SEMINAR ON FINANCIAL

ACCOUNTING

The Analysis of PT. Asuransi Jiwasraya Case :

Corporate Governance
Compiled By: Group 2

Dini Rahmadianti (1610531008)

Ratu Shavira (1610532025)
Zahira Salsabella (1610533025)
Content
01 Case Description
The description of case specifically

02 Problem Identification
The analytical explanation of problem based on case description

03 Problem Statement
Stating the problem by accurate wording

04 Case Analysis
The analysis of case with supported data and fact

05 Solution and Conclusion

 01 Case Description
The description of case specifically

PT Asuransi Jiwasraya, is reported to be in the middle of a complicated issue due to failed to pay insurance claims of IDR 12, 4 trillion.

Quoting from CNBC Indonesia, The Ministry of State-Owned Enterprise (SOE) Erick Thohir said that there was a violation of the principles
of Good Corporate Governance in Jiwasraya's blood.

In 2013, Jiwasraya introduced the JS Saving Plan product. JS Saving Plan can be said as 'mainstay' product from Jiwasraya,
particularly in the period 2013- of 2017. Jiwasraya truly offers high interest rates for this JS Saving Plan product, which is up to 13 percent.
This amount is far above the deposit rate which is the average bank interest.

So Jiwasraya is looking for investment instruments that can provide a much higher return compared to the average deposit interest rate that may be around
5 percent, eventhough Jiwasraya promised to their policyholder's customers up to 13 percent, then Jiwasraya invested in
most risky assets (high risk) to pursue high profits (high return) from the sale of JS Saving Plan products. Investment funds are generally
placed on low performance stocks and mutual funds which managed by investment managers with low performance too. The SOE Minister
said that Jiwasrya's management did not use the precautionary principle in managing their investment.

The Ombudsman Institution of the Republic of Indonesia (ORI) on CNN Indonesia also revealed that Jiwasraya was late in fulfilling the
criteria for three minimum commissioners, and this just could be realized in September 2019. They also revealed that The independent
commissioner and the chief commissioner is held by one person who was appointed on 19 July 2019. The Finance Director and Investment Director were
also held by one person. Then, Jiwasraya also reportedly did not have a Compliance Director as required by OJK.

Then in addition, The observer of State-Owned Enterprises (SOE) Toto Pranoto stated that Jiwasraya was late in submitting financial reports. Which is
another factor that will worsen reputation in the midst of default. Based on the company's official website
https://www.jiwasraya.co.id/id/laporan-keuangan show the latest records of annual report for the 2016 financial year (Source: Merdeka.com). Jiwasraya
also did not
submit a complete report. By only publishing one sheet of financial statements on 2017 and 2018
02 Problem Identification
The analytical explanation of problem based on case description

Based on the case description above, we identify that Jiwasraya has violated The Principles of Good Corporate
Governance, in the form of:
Jiwasraya’s Corporate Governance Structure does not
fulfill as stipulated in Law Number 40 of 2007 concerning
01 limited liability companies article 120 paragraph 2 and
OJK Regulation No.73 / POJK.05 / 2016 Article 6
paragraph 1 and article 7 paragraph 1

02 Did not held Product and Investment Governance

properly

Jiwasraya has violated OJK Regulation

03 No.55/POJK.05/2017 article 8 about periodic insurance
company reports due to transparency principle of
corporate governance
03 Problem Statement
Stating the problem by accurate wording

“ Poor aplication of corporate governance, which is considered one o the most important
pillars to enhance transparancy, increase control and supervision on management and
reduction raud committed by some executives and companies Board of Director, which
“
may cause damage to shareholders, investors, stakeholders, and company’s reputation
as well as. Based on foregoing, the statement problem can be summerized in the
following question:

To what extent corporate governance principles are violated in PT Asuransi

Jiwasraya?
04 Case Analysis
The analysis of case with supported data and fact

Based on Good Corporate Governance report published by Jiwasraya on December 14,

2018, the Board of Commissioners and Directors of Jiwasraya issued a statement of
commitment that they have carried out their respective duties, functions and authorities
to implement the Good Corporate Governance (GCG) guidelines. But in reality, Jiwasraya
does not implement the Good Corporate Governance (GCG) itself. E John Aldrige (2005)
on The Australian Stock Exchange defines Corporate Governance as the system by which
companies are directed and managed. It influences how the objectives of the company are
set and achieved, how risk is monitored and assessed, and how performances are
optimized, so that the chances of fraudulent activities can be reduced.

While in fact, did Jiwasraya reduced the likelihood of creative accounting and fraud? No.
What's wrong? It’s their corporate governance implementation. We see that Jiwasraya has
violated some of the basic principles of CG, such as transparency, accountability,
responsibility, independence and fairness. This is evidenced by the case of default and
bankruptcy of Jiwasraya at this time . Then, to what extent does this company violate the
principles of corporate governance?
 04 Case Analysis

Did not held Product and Investment

The analysis of case with supported data and fact

JS Saving Plan product is the beginning of the failure to corporate governance at Jiwasrya, this is because Jiwasraya sets the JS
Saving Plan interest rate to remain above the deposit rate. Products issued without this precautionary principle offer
guaranteed returns ranging from 9% -13% during 2013-2018. The yield is greater than the FY2018 deposit interest rate of
around 5.2% -7.0% which is also greater than the growth of the FY2018 CSPI which is negative 2.3%. JS Plan yields will never
be covered by investment. In this case it appears that there is a lack of governance in the JS Saving Plan product, whereas

Governance properly
insurance products should not provide a return fix rate.

