Update COVID-19 in Indonesia: 70,736 confirmed infections, 3,417 deaths (9 July 2020)
6 July 2020 (closed)
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The Financial Services Authority (Otoritas Jasa Keuangan, OJK) of Indonesia announced that it has declared five Indonesian insurance companies insolvent as they do not meet capital requirements. OJK official Dumoly Freddy Pardede said that Bakrie Life, Asuransi Jiwa Tugu Mandiri and MAA General Assurance are three of the five insolvent companies. He refrained from mentioning the names of the other two insurance companies. The OJK will continue to monitor the five companies and force them to meet all capital requirements.
If a company fails to meet the OJK’s capital requirements then there will be a total of three warnings. After the third and final warning the company’s business operations can be limited. If there is still no improvement hereafter then the company’s permits can be revoked.
Asuransi Jiwa Tugu Mandiri received its third warning from the OJK on Wednesday (03/09). Two of the five have already been warned three times and now may face sanctions that limit their business operations. Two others are in serious risk of receiving the third warning as they show problems in their internal management. The OJK has given these two companies three months to improve their internal management.
The case of Asuransi Jiwa Bakrie (Bakrie Life) is well known. The company offered an insurance-based product named Diamond Investa to clients in 2005. According to the prospectus of this product, 90 percent of investors’ funds would be invested in bonds. Clients were guaranteed returns of up to 13 percent annually. However, after the global financial crisis from 2008 onward, the company stopped interest payments and was unable to return the initial investment to its +600 clients. Later it became known that most of the money was in fact invested in equities, including stocks of companies within the Bakrie Group.