Indonesia Raise Minimum Equity - Insurance Company

Indonesia has raised the minimum equity for insurance firms to hold to at least 250 billion rupiah (S$21.4 million) by 2026, 67 per cent higher than the previous minimum level, following policy defaults in the past few years.

Under the previous rules, the minimum paid up capital for insurance firms was 150 billion rupiah.
The Financial Services Authority (OJK) will increase the minimum to between 500 billion rupiah and one trillion rupiah by 2028.

Limited capital capacity is one of the main issues that has potential to disrupt the sector’s resiliency and stability in anticipating potential economic crises. A number of insurance firms, including state-owned Asuransi Jiwasraya, an insurer for military officers Asabri and one of the country’s oldest insurers, Bumiputera, got into financial difficulty after a wave of unpaid claims.

The new regulation also called for new investors to put in at least one trillion rupiah to start a new insurance business.

Indonesia Universal Health Scheme

Indonesia president Joko Widodo has affirmed that citizens are exempt from medical bills when visiting hospitals, attributed to the national health insurance program, BPJS Kesehatan, covering 95% of the population, or approximately 267 million people.

Additionally, the Indonesian State Budget is responsible for the fees of 96 million citizens under this scheme. During a meeting with insurance beneficiaries in Blora, Central Java, Widodo remarked on the unique nature of Indonesia's healthcare system, noting the country's size and the provision of free hospital access to its citizens.

The president's visit to Central Java included inspections of regional health facilities. These visits encompassed the Toroh Community Health Center (Puskesmas) in Grobogan and the Salatiga Regional General Hospital.

While touring these health facilities, President Widodo emphasized the need for enhancements in health services and infrastructure. Key areas of focus included reducing patient wait times and improving medical equipment, such as ultrasound machines, at community health centres.

In Blora, the president acknowledged challenges related to space availability in hospitals. Nonetheless, he underscored the importance of maintaining good health among the population. He expressed his hope that the BPJS Kesehatan and the Healthy Indonesia Card would continue to serve the citizens effectively.

Elsewhere in the country, Indonesia has announced an increase in the minimum equity requirement for insurance companies, setting the new treshold at 250 billion rupiah (US$16.06 million) by 2026.

RM1.34 Scam Losses - Malaysia 2023

The national scam response centre (NSRC) said losses totalling RM1.34 billion were recorded from 33,234 cases involving various online scams between Jan 1 and Dec 8 last year (2023).The figures were based on records obtained by the NSRC, through reports from victims via the 997 hotline.

The losses involved six modus operandi, with investment scams recording the most losses at RM437 million, followed by e-commerce (RM383 million), telecommunications (RM334 million), e-finance (RM104 million), love scams (RM41 million) and non-existent loans (RM39 million).

The total amount of RM1.34 billion is a major increase compared with 2022, when the recorded losses were RM804 million. The public is advised to be vigilant and not to easily fall for the various tricks of online crime syndicates, especially in investments which promise high returns.

Sompo Holdings & Bigmotor

Sompo Holdings' Kengo Sakurada is planning to step down as CEO at the end of March, over automobile insurance fraud at used-car dealer Bigmotor. The Financial Services Agency is expected to issue business improvement orders to the holding company and subsidiary Sompo Japan Insurance as soon regarding their responses to wrongdoing by Bigmotor. The FSA ended its on-site inspections of Sompo Holdings and Sompo Japan.

The orders will likely urge the two companies to clarify their management responsibility over the matter. The parent company will consider whether Sakurada, 67, should also quit as its chairman, based on the upcoming FSA actions.

Bigmotor Misconduct - Sompo Japan was the only firm among major nonlife insurers to resume referring its auto insurance customers to Bigmotor even though it was aware of the used car dealer's misconduct. Sompo Japan later notified Sompo Holdings of the resumption.

An independent investigation panel set up by Sompo Holdings has criticized Sompo Japan's decision on resuming introductions of customers to Bigmotor as "lacking customer-oriented thinking." Sompo Holdings did not take any proactive measures and failed to properly instruct the unit to deal with the matter, the panel also said, pointing to flaws in the parent company's supervisory system.

Sakurada joined Yasuda Fire & Marine Insurance, now Sompo Japan, in 1978. He assumed his current positions in April 2022 after serving in posts such as president of NKSJ Holdings, now Sompo Holdings. Sakurada was chairman of the Japan Association of Corporate Executives, or Keizai Doyukai, from April 2019 to April 2023.

Bharti Existing AXA India Life Insurance

The Bharti group which has been looking to exit the insurance business and focus on telecom sector is in advanced talks with SBI Life and others to sell its wholly owned life insurance venture Bharti AXA Life Insurance

Bharati group which has been looking to sell its insurance business is in advanced talks with SBI Life and others. The group is planning to sell its now wholly owned life insurance venture Bharti AXA Life Insurance.

Bharati Group Insurance Business - The group acquired its joint venture partner AXA Group’s 49% stake in the life insurance business in October 2023. This after attempts by Hinduja Group and Abu Dhabi Investment Authority (ADIA) to acquire AXA’s stake in the life insurance venture failed. Bharti and the French insurer had formed two joint ventures in 2006, with the Indian partner holding 74% stake in both Bharti AXA Life Insurance and Bharti AXA General Insurance.

Bharti has been looking to exit the insurance business to focus on Telecom after the acquisition. The group has already sold the general insurance business to ICICI Lombard by way of merger when AXA exited the company.

Bharati AXA has a market share of 2% in terms of premium in the life insurance sector. The equity share capital of the company stood at Rs 3,706 crore as of March 31, 2023.

