Govt urged to protect insurance customers

Fitri Wulandari, The Jakarta Post, Jakarta

The Foundation of Indonesian Insurance Consumers (YLKAI) and the Association of Indonesian Life Insurance (AAJI) called on the government to provide a blanket guarantee program for life insurance policyholders in the wake of the bankruptcy ruling on insurance firm PT Asuransi Jiwa Manulife Indonesia (AJMI).

They argued that the AJMI case could potentially harm the local life insurance industry as customers could lose confidence in insurance firms.

Angger P. Yuwono, the chairman of AAJI said that the life insurance industry was concerned that the case might reduce public confidence in the industry.

"The government must guarantee that all Manulife policyholders get their rights," Angger told The Jakarta Post on Tuesday.

According to AAJI, at present, there are 23 million life insurance policyholders in Indonesia.

YLKAI chairwoman Mira Amalia Malik said that the government must take an active role in resolving the impact of the Manulife case, especially in protecting consumers.

AJMI is the local unit of Canadian insurance firm Manulife Financial Corp. The company is the fourth largest insurance firm in Indonesia with assets worth around Rp 3.1 trillion (around US$350 million) and some 400,000 policyholders.

Last week, the Central Jakarta District Court issued a controversial ruling declaring AJMI bankrupt after Manulife's former partner filed a lawsuit over unpaid dividends in 1999.

YLKAI called on the government to set up a "guarantee fund", as done in the banking sector, to ensure that policyholders would be able to recover all their funds.

Under a blanket guarantee program launched in 1998, the government guaranteed all obligations of closed banks.

Mira argued that like banks, insurance companies also gather funds from the public.

"Therefore, the government must guarantee that policyholders can recover their money when insurance companies go bankrupt," Mira told the Post.

Further, Angger asserted that Manulife would be able to fulfill their policyholders' rights as the company was in healthy condition with a Risk Base Capital of 165 percent which is higher than the government's minimum requirement of 75 percent.