Indonesia may close down troubled insurer Jiwasraya

Indonesia may close down troubled insurer Jiwasraya | Insurance Business

Indonesia may close down troubled insurer Jiwasraya

The Indonesian government is reportedly looking to shut down financially troubled life insurer Asuransi Jiwasraya, followed by creating a new state-owned company to settle obligations.

“The concept is to save policyholders,” Jiwasraya chief executive Hexana Tri Sasongko told Reuters through a text message.

“Policies are restructured then transferred to the new company that will be formed under the state insurance holding company using a capital injection.”

The move, which Sasongko believes will take place in 2021, is likely to put additional pressure on Jakarta’s coffers, as the Southeast Asian nation continues to struggle with the impact of the coronavirus pandemic. The fiscal deficit for 2020 is projected at 6.34% of GDP, over three times the target level.

According to the report, the country’s central bank is planning to partially make up for the deficit by taking up bonds without receiving interest, as well as assisting the government in paying for some interest expenses through a US$40 billion bond scheme.

On Tuesday, Indonesia’s parliament put up for debate the plan to close down Jiwasraya, as introduced by Kartika Wirjoatmodjo, deputy minister of state-owned enterprises.

According to a report by Tempo, Jiwasraya had unpaid claims of around IDR18 trillion (US$1.25 billion) by the end of May.