in some cases.

Managing Change Management

Change management is a systematic approach to dealing with the transition or transformation of an organization's goals, processes and technologies. The purpose of change management is to implement strategies for effecting and controlling change and helping people to adapt to change.

Change management activities range from individual projects to large programs, such as digital transformation that introduces many new processes and applications. Change efforts often involve management teams and other stakeholders. Department-level management and employee buy-in is essential.

To be effective, a change management strategy must do the following:

-  Consider how a change will impact processes, systems and employees.
-  Include planning and testing the change, scheduling and implementing it as well as 

   documenting and evaluating its effects.
-  Provide documentation to maintain an audit trail if a rollback becomes necessary and 

   ensure compliance with internal and external controls, including regulatory compliance. 

What Are The Benefits Of Change Management

Taking a structured approach to change management helps organizations mitigate disruption, reduce costs, reduce time to implementation, improve leadership skills, drive innovation and improve morale. In addition, there are ways change management can add structure to IT and operations:

-  Improved documentation of enterprise systems.
-  Greater alignment between suggested change and what gets implemented.
-  Better starting point for automation initiatives.
-  Clearer understanding of why systems were made.
-  Ability to reverse-engineer changes made to existing business processes and infrastructure.
-  Better ability to identify what can be safely eliminated or updated.

Change Management For Project Management

Change management plays an important role in project management because each change request must be evaluated for its impact on the project. Project Managers - or the senior executives in charge of change control must examine how a change in one area of a project could affect other areas and what impact that change could have on the project as a whole. 

Project areas that change control experts should pay particular attention to include the following concerns:

Scope - A change request could affect the project scope

Schedule - A change request could alter the project schedule.

Costs - Labor is typically the largest project expense and changes that increase time to 

complete also raise project costs.

Quality - Change requests might affect the quality of the completed project. For example, accelerating the project schedule can affect quality when work is rushed.

Human Resources - A change request might entail bringing on additional or specialized labor. Also, when the schedule changes, key resources might be moved to other assignments.

Communications - Change management is interactive. Approved change requests must be communicated to the appropriate stakeholders at the right time.

Risk - Change requests must be evaluated to consider risks they pose. Even minor changes can have a domino effect on the project and introduce logistical, financial or security risks.

Procurement - Changes to the project can affect when, where and how materials and contract labor are procured.

When an incremental change is approved, the project manager documents the change in one of four standard change control systems to ensure all thoughts and insight have been captured with the change request. Changes that aren't entered through a control system are labeled defects. When a change request is declined, this is also documented and kept in the project archives.

Types Of Organizational Change

Change management can be used to manage many types of organizational change. The three most common types are the following:

Developmental Change - Any organizational change that improves previously established processes and procedures.

Transitional Change - Change that moves an organization away from its current state to a new state to solve a problem, such as implementing a merger and acquisition or automating a task or process.

Transformational Change - Change that radically and fundamentally alters the culture and operation of an organization. The result of transformational change might not be known ahead of time. For example, a company may pursue entirely different products or markets.

Popular Models For Managing Change

One of the popular model is ADKAR & Kotter's 8 Steps. 

ADKAR

Prosci founder Jeff Hiatt created the ADKAR model. It consists of five sequential steps:

-  Awareness of the need for change.

-  Desire to participate and support the change.
-  Knowledge of how to change.
-  Ability to implement desired skills and behaviors.
-  Reinforcement to sustain the change.

Prosci 3-Phase Process

This expands on the ADKAR model and includes three phases: preparing for change, managing change and reinforcing change. It provides a comprehensive framework for managing change initiatives.

Kotter's 8-Steps For Leading Change

Harvard University professor John Kotter's model has eight steps:

-  Create a sense of urgency.
-  Build a guiding coalition.
-  Form a strategic vision and initiatives.
-  Enlist a volunteer army.
-  Enable action by removing barriers.
-  Generate short-term wins.
-  Sustain acceleration.
-  Institute change.

What Are The Challenges Of Change Management

Companies developing a change management program from the ground up often face challenges. Besides a thorough understanding of company culture, the change management process requires an accurate accounting of the systems, applications and employees that changes are likely to affect. Additional change management challenges include the following:

Resource Management

Managing the physical, financial, human, informational and intangible assets and resources that contribute to an organization's strategic plan becomes increasingly difficult when implementing change.

Resistance

The executives and employees most affected by a change might not be amenable to it, resulting in a backfire effect. In many cases, this happens because people perceive that change will result in extra work. Transparency, training, planning and patience can help quell resistance and improve overall morale. Additionally, care should be paid to address and manage the emotional journey of employees during change.

Communication

Companies often fail to consistently communicate change initiatives or include employees in the process. Change-related communications plans require an adequate number of messages, the involvement of enough key stakeholders to get the message out, and the use of multiple communication channels.

New Technology

The application of new technologies can disrupt an employee's entire workflow. Companies can improve adoption of new technology by creating a network of early learners who champion the new technology to colleagues.

