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The Anomaly of Insurance's Significant Potential in the Business World


Elsatekno.com- The Anomaly of Insurance's Significant Potential in the Business World-In the financial hierarchy, insurance occupies the foundation, offering protection of wealth to safeguard future prosperity. The insurance's placement at the top priority is not detached from the benefits derived by policyholders.

Insurance, in its core, is a contract between the insurer as the underwriter and the insured as the beneficiary. In insurance, the underwriter provides indemnification or replacement when something adversely affects the beneficiary or their property according to the agreed contract.

In essence, insurance companies offer indemnification to beneficiaries when undesirable events occur. Conversely, insured individuals must fulfill their obligations, which is to pay insurance premiums according to the contract.

The term "Insurance" is no longer foreign to many people. Despite the popularity of the term "Insurance," the majority of Indonesian citizens still do not have insurance. According to data from the Financial Services Authority (OJK), the understanding of the Indonesian public about insurance and its use is still limited.

This issue is evident from the penetration or ownership of Insurance by the Indonesian public. According to data from OJK, as quoted by Bisnis Indonesia in July 2021, the insurance penetration rate in 2019 reached 2.81%. This figure increased to 2.92% in 2020 and 3.11% in June 2021.

This situation is due to the lack of understanding among the public when purchasing insurance and the claims process for the insurance in question. Another reason is the variety of insurance products offered by insurance companies. As a result, many people, particularly those new to insurance, are confused about the benefits of each insurance product offered

Insurance is no longer separable from life due to its increasingly frequent development. Whether consciously or unconsciously, insurance is one of the only financial instruments that can provide protection or guarantee income and livelihood for individuals and organizations from unknown risks that may come at any time.

Insurance has now become one of the best alternatives for saving and financial planning, as well as a long-term investment tool. Insurance is not only a tool for spreading business risk but also provides benefits in protecting personal (life), assets (property), and liabilities. As a result, insurance must grow rapidly and widely throughout Indonesia. As stated by OJK, the penetration of the insurance industry in Indonesia is still very low.

This statement is indeed an anomaly in the business world given the significant potential of insurance. The ratio of the business world and the public insured with this potential is still very low. This indicates that insurance is not yet popular, not well understood, and not well received by a large portion of the public due to the relatively low level of insurance awareness.

Therefore, it is a challenge for those concerned, as the public's general perception of insurance and its benefits is not yet widely known, and there is still the perception that becoming an insurance customer adds to the burden of costs and has a negative image, especially in relation to the complicated claims process.