The advocate team head for the century-old mutual insurance firm, Jaka Irwanta, said OJK’s decision to take over Bumiputera through PS on Oct. 21 last year, illegally violated the 2014 Constitutional Court’s verdict regarding the firm’s status.

“The Court instructed the government to issue a Mutual Insurance Law to help Bumiputera improve its financial condition. But by the deadline of Oct. 3 last year no law had been made,” he said on the sidelines of a closed door meeting between Bumiputera policyholders and non-active management and lawmakers on Thursday in Jakarta.

Instead of abiding by the verdict, OJK formed a statutory management, comprised of seven officials, to take over the daily operations of the firm and plan for capital injections through initial public offerings (IPO) or divestment.

The takeover, according to policyholders, has negated their share ownership in the firm. “The statutory management has told the public it’s trying to save the firm. But in fact, it ‘robs’ us,” Jaka said, adding that the team has reported their objections to the National Police and the Corruption Eradication Commission (KPK).

Bumiputera is the only mutual — as well as the oldest — insurance company in Indonesia, in which its policyholders are also its stakeholders. As such a distinctive legal entity, the company does not fall under the 2007 Law on Limited Company (PT).

However, the OJK has acted differently. In restructuring the company, it has applied the Insurance Business Law, which supposed to be applied only to insurance firms under PT status. Its statutory body took control of 2,000 employees, 28,000 agents, 574 branch offices and the firm’s information technology (IT) infrastructure and assets for Rp 6.5 trillion, which policyholders have deemed as “too low.”

OJK has come up with several plans to save Bumiputera by conducting rights issue and capital injection. However, no progress has been made after the publicly listed investment and textile company Evergreen Invesco — controlled by tycoon Erick Thohir — officially revoked the Rp 2 trillion capital injection plan through rights issue recently.

Abdul Kadir, a member of the Policyholder Representatives Body (BPA), said that Bumiputera had never failed to pay all its policyholders’ claims, despite its high risk based capital (RBC). As of 2015, Bumiputera’s capital stood at Rp 11.3 trillion (US$840.34 million), while its total liabilities of around Rp 29 trillion came from 6.5 million policyholders.

Statutory management coordinator Didi Achdijat said the huge gap between its capital and liabilities was caused by shrinking asset value and the rupiah’s depreciation against the US dollar, which adversely affected its dollar-denominated policies and unprofitable products.

Jaka, on the other hand, said the high liabilities were simply a result of wrongly-applied calculation methods, as OJK uses a calculation formula for a “PT” entity, and not the mutual company.

Lawmaker Johnny G. Plate, member of House of Representatives’ special committee overlooking the Bumiputera case, said the contradicting views between Bumiputera policyholders and OJK are a result of the different standard.

“We’re waiting for the government to issue a PP [government regulation] on mutual insurance companies so the conflict can be solved. At the moment, we’ll summon stakeholders from OJK and statutory management to communicate with policyholders,” he said after the meeting.

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