http://www.info-based.com/kosher/G2Koji/hlfjktpreview02.jpg

I know this isn't a very good picture, but I did make an open jacket for G2Male Koji, and it flows nicely as he moves, even with arms down.

(The open front is intentional !  It isn't a splitting centre seam.)

I think you may want to play with the cloth settings.  I use PhilC's cloth presets which he makes available free at his website.  A more flowing material will not scrunch up as much.

Hope you get your problem solved.

 

Eternal Hobbyist