Attorney Heru Widodo (center) delivering the petition revision in the judicial review hearing of Law No. 40 of 2014 on Insurance, Monday (10/2) in the Courtroom of the Constitutional Court. Photo by Humas MK/Ifa.

JAKARTA, Public Relations of the Constitutional Court—The Constitutional Court (MK) held another judicial review hearing of Law No. 40 of 2014 on Insurance on Monday (10/2/2020) in the Plenary Courtroom of the Constitutional Court. The case No. 5/PUU-XVIII/2020 was petitioned by the Association of Indonesian General Insurance Companies (AAUI). In the second hearing, attorney Heru Widodo conveyed several revisions to the petition, including affirming the Petitioner\'s legal standing.

Based on the deed of the association, Heru said, a private legal entity has a legal standing to act on behalf of the organization represented. Thus, Heru and peers claimed to have relation to the enactment of the law. In judicial practice, the legal status of the organization has been accepted and recognized in efforts to seek justice in the Constitutional Court. "So in the a quo case, the Petitioner is an organization whose membership certificate shows that it has 47 insurance companies that have been incorporated and registered with the OJK," said Heru before the hearing led by Constitutional Justice Suhartoyo along with Constitutional Justices Enny Nurbaningsih and Daniel Yusmic P. Foekh.

In addition, the Petitioner reduced the articles used as touchstones. The Petitioner initially used Article 1 paragraph (3), Article 28C paragraph (2), Article 28D paragraph (1), and Article 33 paragraph (4) of the 1945 Constitution. In the revision hearing, the Petitioner affirmed that it would only use Article 28D paragraph (1) of the 1945 Constitution as a touchstone.

The Petitioner argue that Article 5 paragraph (1) of the Insurance Law does not explicitly state surety business that has been running for 40 years as an innovation product of insurance companies. The business takes over the potential loss risk on the implementation of a contract in the supply of goods or services. This business is experiencing rapid development internationally, whereas in Indonesia, insurance companies since the 1970s have been considered non-banking institutions that can provide surety for development projects.

The legality of surety has been acknowledged by the Government since 1978 through Government Regulation No. 34 of 1978 and the Presidential Decree No. 14A of 1980. Despite clear regulations, ironically surety business is not explicitly regulated in the Insurance Law. Guarantee through surety products is only based on Article 5 paragraph (1) of the Insurance Law, which authorizes the Financial Services Authority (OJK) to expand the insurance business line based on public needs.

Therefore, the Petitioner believes that Law No. 1 of 2016 had resulted in uncertainty in surety business and harm to the Petitioner because insurance companies that previously could provide surety had to adjust within three years of the enactment of the law. As a result, only licensed companies are legally recognized for being able to conduct this business. (Sri Pujianti/Raisa/NRA)

Translated by: Yuniar Widiastuti

Uploaded on 2/11/2020