Policyholders Challenged Kresna Life Bankruptcy

Asuransi Jiwa Kresna (Kresna Life) has been declared bankrupt by the Supreme Court which granted a petition for the insurer's bankruptcy on 8 June 2021. The petitioners were six Kresna Life customers. Other clients though are seeking a judicial review of the bankruptcy decision so that it could be overturned. They want Kresna Life to immediately settle their obligations to customers.

Many customers are surprised by the bankruptcy decision because the insurer had been making some payments. Bankruptcy means that all assets of the insurer will be taken over by the official assignee. As a result, payments to customers will be stopped until all assets have been sold.

Furthermore, customers also urge the Financial Services Authority (OJK) to protect consumers by intervening in the bankruptcy decision and ensuring that all amounts due to customers are settled immediately by Kresna Life.

OJK has found violations in Kresna Life. Thus, the Authority must ensure that the insurance company is liable. This case is not a failure to pay due to financial difficulties and bankruptcy, but a violation of regulations. Kresna Life invests customer funds in its affiliated companies far above the limit allowed by the OJK.

Background - Kresna Life has defaulted on two of its insurance products. This decision was conveyed to policyholders through a circular letter on 14 May 2020. In the letter, the president director of Kresna Life Kurniadi Sastrawinata explained that the COVID-19 pandemic was a force majeure beyond the control of the company. This condition caused the investment portfolio of two of its products, namely, Kresna Link Investa Life Insurance (K-LITA) and Protecto Investa Kresna Life Insurance (PIK), to be problematic.

Kresna Life's financial ability to fulfill the obligations of the K-LITA and PIK policies has been hindered by liquidity problems.

Kresna Life then underwent a trial to postpone debt payment obligations (PKPU) at the Central Jakarta District Court. The insurer sought to postpone every policy redemption transaction that was due from 11 February 2020 to 10 February 2021. The company also postponed the payment of investment benefits on policies that matured from 14 May 2020 to 10 February 2021. The PKPU application was approved.

At that time, the judges were reluctant to explain the legal considerations for the approval of the PKPU. The reason is that they were not obligated to do so. The trial closed with customers and creditors disappointed. They demanded legal transparency and argued that since the PKPU decision was not attended by the OJK, it was considered legally flawed.

Meanwhile, OJK responded by saying that it had never approved Kresna Life's PKPU application. The PKPU decision was eventually withdrawn in February 2021. However, customers have not yet received payments on their policies. Then the group of six Kresna Life customers petitioned for the bankruptcy of the insurer.