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Experts Kornelius Simanjuntak Irvan Rahardjo for the Petitioner and the Constitutional Court (left-right) giving statements at the material review hearing of Law No. 40 of 2014 on Insurance, Thursday (10/9) in the Constitutional Court. Photo by Humas MK/Gani.

JAKARTA, Public Relations of the Constitutional Court—Based on Article 5 paragraph (1) of Law No. 40 of 2014 on Insurance, to offer a new insurance product only takes a product license from the OJK (Financial Services Authority). There is no need for the OJK to issue a special provision on every product or expansion in the insurance business, said Kornelius Simanjuntak as an expert for Petitioner, the Association of Indonesian General Insurance Companies (AAUI), on the eight hearing for case No. 5/PUU-XVIII/2020 on Thursday, September 10, 2020.

“Upon a deeper analysis, the business expansion should be regulated in the Insurance Law so that businesses and insurance companies can be equal with suretyship companies,” explained the insurance law expert of the University of Indonesia’s Law Faculty.

He added that the provision on insurance can be expanded following the need of society as well as general, life, and sharia insurance businesses. The expansion can be benefits whose amount is based on fund management revenue but the OJK regulatory provision on expansion of business—in terms of business type and line—has led to rigidity of insurance business. He revealed that this has led to outdate insurance products.

Avoiding Risk of Uncertainty

On the other hand, insurance practitioner presented by the Court, Irvan Rahardjo, said that insurance is the effort to reduce risk and gain profits from funds with a promise of benefits to avoid the risk of uncertainty. He said that the license of business expansion in the form of surety bonds was only issued for the state-owned insurance company Jasa Raharja. However, to meet the demands of society, it was issued to 22 insurance companies.

“The surety bond is one of the innovations of insurance companies that takes over the risk of loss that project owners might suffer for their trust in contractors, under an agreement,” he explained to presiding Chief Justice Anwar Usman and the other eight constitutional justices.

Also read…

Surety Business Unclear, Insurance Association Challenges Insurance Law

Petitioner of Insurance Law Affirms Legal Standing

Government’s Role in Improving Insurance Capacity

House Absent Again, Judicial Review Hearing on Insurance Law Delayed

OJK: Surety and Insurance Companies Can Operate Surety Business 

House: Insurance Law Already Includes Suretyship 

Suretyship Provides Contractors with Ease of Project Funding 

The Petitioner believes that the a quo norm does not clearly state that suretyship is an expansion of insurance business. Suretyship is only based on the a quo norm, which authorizes the OJK to expand the insurance business. The Petitioner believes it has resulted in legal uncertainty. They argued that the a quo article is unconstitutional and does not have legal force insofar as not be interpreted as “prescribing that suretyship is the expansion of insurance business based on public needs.”

Before concluding the session, Chief Justice Anwar informed that all parties must submit their conclusion by Friday, September 18, 2020 to the Registrar’s Office.

Writer: Sri Pujianti
Editor:  Nur R.
PR: Raisa Ayuditha
Translator: Yuniar Widiastuti (NL)

Translation uploaded on 9/11/2020 18:08 WIB

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

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