Roojai Acquires Lifepal

Thai insurtech Roojai Group has completed the acquisition of Lifepal, a prominent online insurance broker based in Indonesia.

Roojai Group’s acquisition is set to leverage the strengths of both companies. Lifepal’s established presence as the largest online insurance distribution channel in Indonesia complements Roojai’s expertise in pricing and underwriting technology, promising an enhancement in customer experience.

Over the past year, Lifepal had been actively seeking a new investor with a comprehensive understanding of the insurance sector. Its collaboration with Roojai Group aligns with these criteria, it was stated, offering a strategic partnership between the two entities.

The joint statement from both companies highlights their plans to broaden their product range and distribution networks, both online and offline. The collaboration aims to deliver a more integrated and customer-focused approach to insurance services.

Lifepal’s customers are expected to benefit from Roojai’s competitive pricing structures and enhanced customer experience, a model that has seen success in Thailand. Concurrently, Lifepal’s insurance partners will gain from Roojai’s proficiency in digitalising insurance processes, including aspects like car inspections, claim support, and strategies for portfolio sustainability.

Despite the acquisition, Lifepal will maintain its operational independence from Roojai Indonesia, continuing to offer its online comparison services for car and health insurance.

Singapore - Financial Industry Disputes Resolution Centre (Fidrec)

Victims who have been duped into buying inappropriate financial products will soon be able to claim more in compensation. The Financial Industry Disputes Resolution Centre (Fidrec) has proposed to raise the claim limit by 50 per cent, from $100,000 now to $150,000, if investors suffer losses from misconduct, negligence or contractual breach by employees of financial institutions.

The move is significant because the higher amount will apply to the losses suffered, not the size of the initial investment. Take a bank customer who is misled into a buying an unsuitable $1 million product. He can have his case adjudicated by Fidrec if he suffers losses of up to $150,000.

If his losses exceed the limit, he can still ask Fidrec to hold a mediation, which does not cap claim amounts, so both sides can try to settle the dispute amicably.

This change and others on Fidrec's wish list are likely to be in force by the third quarter of 2024 and will further strengthen Singapore's standing as a leading global financial hub because such access to speedy justice will come at virtually no cost to investors.

Free Service - Fidrec's mediation service is free for claimants, while those who go for adjudication in such cases have to pay only a small fee of $54.50, including GST.

Such easy recourse for consumers who suffer losses due to misconduct or misrepresentation should be reason enough for financial institutions to tighten their supervisory and regulatory checks to weed out rogue employees.

If not, they will have to spend a lot of money and effort to deal with the deluge of claims that may land at their door as investors become more aware of their rights.

Miselling By Banker - Consider a recent case where Fidrec helped a 75-year-old woman recover her investment losses after she was duped into sinking $100,000 in a risky product.

The woman had wanted to put her money in a fixed deposit account but a bank employee sweet-talked her into investing it instead by lying that she not only would get better returns, but her initial capital would also remain intact.

She learnt she had been fooled only about a year later when she noticed that her $100,000 deposit had plunged by about 20 per cent.

Fidrec's adjudicator found that the woman, who could speak only Mandarin, was misled by the bank employee who stated in her records that the woman was a seasoned investor even though this was not true.

While the Monetary Authority of Singapore requires banks to safeguard the interests of elderly and illiterate customers, the employee's supervisor had failed to ensure that the woman knew what she was getting into. As a result, the bank was ordered to compensate her.

More Compensation - Many people are deterred from filing lawsuits to recover investment losses due to hefty legal bills. Moreover, they also face the risk of footing the costs of the other party if they can't prove their case.

This is why Fidrec is a boon for the average investor. It ensures that deserving claimants can get back their money without having to worry about paying high legal costs. The rising costs of living and income over recent years mean that investments by retail consumers have become larger. Although only a small percentage of claims exceeds the $100,000 limit now, these often pertain to disputes involving scams, insurance claims and market conduct, which are significant issues for retail consumers.

For instance, the number of claims exceeding $100,000 had been creeping up in the last three financial years (FYs), from about 100 cases in the previous two financial cycles to 157 cases in FY22 / 23.

While raising the claim limit will benefit more people, you should never read the change as giving you the right to file a complaint against a financial institution just because you are unhappy with the investment outcome.

After all, investments always carry risks and the most basic step you should take is to understand what you are getting into and that you can lose money if markets turn. This is why Fidrec will not entertain claims from investors who are dissatisfied with the performance of investments they had bought willingly and through no fault of the vendors.

Similarly, complaints relating to standard commercial decisions and pricing policies, such as higher interest rates and fees, will not be entertained.

Small Businesses Eligibility - Like many retail investors, small businesses may not have the resources to take on banks and insurers over disputes involving day-to-day transactions. That Fidrec is proposing to hear claims from small businesses is welcome news for such entrepreneurs.

Fidrec wants to allow small businesses with an annual turnover up to $1 million to use its services. The move is expected to benefit more than 200,000 of such firms, especially when they face the following disputes:

Like safeguards to protect consumers, this business-friendly proposal will be applauded by smaller businesses as it is tantamount to giving them a much-needed David versus Goliath slingshot against bad and unfair practices of the big financial institutions.

In the wake of rising costs, it is truly heartening that public bodies like Fidrec are looking at ways to improve access to justice without any cost burden being imposed on people.

Together with the judiciary and the enforcement branch of the Government, this is why Singapore will continue to be the best and safest place to invest and do business, even for the man in the street.