Indonesia: Life insurance body says sector unaffected so far by Jiwasraya insolvency woes
Source: Asia Insurance Review | Jan 2020
The Indonesian Life Insurance Association (AAJI) says that the financial problems of state-owned life insurer Asuransi Jiwasraya can have an impact on the industry if the issue is neglected.
AAJI board chairman Budi Tampubolon said that fortunately, at this time, the financial problems of Jiwasraya have not affected the sector, reported Bisnis.
“But if, in another one-two years, there is no solution, what we are all worried about is that the life insurance industry would be affected,” he said.
He added that the association is not involved in decision making related to Jiwasraya’s financial health.
Jiwasraya, the country’s oldest life insurer, has faced financial woes since late 2018, when investments, including in risky cheap stocks, turned sour, prompting a delay in paying maturing policies.
The company needs a IDR32.9tn ($2.33bn) fund injection to boost its risk-based capital ratio to a minimum requirement of 120%, according to company documents. The insurer’s short-term cash requirements to pay interest, maturing policies and other liabilities until the end of 2020 amounted to IDR16.13tn, while it had only IDR530bn in current assets as of September, according to the documents.
The Indonesian government has said that it does not intend to bail out the insurer. The Financial Services Authority has been reviewing rescue plans for Jiwasraya. A