Legal counsel Eliadi Hulu conveying the petition’s subject matters at the panel preliminary hearing of the judicial review of Article 251 of the Commercial Code, Thursday (8/1/2024). Photo by MKRI/Ifa.

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JAKARTA (MKRI) — Maribati Duha, heir to and beneficiary of the deceased Sopan Santun Duha, has filed a material judicial review petition No. 83/PUU-XXII/2024 against Article 251 of the Commercial Code (KUHD). She believes the provision of the norm has often been used as a legal loophole by insurance companies.

“The one requesting judicial review is Maribati Duha, beneficiary (and wife) of deceased Sopan Santun Duha,” said the Petitioner’s legal counsel Eliadi Hulu before Constitutional Justices Ridwan Mansyur (panel chair), Daniel Yusmic P. Foekh, and M. Guntur Hamzah on Thursday, August 1, 2024.

Article 251 of the Commercial Code reads, “Every incorrect or false notice, or every concealment of facts known by the insured party, even though made in good faith, the nature of which is such that the agreement concerned would not have been made, or would not have been made under the same conditions if the insuring party learnt the factual situation of all these matters, shall render the insurance concerned void.”

Hulu explained that the article can also be used to avoid liability for errors or omissions made by the insurance company’s own internal team. Such negligence includes re-underwriting or risk selection, which is the process of assessing and classifying the level of risk that exists in a prospective insured.

Underwriting is almost always done by insurance companies when the beneficiary files a claim for the benefits promised in the policy. The Petitioner experienced this when submitting a claim to Prudential. In such a situation, insurance companies frequently cancel the policy or at least reduce the benefits that can be claimed by the beneficiary, which the Petitioner experienced. The move seems valid in the eye of the law because of Article 251 of the Commercial Code.

Hulu said the article 251 allows insurance companies to use it as a loophole to avoiding the responsibility of paying claims. In addition, it does not allow the insured/policy holder or their beneficiary to prove if that the fault or negligence does not lie with them and to prove that the insured has made utmost good faith. This is certainly contrary to the principle of the rule of law stipulated in Article 1 paragraph (3) of the 1945 Constitution.

“Article 251 gives the exclusive right to the insurer to cancel [the policy] without considering the insured’s legal defense,” he said.

In the petitum, the Petitioner requests that the Court declare the phrase “the insurance concerned void” in Article 251 of the Commercial Code unconstitutional and not legally binding if not interpreted as “cancellation of insurance must be based on a decision of an authorized court unless the cancellation is based on an agreement between the insurer and the insured” or “cancellation of insurance must be based on a decision of an authorized court unless the cancellation is made by the insurer within a maximum period of 6 (six) months due to the discovery of discrepancies in the insured’s data between the data stated in the insurance form and the actual data.”

Sopan Santun Duha was the beneficiary of PT Prudential Life Assurance policyholder Latima Laia. Until the petition was filed, Prudential still has an obligation to pay the remaining claim by Sopan Santun Duha amounting to Rp510.5 million.

However, until Sopan Santun Duha passed away on January 7, 2024, Prudential had not paid the claim. The Petitioner asserts that as the legitimate heir to the policy’s beneficiary, she has the right to the insurance claim.

Sopan Santun Duha filed a similar petition, No. 2/PUU-XXII/2024. However, at the petition revision hearing on February 5, it was revealed that he had passed away on January 7. At the ruling hearing on February 13, the Court declared the petition inadmissible since with the petitioner’s passing the petition lost its legal subject and could not continue.

Justices’ Advice

Constitutional Justice M. Guntur Hamzah said the Petitioner must explained the rationale of her request of the reinterpretation of Article 251 of the Commercial Code, such as the rationale behind the phrase “within a maximum period of 6 (six) months.” The Petitioner must be careful because a new norm will apply if the Court grants this petition.

“It could be only three months, it could be nine months, or one year. So, you ask how the practice is, how the insurance company carries out its obligations. On average it is completed within how long if you want to add, so there is a ratio legis,” he said.

Before adjourning the hearing, Justice Ridwan Mansyur announced that the Petitioner must submit a revised petition by Wednesday, August 14, 2024 at 13:00 WIB to the Registrar’s Office.

Also read:

Insurance Payout Inaccurate, Commercial Code Challenged

Petitioner of Commercial Code Passed Away

Sopan Santun Passed Away, Petition on Commercial Code Dismissed 

Author         : Mimi Kartika
Editor          : Nur R.
PR              : Fauzan F.
Translators  : Yuniar Widiastuti (NL)

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

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