Justice for Jiwasraya Policyholders

KOMPAS/PRIYOMBODO

Two employees of PT Asuransi Jiwasraya walk past the state insurer’s logo at its Jakarta office on Thursday (9/1/2020). A 2018 investigation into Jiwasraya by the Supreme Audit Agency (BPK) uncovered corporate fraud that incurred losses for both the company and the state. The State-Owned Enterprises Ministry is backing the efforts of the BPK and the Attorney General\'s Office in resolving the case, with a focus on strengthening the company.

The Attorney General’s Office’s (AGO) decision to name five suspects in a corruption case involving state-owned insurance company PT Asuransi Jiwa Jiwasraya must also be followed with steps to ensure policyholders get their rights.

We appreciate the swift action of the AGO in naming the suspects. On Tuesday (14/1/2020) evening, the AGO arrested Jiwasraya directors and private business players who were suspected of benefiting from wrongdoings at the state-owned company.

This quick step is important to restore public trust and investor confidence, both at home and abroad, in law enforcement and the insurance business in Indonesia.

According to Attorney General Sanitiar Burhanuddin, so far, Jiwasraya\'s financial losses has reached Rp 27 trillion (US$1.98 billion). Previously, Jiwasraya president director Hexana said the company was unable to meet its obligation to pay policyholders, which totaled Rp 12.4 trillion as of December 2019.

The financial problem in Jiwasraya is suspected to have started in 2004 when the company reported a deficit of Rp 2.769 trillion in reserves. The government has tried several times to improve the company\'s financial position.

One of the efforts was when the Capital Market Supervisory Agency granted Jiwasraya a permit at the end of 2012 to issue the JS Protection Plan product. It turned out, Jiwasraya had difficulty fulfilling its obligations to its policyholders, including those of JS Protection Plan products.

ANTARA/DHEMAS REVIYANTO

Police officers escort Hendrisman Rahim (in red vest), the former president director of state insurance company PT Asuransi Jiwasraya, as he is detained on Tuesday (14/1/2020) at the Attorney General’s Office in Jakarta.

Finance Minister Sri Mulyani Indrawati stated on Dec. 19, 2019, that there were suspicions of a corporate crime related to financial matters that has entangled Jiwasraya.

The efforts to restore confidence in the national financial industry need to be done immediately. At the same time, PT Asabri, a state-owned social insurance for Indonesian Military (TNI) personnel, also experienced the same problem. Asabri\'s investment in 12 companies during 2019 has brought losses amounting to Rp 10 trillion.

Insurance products are one form of financial industry deepening. In good the governance of insurance businesses, the funds collected from customers are invested in financial products and other products that are permitted and under the prudence principle, while also looking for adequate returns.

The government has also formed a special institution to oversee financial service businesses.

The problems in these two insurance companies raised questions about their corporate governance practices, especially regarding internal and external supervision. Internal supervision involves government representatives as shareholders. The government has also formed a special institution to oversee financial service businesses.

Legal steps are underway and the public hopes that the government will resolve these cases of alleged corporate crime transparently and indiscriminately.

Moreover, in addition to legal action, the government must also find a way to uphold the rights of policyholders and customers. Furthermore, there needs to be a fundamental overhaul of the two companies, in addition to a comprehensive audit of Indonesia’s insurance industry.