Embattled Asuransi Kresna or Kresna Life, struggling under the impact of the COVID-19 pandemic, has started paying claims and benefits due to 1,722 policyholders with a cover of up to IDR50m ($3,423) each.
The company is currently preparing a payment plan for insurance policies of other coverage amounts, reported CNBC Indonesia.
The head of the K-LITA and PIK settlement team, Mr Supriyadi, said that in total there are 12,000 K-LITA and PIK policy claims worth IDR6.4tn that Kresna Life has to settle.
He said that for other policy values, the company has set a target for settlement to be completed within the next five years. This has been communicated to the Financial Services Authority (OJK).
He said, “We don't know how long this COVID-19 pandemic will last. If we recover quickly, we will also complete settlement quickly," he explained.
A Kresna customer previously revealed that the company had postponed the payment of claims due since February 2020. This was conveyed to the customer through an official letter, which said that the payment delay could take up to six months from February. The insurer asked the customer to extend the maturity of the policy for six months. Apart from not being able to receive the maturity proceeds on time, this insurance customer has failed to receive investment benefits from his policy since May 2020.
But the life insurer announced on 14 May that it would postpone insurance claim and benefit payments to Kresna Link Investa (K-LITA) and Protecto Investa Kresna (PIK) policyholders till February 2021. The reason given was that the insurer was facing liquidity problems, so it was unable to settle the liabilities.
On 3 August, the OJK prohibited Kresna Life from accepting new business in all lines until recommendations are made relating to the company by an ongoing OJK examination. In addition, OJK has ordered Kresna Life to prepare a financial restructuring plan as well as a detailed claim payment plan.
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