Restructuring of Jiwasraya Insurance Policy led to Losses for Policyholders

AMAR has been involved in the legal efforts of customers who suffered from losses due to the restructuring of the insurance policy of PT Asuransi Jiwasraya (Jiwasraya) since 2021. VWS & Partners and AMAR have formed a Legal Team, led by VWS & Partners, for handling multiple cases concerning customer rights in relation to the restructuring.


In tort lawsuit No. 188/Pdt.G/2022/PN.JKT.PST, the Legal Team postulated that the restructuring done through transferring the clean and clear assets from Jiwasraya to PT Asuransi Jiwa IFG (IFG Life) was a tort, because if Jiwasraya no longer had clean and clear assets then the policyholders’ rights would be violated. In the State Administrative lawsuit No. 15/B/2022/PT.TUN.JKT, the Legal Team represented policyholders who received unilateral decisions through letters containing unilateral restructuring of  insurance policies and unilateral cut off of active insurance policies from policyholders. In default lawsuit No. 430/Pdt.G/2021/PN.Jkt.Pst where Jiwasraya did not pay the coverage to the Heirs from the insurance service customer when the policy required Jiwasraya to pay after an insurance service customer died. The decision of first instance declared the Lawsuit to be Unacceptable (NO); and the Legal Team are currently in the process of filing an appeal for this case.


The official restructuration of PT Asuransi Jiwasraya (Jiwasraya) had been undergone since December 2020. It has been proven to have negative impacts on the customers of Jiwasraya. One way to fulfill the restructuring of Jiwasraya was to restructuration its insurance policies. The insurance policy restructuration is an effort to recover Jiwasraya insurance policy by the Indonesian government – Jiwasraya’s stakeholder. This shifts the obligation to settle Jiwasraya’s debts from Jiwasraya to PT Asuransi IFG (IFG Life) – the government’s BUMN holding company made to minimize Jiwasraya’s losses. 


The restructuring of Jiwasraya’s insurance policy was carried out by the Restructuration Team of Jiwasraya. It consisted of the Ministry of BUMN (State Owned Enterprise) and the Ministry of Finance. Its aim was to save Jiwasraya’s policy amidst an insolvency – when a company’s assets are less than its debts. Jiwasraya had a difference of 120%, they had Rp. 48,5 trillion by the end of 2020. The insolvency of Jiwasraya itself was caused by multiple factors.


Such factors included cases of corruption, the offer of interests that were too high; and the misinvestation of investors’ money; all of which led to major losses. Jiwasraya had negative equity – it was worth 38.6 trillion rupiahs and owed 19.3 trillion rupiahs of debt on 30 November 2020


In the ongoing tort lawsuit No. 442/Pdt.G/2021/PN.JKT.PST, the Legal Team postulates that Bank KEB Hana and Bank BTN have done tort in their collaboration with Jiwasraya, because among others:

  1. Both banks have used, disclosed, and distributed confidential information of policyholders to Jiwasraya. This violates the prudential banking principle and bank secrecy.
  2. Both banks as banking parties that retail Jiwasraya’s insurance products have advertised information that is false, inaccurate, redundant, and misleading.
  3. Both banks violated OJK regulations.
  4. Both banks did not pay attention to Jiwasraya’s solvency, performance, and reputation which resulted in carelessness during advertisement. Jiwasraya has conducted window dressing on the 2016 financial report based on BPK report; where in 2017 OJK gave sanctions, in 2018 OJK gave sanctions to Jiwasraya, in 2018 there was a BPK report that Jiwasraya did investment on risk asset, and in December 2018 there was a capital deficiency in PT AJS. From all of these legal facts, the two banks as banking parties that retail Jiwasraya’s products are not careful as they continue to cooperate despite these factors. 


The Indonesian Government, the sole shareholder of Jiwasraya, had conducted a State Equity Participation  for 22 trillion rupiah to PT Bahana Pembinaan Usaha Indonesia (PT BPUI) which will be the addition of PT BPUI’s equity participation into IFG Life’s share capital which will now continue the Jiwasraya insurance policy after the restructuration.


An insurance policy is a form of written agreement between insurance companies and policyholders, with insurance service customers. It contains the rights and obligations of both parties. The restructuring of the policy was a one-sided decision by Jiwasraya. They provided an official announcement to their customers in January 2021. With it, they explained that they calculated a cut-off on 31 December 2020. Therefore, the rights of policyholders to Cash Value (Flat Rate plus Compensation Interest) would only apply until 31 December 2020. Afterwards, it would be discontinued.


In the ongoing Bancassurance policy case, Jiwasraya conducted a cut-off and offered to replace the JS Mantap Plus insurance policy. This type of insurance policy was detrimental for policyholders: Plan A involved paying 100% in installments for 15 years without interest; Plan B involved paying 71% in installments for 5 years without interests; and Plan C involved paying 59% in installments for 5 years without interest with a payment of 10% on the first year. This new policy was presented to policyholders as the “best option” for them to take despite it going against their interests. The announcement also stated that customers who refuse the restructuration would have their policy terminated and will be paid their obligations using Jiwasraya’s remaining unclean and unclear assets. 


The announcement of the policy restructure influenced customers to switch to JS Mantap Plus despite the decision being detrimental to them. This violated Art. 17 of POJK No. 1/POJK.07/2013 which prohibits marketing that can manipulate policyholders and take advantage of their conditions in the case that they have no other options. The transfer of insurance policy which harms policyholders violates Art. 60 paragraph (2) letter a and Art. 61 paragraph (2) of POJK No. 69/POJK.05/2016 which prohibits the reduction of policyholders’ rights in the transfer of responsibility for insurance policy. Shareholders are responsible for the loss incurred by policyholders due to mismanagement. Art. 29 of POJK No. 1/POJK.07/2013 and Art. 19 of Law No. 8 of 1999 concerning Consumer Protection stipulates that companies are obligated to provide compensation for the losses incurred by consumers for their mistakes.


Although Jiwasraya is undergoing insolvency, rights of policyholders as stipulated in their insurance policy should not be disregarded. The modification of policyholders’ policies without compensation was a violation of the law, it was even committed without any legal basis. The restructuring of Jiwasraya’s insurance policy should have been done with regards to the law and should not have reduced the rights of customers. Rather than defending the policyholders, the government as the regulator, shareholder, and manager of both Jiwasraya and IFG Life instead chose to undergo a restructure which left them in a state of vulnerability and uncertainty. In essence, the restructuring of Jiwasraya was a one-sided decision without any concern for the suffering of policyholders.