Prudential fends off new lawsuit
Tony Hotland, Jakarta
PT Prudential Life Assurance fended off another bankruptcy suit on Thursday by clarifying that it refused to honor an agreement to pay monthly benefits due to "proven deceit" on the part of their client.
"From our investigation, the insured, Ng Sek Ngie, turned out to have given false statements about his health when signing the policy. As stated in the policy itself, any false statements will lead to termination of the agreement," Prudential vice president for corporate marketing and communication, Nini Sumohandoyo, told The Jakarta Post.
She said the firm had paid the death claim of Rp 350 million (US$38,888) and the monthly benefits to Ng's wife and two sons until September 2003 when Prudential discovered the fraud.
"We found out that he had had a serious illness and had been receiving medical treatment and was hospitalized before signing the policy. Had we known that, we wouldn't have issued the policy," Nini added.
Ng's wife Ng Sok Hia and sons Davin Sigmund and Dick Sigmund, who live in Pematang Siantar, North Sumatra, filed a bankruptcy suit at the Central Jakarta District Court on Tuesday, accusing the firm of failing to pay monthly benefits amounting to Rp 16,125,003 from October 2003 to June 2004.
Prudential issued a policy for Ng Sek Ngie with insurance coverage of Rp 350 million in May 2002.
Ngie died in January 2003. His wife said that he died of a heart attack and that he had never suffered from any illnesses and had never received any medical treatment.
The company then paid the death claim and the monthly benefits of Rp 791,667 for his wife and Rp 500,000 for each of his children.
According to their lawyer, Prudential is obliged to pay the monthly benefits until the wife turns 55 and the children turn 25. The wife is now "in her forties", while the sons are aged between 7 and 10.
"Prudential paid the insurance money and started paying the benefits in June 2003, as they said they had to investigate the claim first. In March 2003, Prudential signed a statement saying they would pay the insurance and the benefits, and no cancellation of that agreement has been made until now," Oscar Sagita, the lawyer for the family, told the Post.
He said that Prudential should have conducted an investigation before issuing the policy.
"Even so, they also conducted an investigation over the claim after Ngie died. They finally paid the claim months after the death," said Oscar.
Nini rejected the argument saying, "From what we understand, they are not entitled to this because a false statement would lead to termination of the agreement," said Nini.
She added that the lawsuit only proved the urgent need to amend the existing bankruptcy law as the amendment of the law was "the best way to prevent similar cases from occurring in the future".
Meanwhile, the Indonesian Insurance Consumer Foundation (YLKAI) blamed the director of insurance at the Ministry of Finance for failing to supervise insurance firms, considering that Prudential had just escaped a bankruptcy suit in June.
The foundation therefore urged the president and the finance minister to review the director's performance, especially in relation to protecting insurance policy holders.
The Supreme Court accepted Prudential's appeal after the same district court declared the company bankrupt in May. Prudential was accused by a former agent of failure to pay him bonuses.