Dual Protection Framework for Insurance Company Financial Crises

Abstract

Insurance company bankruptcies in emerging economies pose significant regulatory challenges, often leading to poor policyholder protection and market disruption due to fragmented regulatory frameworks lacking coordinated intervention mechanisms. This research addresses these issues by developing a dual protection framework that protects policyholders while ensuring business continuity during insurance restructuring. The study employs a dual methodology, combining bibliometric analysis of 33 peer-reviewed articles (2015-2025) with comparative case studies of three Indonesian insurance failures: PT Asuransi Jiwasraya, PT Asuransi Jiwa Kresna Life, and AJB Bumiputera 1912. Results show contrasting outcomes based on institutional coordination effectiveness. Jiwasraya succeeded through coordinated government intervention with Rp 31 trillion backing, achieving 99.9% policy restructuring. Conversely, Kresna Life failed completely, affecting 9,500 policyholders due to regulatory breakdown, while AJB Bumiputera achieved partial recovery. The analysis identifies five critical success factors: multi-agency coordination, substantial fiscal backing, institutional innovation, transparent communication, and adaptive regulatory frameworks. The proposed Integrated Dual Protection Framework includes coordinated crisis management, graduated fiscal support, institutional innovation capabilities, and enhanced stakeholder communication. This framework provides emerging economies with practical guidance for developing robust insurance governance that balances market discipline with comprehensive consumer protection, significantly improving upon ad-hoc intervention approaches.