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Secretary General of the Ministry of Finance Hadianto giving a statement on behalf of the government in the judicial review hearing of the Insurance Law, Wednesday (19/8) in the Plenary Courtroom of the Constitutional Court. Photo by Humas MK/Gani.

JAKARTA, Public Relations of the Constitutional Court—The Constitutional Court (MK) held a material review hearing of Law No. 40 of 2014 on Insurance on Wednesday, August 19, 2020 in the Plenary Courtroom. The hearing had been scheduled to hear the Government’s statement. The case No. 32/PUU-XVIII/2020 was filed by the members representative body (BPA) of mutual life insurer Asuransi Jiwa Bersama (AJB) Bumiputera1912.

The Government, represented by Secretary General of the Ministry of Finance Hadianto, stated that legal certainty for an existing joint venture legal entity to carry out an insurance business is guaranteed in the Insurance Law. According to Article 51 paragraph (1) of Law No. 24 of 2003 on the Constitutional Court as amended by Law No. 8 of 2011, which stipulates that a petitioner is someone who believes that their constitutional rights and/or authorities have been impaired by the enactment of the law. Therefore, the a quo Petitioners do not meet this requirement because the Constitutional Court Decision No. 32/PUU-XI/2013 has been implemented by the lawmakers of Law No. 40 of 2014.

He also explained the difference between the open legal policy formulated by lawmakers in drafting Article 7 paragraph (3) of Law No. 2 of 1992 and Article 6 of Law 40 of 2014 on joint venture legal entities as legal entities that do insurance business. According to the Government, the norms in Article 7 paragraph (1) of Law No. 2 of 1992 allows for joint ventures as legal entities that carry out insurance businesses as reflected in the formulation that doesn’t impose any limitations on joint ventures as legal entities to carry out insurance business is aligned with the norm for cooperatives and corporations.

However, from 1992 to 2014, when the judicial review petition was filed and at the same time amendment was made to Law No. 2 of 1992, there was no insurance company in the form of a joint venture apart from AJB Bumiputera, which has existed since 1912. "This condition becomes part of consideration, whether the joint venture that runs insurance business will continue to grow or directed at corporations or cooperatives," said Hadianto in the hearing chaired by Chief Justice Anwar Usman.

Therefore, taking into account the development of financial services that requires legal certainty and guarantee of the protection of customer rights, in Law No. 40 of 2014 lawmakers set an open legal policy in which business entities that are allowed to run insurance business are limited liability companies and cooperatives, as well as existing joint ventures.

This policy is reflected in Article 6 paragraph (1) of Law No. 40 of 2014, which defines existing joint ventures as business entities in the form of joint ventures that can run insurance businesses. Given the different open legal policies adhered to by Law No. 2 of 1992 and Law No. 40 of 2014, the general norms or the main points of the regulation of joint ventures as insurance providers have been regulated in Law No. 40 of 2014, which includes the affirmation of joint business status, joint business licensing, insurance business implementation, corporate organ liability regulation, regulation on basic principles of joint business operation, prohibition on corporate organs, authority of corporate organs, OJK’s (Financial Services Authority) authority to deactivate company organs, periodic or occasional inspection of insurance companies, OJK\\\'s authority to order the replacement of the board of commissioners, criminal provisions for corporate organs that violate Law No. 40 of 2014, and transitional provisions for joint ventures. 

With this arrangement, the implementation of the Constitutional Court Decision No. 32/PUU-XI/2013 dated April 3, 2014 has been followed up by legislators, who formulated provisions in relation to insurance business in the form of joint ventures in Law No. 40 of 2014.

Also read:

Members Representative Body of Mutual Life Insurer Bumiputera Challenges Provision on Insurance

Members Representative Body of Mutual Life Insurer Bumiputera Reinforces Legal Standing 

The Petitioners challenge Article 6 paragraph (3) of Law Number 40 of 2014 on Insurance that reads, "Further provisions regarding the joint venture legal entity as referred to in paragraph (2) shall be regulated in a Government Regulation." They are Nurhasanah, Ibnu Hajar, Maryono, Achmad Jazidie, Habel Melkias Suwae, Gede Sri Darma, Septina Primawati, and Khoerul Huda.

They believe they have suffered constitutional loss because the a quo article is against the substance of the Constitutional Court Decision No. 32/PUU-XI/2013 dated April 3, 2014, in which the Court ordered that the provision on mutual insurance business shall be regulated in a separate law at the latest two years and six months after the ruling was pronounced. They believe the president and the House of Representatives (DPR) has induced a regression by amending Law No. 2 of 1992 on Insurance into Law No. 40 of 2014 on Insurance, especially the a quo article.

The Petitioners also deem the provision in violation of the Constitutional Court decision that ordered the Government and the House to form a separate law on insurance joint venture. They also believe that the Government Regulation (PP) contradicts the existing article of association of AJB that guarantee the Petitioners’ status and authority.

Writer: Utami Argawati
Editor: Nur R.
PR: Annisa Lestari
Photographer: Gani
Translator: Yuniar Widiastuti (NL)

Translation uploaded on 8/24/2020 15:05 WIB

Disclaimer: The original version of the news is in Indonesian. In case where any differences occur between the English and the Indonesian version, the Indonesian version will prevail.

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