Govt urged to protect insurance customers

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.