How is the insurance company's ability to pay customer claims measured?

PT Asuransi Jiwasraya's request for a delay in paying maturing policyholder claims has further eroded public trust in the Indonesian insurance industry. This follows AJB Bumiputera 1912's previous failure to pay maturing policyholder claims, a case that remains unresolved to this day.

The decline in stock and bond prices has resulted in significant losses for investment managers who invested in the domestic capital market. This has impacted the performance of the insurance sector, which largely invests its managed funds in the capital market. Consequently, the ratio of claim-paying ability from premiums and investment returns has decreased throughout January-August 2018.

According to data from the Indonesian Insurance Statistics of the Financial Services Authority (OJK), the ratio of premiums and investment returns sufficient to pay claims and general insurance costs for life insurance decreased by 6,900 basis points to 114.9% at the end of August 2018 from its January position. This means that if all policyholders were to redeem their policies (100%), insurance companies would only have approximately 15% of the total premiums and investment returns. Furthermore, the claim-paying ability ratio for general insurance also decreased by 4,700 basis points to 187%, and for reinsurance, it fell by 7,900 basis points to 250% from its January position.