Every country has their own requirement in insurance policies just as individual insurance provider has their own terms and agreements and different individuals have different premiums to review. Factors like geography, economy and need are being considered in every transaction. Axis Capital, with a group of insurance and reinsurance companies across the global starting from its main office in Bermuda to its branches in Australia, United Kingdom, over 10 states in the United States and Singapore knows the pressure of registering different insurance policies in each country. For those who would want to know the policyholder’s protection in each nation, here are the general guidelines:
Life insurer - Life insurers are required to maintain statutory funds, which act as a mechanism for quarantining the life insurance business of the company from any other business of the company.
General insurer - APRA administers the Financial Claims Scheme (FCS), which makes payments to certain policyholders with valid claims on an insolvent general insurer. The Government funds the payments made under the scheme and then seeks recovery from the general insurer in the winding up process. Any shortfall may be recovered through a levy on the general insurance sector.
In the event of insolvency or revocation of license of a nonlife insurer whose assets are insufficient to pay benefits, a non-life policyholder protection fund covers 100 per cent of losses up to RMB50,000 and thereafter, 90 per cent of losses for individual policyholders and 80 per cent for corporate policyholders.
In the event of insolvency or revocation of license of a life insurer, the policies are required to be transferred to a new insurer and the policyholder protection fund will make up the shortfall in supporting assets to 90 per cent of individual policyholder liabilities and 80 per cent of corporate policyholder liabilities.
With most of its insurance companies located in the country’s capital, Jakarta, each insurance company must form its own protection fund as a means of ‘last resort’ to protect the interests of policyholders. The protection fund must constitute at least 20 per cent of the insurer’s capital plus 20 per cent of annual premiums. The funds representing the protection fund must be deposited with a bank.
The insurance law gives policyholders preferential rights in a liquidation procedure ahead of secured and unsecured creditors but behind preferred creditors (tax liabilities and employee compensation).
The Financial Services Authority, Otoritas Jasa Keuangan or OJK Regulation No. 1 of 2013 gives a policyholder the right to report a complaint to the OJK with an indication of a dispute between an insurance company with a policyholder and/or an alleged violation of the financial laws and regulations. Further, it also requires insurance companies to have annual program on customers and/or public education to promote financial (insurance) literacy.