PT BNI Life Insurance (BNI Life), a state-owned life insurance company, has revealed its preparations for implementing Financial Accounting Standards Statement (PSAK) 74 regarding Insurance Contracts on January 1, 2025.

Acting President Director of BNI Life, Eben Eser Nainggolan, disclosed that the company has not yet implemented PSAK 74 in its financial reports. This is because the implementation of PSAK 74 is still undergoing User Acceptance Testing (UAT).

"And according to the plan, in March, it will go live and run in parallel," said Eben when contacted by Bisnis on Monday (5/1/2024).

Eben revealed that there are several challenges in implementing PSAK 74, especially in understanding the standard itself as it is being applied for the first time in Indonesia under the International Financial Reporting Standards (IFRS) 17 adoption. He stated that there is a minimal understanding of IFRS 17 among Human Resources (HR) in the industry.

"So it's quite difficult to share knowledge and discuss if there are problems related to understanding IFRS 17," he explained.

Additionally, Eben also mentioned the limited implementation timeframe, while many activities are being conducted because they are related to data and systems. Lastly, the implementation costs are also significant, including the need for consultant and system costs.

The Financial Services Authority (OJK) has established the improvement of the national insurance industry's credibility as one of its priority work programs, including ensuring the readiness of industry players to implement PSAK 74 regarding Insurance Contracts on January 1, 2025.

Previously, the Executive Head of Insurance, Guarantees, and Pension Funds Supervision concurrently as a Commissioner of the OJK, Ogi Prastomiyono, mentioned that there are still several challenges in the industry that need more attention in implementing PSAK 74, including the readiness of information systems.

However, he is confident that the regulation can be implemented on time. "With the establishment of the steering committee and the PSAK 74 implementation team, OJK is optimistic that these challenges can be overcome effectively," Ogi said in a written statement quoted on June 11, 2023.

On the other hand, the insurance industry is targeted to have an initial balance sheet using PSAK 74 by the end of 2024. The OJK assesses that the majority of companies can prepare this initial balance sheet.

"Insurance companies that implement PSAK 74 early can present the latest financial statements adequately and do not encounter significant difficulties in the early implementation," said Ogi.

The implementation of PSAK 74 is in line with the mandate of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (Law P2SK), which states that Financial Sector Business Actors (PUSK) must submit and prepare financial statements in accordance with the financial reporting standards determined by the Financial Reporting Standards Committee, which is established by Presidential Decree.