President stresses on reform in insurance industry, pension fund

Jakarta (ANTARA) – President Joko Widodo (Jokowi) laid weightage on the need to reform non-banking financial institutions, including the insurance industry and pension fund, to boost its supervision and capitalization.

“As I have conveyed, non-bank (financial institutions), be it the insurance company or pension fund financial institution, would require a reform, as well as improvement in terms of management, supervision, and capitalization,” Jokowi notified the press after attending a yearly meeting on the financial service industry here on Thursday.

The government will lend complete support to the Financial Service Authority (OJK) to improve the insurance industry and pension fund financial institutions.

In connection with a case implicating state-owned insurer PT Asuransi Jiwasraya, President Jokowi instructed Minister of State Enterprises Erick Thohir, OJK Chairman Wimboh Santoso, and Finance Minister Sri Mulyani to address the issue concerning the company’s business management.

However, the Attorney General’s Office (AGO) will handle the legal process of the case.

“The legal process will be handled by the Attorney General’s Office. I think this is important to be settled,” Jokowi noted.

The AGO named five suspects in the alleged corruption case: Jiwasraya’s former president director Hendrisman Rahim, former director of Finance and Investment Hary Prasetyo, former head of the Finance and Investment Division Syahmirwan, President Director of PT Hanson Internasional Tbk Benny Tjokro, and Commissioner of PT Trada Alam Minera Tbk Heru Hidayat.

In October 2018, Jiwasraya announced that it had failed to pay out maturing JS Saving Plan policies worth Rp802 billion. Furthermore, it was unable to pay out holders of policies, worth Rp12.4 trillion, supposed to be paid in December 2019.

Jiwasraya invested total funds of Rp5.7 trillion, or 22.4 percent of its total investment, in high-risk assets. Some 95 percent of the funds were invested in junk stock.

Almost 98 percent of the investment funding in mutual funds, or Rp14.9 trillion, are also entrusted with management to investment management companies, with poor performance.

Jiwasraya bore potential state losses, at Rp13.7 trillion, until August 2019. Jiwasraya requires Rp32.89 trillion of funding in order to attain a Risk Based Capital (RBC) ratio of at least 120 percent.

Source: Antara News