Indonesia mulls closing state life insurer Asuransi Jiwasraya

Policies will be restructured and then turned over to a new company.

Indonesia is planning to shut down troubled state-owned life insurer PT Asuransi Jiwasraya and establish a new company to settle outstanding claims, reports Reuters.

“The concept is to save policyholders,” chief executive Hexana Tri Sasongko said. “Policies are restructured then transferred to the new company that will be formed under the state insurance holding company using a capital injection."

This plan could further strain the state budget, with spending to help the economy rebound from the impact of the pandemic seen keeping the fiscal deficit wide in the next few years.

The central bank is expected to finance some of the deficit by taking up bonds without receiving interest and helping the government pay some interest expenses, under a $40b bond scheme.

The plan to close down Jiwasraya was introduced for parliamentary debate on Tuesday by deputy minister of state-owned enterprises Kartika Wirjoatmodjo, according to media reports, which did not specify the size of the required investment.

Here’s more from Reuters.