Meanwhile Jiwasraya invests customer funds in financial instruments that do not guarantee fixed profits. With the sale of JS
Saving Plan , Jiwasraya spent its money to bought high-risk shares to get high returns as well. This is violates product and
investment governance because Jiwasraya is not careful in the choice of products and investments by choosing those high risk.
Jiwasraya placed 22.4% shares worth Rp5.7 trillion of financial assets. The amount is 2% placed in companies with good
performance, and as much as 95 percent in poorly performing stocks. Then, the placement of mutual funds as much as
59.1% valued at Rp 14.9 trillion of financial assets, 2 percent managed by investment manager Indonesia with good
performance, 98 percent managed by investment manager with poor performance.
 04 Case Analysis
The analysis of case with supported data and fact

Structure does not fulfill Law and OJK

Jiwasraya’s Corporate Governance
Jiwasraya has violated the provisions of the structure and corporate governance that should be. Firstly, Sentot A.
Seantausa as the chief commissioner of Jiwasraya also serves as an independent commissioner. This is violates the
concept of good corporate governance related to independence and also contradicts Law No.40 of 2007 concerning
limited liability company article 120 paragraph 2 which states that an independent commissioner is appointed based
on the GMS decision of a party not affiliated with the major shareholders, members of the Board of Directors and / or
other members of the Board of Commissioners. The issue of independence is not only limited to the main
commissioner who is also an independent commissioner, but also the governance transparency and fairness
because there is no segregation of duties.  Jiwasraya also does not have a compliance director. In fact, the director of
compliance must be include in the composition of the board of directors based on OJK Regulation No.73 / POJK.05 /
2016 article 7 paragraph 1, it is stated that insurance companies are required to have a compliance director no later

Regulation
than 3 years after this OJK regulation was enacted, and also at Article 7 Paragraph 2 also mentions that the
Compliance Director is prohibited from concurrently performing other functions while the fact is that until now
Jiwasraya does not have a compliance director in the board of directors. For insurance companies as large as
Jiwasraya it is very unnatural to not have a Compliance Directordirector of finance and investment held by one
person.This is not in accordance with the principles of good corporate
Jiwasraya’s corporate governance structure
What has been violated by Jiwasraya?

Sentot A. Sentausa Harry Prasetyo Anonymous

President Finance Director and Complience

Comissioner and also Investment Director Director??
Independent
Comissioner
 No.55/POJK.05/2017 article 8 about periodic insurance
04 Case Analysis
The analysis of case with supported data and fact

company reports due to transparency principle of

The last problem in corporate governance is Jiwasraya was late in submitting its financial statements. This is another
factor that will worsen reputation in the midst of Jiwasraya's default. In accordance with OJK Regulation

Jiwasraya has violated OJK Regulation

No.55 / POJK.05 / 2017 article 8 concerning periodic reports of insurance companies in paragraph 1 it is said that the
Insurance Company is required to submit Periodic Reports to the Financial Services Authority (OJK) in the form of
Monthly Reports, Quarterly Reports, Semester Reports, and Other Reports submitted in accordance with the
provisions of the deadline set in the OJK Regulation. Sanctions that can be imposed in the form of written warnings,
restrictions on business activities in part or in full up to revocation of business licenses. For insurance companies, the
regulation states that they will be penalized for late fines. Whereas in this case Jiwasraya last published Financial
Statements in 2017 this of course violated the principles of good corporate governance transparency because it did
not publish financial reports for the year after 2017. Even though Jiwasraya published the 2017 Financial Statements,

corporate governance
it was only one sheet report, causing limited information in analyzing Jiwasraya financial statements for stakeholders
and users of Jiwasraya Financial Statement information.. By only publishing one sheet of financial statements, SOE
observers also state that the user will not get any information, at least the user needs to know the list of investments
they have placed because Jiwasraya's main problem is also caused by unproper investment governance.
 05 Solution and Conclusion

Solution
01 03
OJK has authority to make rules and Jiwasraya must be committed to
Jiwasraya is too big to remove its assets oversee the insurance industry and consistently implementing good
in order to obtain the company's finances handling complaints from the public governance, such the issue of
at this time. Jiwasraya can overcome should be tighter in conducting future segregation of duties is the most
this defaults by carrying out policies surveillance. OJK must carry out important thing to avoid fraud and
such as roll over or contract extension reforms in the insurance industry, corruption.
with their customers in a structured including the regulation, supervision of
manner and closely monitored by the capital, transparency of financial
government and independent parties. reports, related to risk management
The management of Jiwasraya in the and establishing a Policy Insurance
future must make policies that are in Agency (LPS). By this poor
accordance with good corporate Jiwasraya’s management, OJK
governance, not high-risk policies that should have been known earlier as a
ignore the principles of good corporate supervisor of financial institutions
governance. before Jiwasraya case exploded,
which means OJK was still not so
strict in overseeing the insurance
industry.

02
Conclusion
Jiwasraya’s current scandal is a particularly stark
reminder of the importance of strong corporate
governance policies and robust internal controls
such segregation of duties. Jiwasraya has violated
the Principles of Corporate Governance, whereas in
order for an organization to run well, it needs to
implement those basic principles of GCG which are
fairness, transparency, accountability, responsibility
and independence. Good corporate governance
must be developed in stages and involving all
parties. Then, held continuous supervision to the
processes which occur in the governance system
that has been made. So if GCG runs well, it certainly
can prevent corruption in an organization. The fraud
that occurred in Jiwasraya itself is the
essence of the weak implementation of Corporate
Governance in the Jiwasraya.
Thank you
Best Regards, Group 2