Multiple Points Of View

How individuals perceive the impact of change depends on their own personal view of it, from their own perspective – their ‘hilltop’. Leaders and managers will be looking at the change from their own personal hilltops in the organization, and what they see below may be different from what members of their staff may see who are elsewhere in the organization – on their hilltops – and looking down, and their views may differ from person to person. In any change initiative, success criteria may differ for people based on their roles in the organization and incentives. Managing the impact of these factors is challenging.

Scheduling Issues

Deciding whether a change program will be long or short term and clearly defining milestone deadlines is complicated. Some organizations believe shorter change programs are most effective. Others believe a more gradual approach to change reduces resistance and errors.

Importance Of A Change Management Plan
As a conceptual business framework for people, processes and the organization, change management increases the success of critical projects and improves a company's ability to adapt quickly. Business change is constant and inevitable. But when poorly managed, it can cause organizational stress as well as unnecessary and costly rework.

By standardizing the consistency and efficiency of assigned work, successful change management assures that the people affected by changes aren't overlooked. As changes to work occur, change management helps employees understand their new roles and build a more process-driven culture.

Change management also helps companies remain dynamic in the marketplace and encourages future growth.

Principles Of Change Management
Three principles of organizational change management build on the three stages of change management. 

Unfreeze The Current Stage

Change Agents need to identify what precisely they want to change. They must formulate a "why" that other participants are likely to buy into. In essence, they need to reverse-engineer the future state and translate this benefit to other possible participants. Then they get people to participate in the new idea. This could include executive sponsorship for a big change or co-workers for a departmental change.

Change The System

At this stage, change agents and any collaborators can put the change into practice. The change agents must work with collaborators to communicate the idea and bring other participants on board. It is important to pay attention to any pushback and find areas of shared understanding to either help move the change forward or shift its implementation in response to feedback. Tension might be high as everyone gets used to the new system. It's important to be respectful of their feelings and ideas.

Refreeze

Eventually, people get used to the new system, or they revert to what was working before. At this stage, it is important to declare that the change is over whether accepted or rejected. Even if the change was rejected, declaring it over gives everyone a chance to relax. It is also helpful at this stage to document what happened for future reference.

Conclusion
In general, most people don't like change, even if it's for the better. Some of the best practices to mitigate resistance to change:

-   Clarify the goal of the change being made and identify how it can benefit others.
-   Listen to objections and find ways to address them.
-   Take the time to build consensus rather than bulldoze dissenters.
-   Consider feedback as a guide rather than an obstacle.
-   Celebrate success at the end to encourage further change
-   Be willing to backtrack when the change doesn't meet desired goals.

PasarPolis Growth in South-east Asia

Indonesia-based insurtech firm PasarPolis claimed that it is now poised for profitable growth and is preparing for its next major step: expansion into Singapore. The firm said in a statement that building on its successes, it aims to further expand regionally, targeting new markets such as Singapore and consolidating its position as a dominant force in Southeast Asia’s.

Innovations & Expansion - The company said it remains committed to continuous innovation, with plans to introduce new products and enhance existing offerings to cater to evolving market demands. It also emphasized that the firm is on track to become profitable, leveraging technology, data analytics, and strategic partnerships to drive sustainable growth, profitability, and market leadership in the insurtech sector.

It is noted that the firm anticipates a 50 percent compound annual growth rate (CAGR) over the next four years and plans to fully underwrite all products within this period. According to the statement, the firm continues to strengthen its position in the region with impressive milestones in Vietnam and Thailand.

Expanding beyond Indonesia into Southeast Asian markets like Vietnam and Thailand, the firm said it has solidified its position as a regional leader in the insurtech industry, focusing on profitability, sustainability, and innovation.

It noted the operations in these markets have proven highly effective, driven by strategic partnerships and a customer-centric approach. These achievements highlight the firm’s successful strategy of collaborating with ecosystem partners for impactful market entry and expansion.

It is noted that since its expansion into Thailand and Vietnam in 2019, PasarPolis has achieved millions in policy sales, underscoring its commitment to democratizing insurance and leveraging technology to address the unique needs of local markets.

PasarPolis said this success further demonstrates its dedication to innovation and customer-centric solutions in transforming the insurance landscape across Southeast Asia.

Revenue Growth - PasarPolis reported impressive financial performance, achieving a 2 times revenue growth since its last funding round until 2023, while consistently maintaining positive gross margins. Its gross written premium (GWP) surged by 250 percent in the fiscal year, showcasing significant growth for the company.

PasarPolis’ full-stack insurtech ecosystem thrives by integrating seamlessly with partners. Following a fruitful partnership with e-commerce giant Shopee in Indonesia, the firm has extended this collaboration to offer insurance protection to users in Thailand and Vietnam. 

In Indonesia, the firm offers gadget and cracked-screen insurance through Shopee, providing accessible and affordable protection for electronic devices. In Vietnam, the partnership has expanded to include comprehensive gadget insurance and product liability coverage, ensuring customers can safeguard their purchases with ease.

