Challenges of consumer protection in the life insurance industry: A qualitative study

Abstract

In the financial sector, trust is essential. The economic crisis of 1998 was one of the financial scandals affecting Indonesia. This phenomenon prompted the regulator to ensure that Indonesians received adequate consumer protection, directly impacting the Indonesian financial sector, especially the life insurance sector, where penetration has remained low over the past decade. Due to its long-term nature and significant economic contribution (OJK [Otoritas Jasa Keuangan], 2017), life insurance is at the forefront of the right to adequate consumer protection, which includes the disclosure of accurate and reliable information when purchasing or selling insurance. This study examined the current state of consumer protection experiences in Indonesia’s life insurance industry based on empirical research. This study investigated how these requirements are viewed regarding the benefits and difficulties associated with their implementation. A qualitative study employing the case study research methodology was conducted to examine the life insurer experiences of the sampled life insurance companies. Despite the numerous benefits and risks, the study found that consumer protection is still being implemented in the workplace, albeit inconsistently and not optimally. The study demonstrates the significance of enhancing need-based selling, consistent consumer protection, and trust-building efforts by life insurers. This study provides regulators with valuable feedback on the need to enhance their oversight, financial literacy, and regulatory challenges. Finally, this study identified opportunities for further research into the optimal customer engagement strategy to address industry issues