A number of policyholders rejected the restructuring scheme offered by Jiwasraya. A wave of lawsuits may lead to banks that distributed the problematic insurance plans.
THE final meeting was held virtually and lasted about two hours on Sunday afternoon, December 20, with about 50 participants. They are the customers of Asuransi Jiwasraya who are members of the Jiwasraya Victims Forum. The meeting was held to determine what further steps that need to be taken after the JS Saving Plan policyholders rejected the restructuring scheme prepared by Jiwasraya. “We have decided to file a lawsuit and it has been done,” said Machril, one of the policyholders in the Jiwasraya Victims Forum, on Thursday, December 24.
The plan to file a lawsuit first emerged during a press conference on Monday, December 14. The Forum spoke to the media in response to Jiwasraya’s announcement about the start of the restructuring program. As Jiwasraya’s Chief Executive Officer Hexana Tri Sasongko said, the company asked clients to immediately participate in this program.
Clients are disappointed because they are not involved in the discussions on how to resolve their unpaid insurance claims. They get more furious after finding out the restructuring scheme. “All the restructuring options offered are very burdensome for customers,” said Jiwasraya Victims Forum representative Roganda Manulang.
On Wednesday, December 23, Roganda and his friends officially sent a letter of rejection to Jiwasraya and the Financial Services Authority (OJK). The Forum requested the OJK to mediate discussions on the restructuring scheme—involving the policyholders, the company and the government as the shareholder.
What they did not follow was that the policy restructuring scheme was actually only one part of Jiwasraya’s financial restructuring plan, which had been discussed in the last few months. On September 14, there was a limited coordination meeting between the coordinating ministry for the economy; coordinating ministry for maritime affairs and investment; coordinating ministry for political, legal and security affairs; the Attorney General’s Office; and the National Police.
The meeting, which was also attended by the state-owned enterprises (SOEs) ministry, the finance ministry, and the OJK, approved steps to rescue Jiwasraya’s policies and health. In a letter numbered S-449/NB.2/2020 dated October 22, the OJK also stated that it does not object to Jiwasraya’s financial restructuring plan.
POLICY restructuring is the first step in Jiwasraya’s financial recovery plan, which was decided to take the form of a portfolio transfer to IFG Life. This is a new insurance business line under the Indonesia Financial Group (IFG), which is the new name of Bahana Pembimbing Usaha Indonesia (BPUI), a company that has been appointed as the holding company for SOEs engaged in insurance and underwriting.
In the future, IFG Life will only take over the management of Jiwasraya policies included in the restructuring program. Part of this policy settlement will be supported by state funds.
The restructuring plan became clear on Monday, November 30. During a work meeting with the House of Representatives’ (DPR) Commission VI, SOEs Deputy Minister Kartika Wirjaatmadja said there were four schemes that policyholders can choose from. The plan is to terminate all policies by December 31 as the basis for implementing the restructuring program carried out via IFG Life.
The restructuring plan document shows that the four schemes are actually targeting individual retail customers. There is another scheme specifically prepared for JS Saving Plan policy holders and corporate clients.
The JS Saving Plan is a product initiated by Jiwasraya in 2013. The policy is different from other insurance products. In short, it is a savings-investment product wrapped in insurance. Jiwasraya’s management at that time promised a return with high interest rates, to attract as much public money as possible.
Later, the Supreme Audit Agency (BPK) declared the product as defective—not meeting the requirements of an insurance product. The way this investment fund was managed is also the culprit behind Jiwasraya’s default and corruption. The number of customers is not small. The value of JS Saving Plan’s unpaid claims as per May 31 amounted to Rp16.5 trillion from 17,451 policyholders. This figure is much higher than the unpaid claims of traditional policies, which is only Rp1.5 trillion.
To JS Saving Plan policyholders, the company offers three alternative solutions. The first is to accept cash payment in full value or 100 percent, paid in installments for 15 years without interest. Customers also get accident insurance with benefits that refer to the initial balance of the policy.
The second option is a claim payment with a shorter installment period of five years, also without interest. However, payments are made of approximately 71 percent or with 29 percent haircut of the cash value. The third option is in the form of claim installments for five years, with an advance payment of 10 percent by IFG Life.
The Jiwasraya Policy Restructuring Acceleration Team emphasized that the policy restructuring schemes, including those offered to JS Saving Plan customers, were determined by taking into account the company’s financial conditions over the last two years. The restructuring is also expected not to be a burden to IFG Life, which will continue to manage the Jiwasraya portfolio.
According to Farid Azhar Nasution, member of the Short-Term Solution Formulation Team for the Jiwasraya Policy Restructuring Program, all of said schemes are the one that offer the least loss for customers. That is why policy restructuring takes precedence over the liquidation plan, initially included in the alternative solution of the Jiwasraya problem. Liquidation, he said, has a high risk as Jiwasraya’s asset is far below its liabilities.
As of November, Jiwasraya’s assets worth was only Rp15.8 trillion, down from two years ago, when it was still around Rp23 trillion. The company’s liabilities have now reached Rp54.4 trillion, resulting in a negative equity of Rp38.6 trillion. “If we liquidate now, clients will not get more than 20 percent, and it would take a long time too,” Farid said on December 23. He said that the policy restructuring scheme will provide maximum claims to customers.
Chairman of the Jiwasraya Policy Restructuring Mid-Term Solution Team, Angger P. Yuwono, admitted that the scheme they are offering will not make all policyholders happy, such as the Saving Plan customers who refused it. “The restructuring will win insurance benefits. This means that it is not 100 percent saved, but at least it is better than having the company liquidated,” said Angger, who is also the technical director of Jiwasraya.
AN earlier fight came from South Koreans against the insurance plan. Hundreds South Korean customers are exploring the filing lawsuits against Bank KEB Hana Indonesia. KEB Hana is one of eight banks that partnered with Jiwasraya to sell the JS Saving Plan.
A South Korean customer, Lee Kang-hyun, said that the policyholders believe KEB Hana is guilty of selling a defective product. “We have appointed a lawyer and continue to complete the necessary documents,” he said on December 15.
A Jiwasraya official revealed that the lawsuit against KEB Hana was quite alarming for the SOEs Ministry. If the lawsuit is granted by court, the problem can spread to other partner banks. “Like BTN, or BRI too,” he said. Like KEB Hana, Bank Tabungan Negara (BTN) and Bank Rakyat Indonesia (BRI) are the selling agents for the JS Saving Plan.
In an official statement on December 22, KEB Hana asserted that the insurance company is the party that must be held responsible for every insurance product traded. Bancassurance products that are marketed through banks, they said, are not the responsibility of the banks.
“The business model carried out by Bank Hana related to the marketing of the JS Proteksi Plan product is a reference business model,” the bank said. “Likewise with the insurance policy certificate, it is explicitly stated in the regulation that the insurance risk is the sole responsibility of the insurance company, in this case Jiwasraya.”
Anto Prabowo, the OJK’s deputy commissioner for public relations and logistics, agrees with KEB Hana. In the context of product marketing, according to him, banks’ involvement is part of the insurance company’s responsibility.
As for Jiwasraya’s financial restructuring plan, he said, it has been submitted to the OJK for approval—with various schemes that owner or management believe to be doable; in terms of their ability to meet the provisions whilst the company is in a restructuring period. Anto suggested Jiwasraya to establish good communication with policyholders. “Resolving this problem is the responsibility of the owner or management,” he said on December 17.