OJK Designs Insurance for P2P Lending, AFPI Responds

OJK (Doc. Ist)

Printable.biz.id - Recently, the Financial Services Authority (OJK) announced plans to design an insurance product for the fintech peer-to-peer (P2P) lending industry. In response, the Indonesian Joint Funding Fintech Association (AFPI) has spoken out.

According to AFPI Chairman Entjik S. Djafar, insurance in lending should be treated as an option, not as a mandatory requirement for providers.

"I want to emphasize that this insurance is an option, not mandatory or a requirement," said Entjik during the Indonesian Joint Funding Fintech Association (AFPI) Media Gathering event in Padalarang, West Bandung Regency, West Java, on Wednesday (1/22).

Furthermore, Entjik expressed AFPI's concerns if the plan is implemented. He warned that implementing this plan could expose P2P fintech to the risk of moral hazard.

He explained that if all loans are insured, borrowers might feel less obligated to repay their debts because they are protected by insurance. This could even increase the risk of default.

"My fear is that this could lead to a mass increase in defaults, which could ultimately bankrupt insurance companies," he stated.

Additionally, AFPI conducted research in several countries, including the UK. According to him, many fintech companies in the UK do not implement insurance comprehensively for the P2P lending industry.

However, AFPI remains open to discussions with OJK to find the best solutions that benefit all parties, including P2P companies and the public.

"Some options we are considering together include forming a consortium or developing insurance products that are more aligned with the characteristics of the P2P fintech lending industry," he concluded.