Meanwhile, Thailand has seen the successful launch of digital electronic protection, a first in the country, which has garnered significant consumer adoption and satisfaction. These achievements demonstrate the scalability of PasarPolis’ platform, enabling easy expansion into other major markets with minimal investment.

Besides Shopee, PasarPolis also partners with other notable brands in multiple markets, such as VFS Global – the world’s largest outsourcing and technology services specialist – in Indonesia and Thailand.

Other key partners in the region include VNtrip, Sendo and Chotot.

1 Million Policies - Since expanding overseas, PasarPolis has sold nearly one million policies in each market, Thailand and Vietnam, reflecting the strong demand and successful adoption of its innovative insurance solutions.

South Korea Insurance Fraud Rising

South Korea National Police Agency reported that the number of insurance fraud cases reached 1,600 last year, a slight increase from 1,597 in 2022. The number of individuals detained in connection with the crime reached 6,044, a 24.6 percent increase from 4,852 the previous year. A total of 107 people were arrested, up 18.9 percent from 90. Insurance fraud amounted to over 1.11 trillion won last year, a 26.7 percent increase from 880.9 billion won in 2019.

Falsifying Claim - A nurse and a doctor at a medical clinic in Daegu and two insurance firm sales representatives were indicted without physical detention last month. Also indicted were 94 people who falsely claimed insurance payouts. All of them face charges of insurance fraud for their involvement in netting a combined 1.1 billion won ($802,743) in payouts between 2018 and 2021.

The clinic staff, according to the police, sent a portion of the payouts to patients registered as having undergone surgery or costly treatments in medical records they falsified. The years of fraud were uncovered after a group of insurance firms filed a report with the police, suspecting orchestrated efforts by the small clinic that reported repeated cases of high payout claims for conditions that are not so common.

New Law - Expectations are growing that cases similar to this would become less frequent deterred by the implementation of a new law governing the penalties for insurance fraud. The long-awaited revision allows financial authorities to refer potential cases for investigation at the first signs of attempted fraud. Previously, the actionable offense was claiming payout after defrauding someone .

Some says the revision is toothless because it falls short of recovering fraudulent proceeds. Also lacking is tougher punishment for industry insiders as part of overall strengthened penalties, a measure long advocated by the insurance industry.

The ceiling for the fine for insurance fraud was raised to 50 million won, up from the previous 20 million won. But insurance fraud does not lead to a prison term as frequently as non-insurance fraud does.

Reports Of False Claims Or Staged Accidents - will trigger an immediate investigation, corroborated by data provided by the health ministry-supervised, state-run NHIS and employment benefit system for previous track records. Insurance fraud is hard to identify, especially when organized with each of the gang members knowing exactly what to do to make it look like an accident or pass the scrutiny of insurance firms.

Malaysia Insurance Industry Update 2024

The life and family takaful and non-life sectors are expected to see slower growth in 2024 due to inflationary pressures. In addition, both are adequately capitalized to absorb some margin compression and potential shocks.

Both have a stable outlook on the Malaysian insurance and takaful sector, which is supported by steady growth in insurance demand, with capitalisation robust and claims under control.

Slower Growth 2024 - It is forecasted that a slower year-over-year new business (NB) expansion of 3.5%-4.0% in 2024 (2023: +4.2%) in the life and family sector as consumers face rising costs, anticipating the planned reduction of RON95 petrol subsidies and noting that policy surrenders and forfeitures have already crept up.

Medical claims - have also surged recently, trimming the earnings of life insurers and family takaful operators, with repricing exercises being implemented to counteract this shift. Bank Negara Malaysia (BNM) advices insurers and takaful operators to include cost-sharing provisions in new individual medical and health products. This could partially stem medical inflation though we view this to happen over the longer term.

Motor Insurance - Car sales has led to projections of general insurance and takaful sector premiums growth at 5% this year, slowing down from 9.4% seen in 2023, with margins at their thinnest in a decade and expected to remain compressed amid intense competition.

Capitalization - will stay strong as sufficient buffers are in place to withstand potential shocks. Industry capital adequacy ratios as at end-December 2023 were over 200% (required minimum: 130%).”

Digitalization - efforts by existing industry players and upcoming digital insurers and takaful operators (DITOs) will help enhance customer experience and move insurance penetration closer to the central bank’s target of 4.8%-5.0% of GDP.

BNM recently launched a licensing and regulatory framework for DITOs which will promote greater innovation within the industry and help narrow the protection gap especially among the underserved segments. This encourages the adoption of new and emerging technology-based solutions, with licensees expected to advance in three core areas: inclusion, competition and efficiency.

In the medium term, the entry of DITOs would intensify competition while also complementing existing players targeting the underinsured and uninsured. The application period for said licenses is to open in January 2025 and close in December the following year, with no limit set for the number of DITO licences to be awarded.

Financial market volatility continues to heavily influence the returns of insurance and takaful operators, particularly those in the life/family takaful sector given substantial investment assets held. It is expected that family takaful to continue to make up between 40% and 50% of NB premiums, especially as the Islamic banking sector continues to outpace its conventional counterpart in line with the “Islamic first” strategy adopted by various banks.