resident Joko “Jokowi” Widodo called for reform of the country’s financial services industry as the government moves to salvage ailing state-owned insurer Asuransi Jiwasraya.
“The nonbanking financial services industry that consists of insurance and pension funds [among other services] needs reform, improvements in terms of regulations, supervision, as well as capital,” he said in his remarks at the financial services industry annual meeting in Jakarta on Thursday.
The reforms, he went on to say, were needed to encourage prudence and transparency in the industry and for it to adopt a proper risk management system to maintain the public’s trust.
“Don’t let a lack of trust undermine our economy,” Jokowi stressed. He said the government was ready to assist the Financial Services Authority (OJK), which supervises the financial industry, in implementing such reform.
Indonesia’s insurance industry is in the spotlight following the financial calamity that has struck Jiwasraya, leading to a corruption case currently being investigated by the Attorney General’s Office (AGO). The country’s oldest insurer failed to pay out more than Rp 12 trillion (US$879.3 million) on customers’ policies that matured in 2018 and 2019, allegedly as a result of investment mismanagement.
The AGO arrested on Tuesday five people, including the insurer’s former president director and two businessmen, for their suspected roles in alleged corruption at Jiwasraya.
Meanwhile, another state-owned insurer Asuransi Sosial Angkatan Bersenjata Republik Indonesia (Asabri) also suffered losses of around Rp 10 trillion from plunging stock investments. Several stocks held by Asabri have been linked to Jiwasraya. Asabri, however, claimed the situation was only temporary and would not affect its ability to pay out customers’ claims.
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