OJK Welcomes Ruling Limiting Insurer Claim Denials

JAKARTA, investortrust.id – Indonesia's financial regulator has welcomed a recent high court ruling that impacts how insurance companies handle claim cancellations, emphasizing the need to balance the interests of both insurers and policyholders. The ruling, which addresses a provision in the nation's commercial code, is seen as a crucial step towards strengthening consumer protection in the insurance sector.

The Financial Services Authority (OJK) has responded to the Constitutional Court’s (MK) ruling on Article 251 of the Commercial Code (KUHD), concerning the unilateral cancellation of insurance claims by insurance companies or insurers. 

The Executive Director of Insurance, Guarantee, and Pension Fund Supervision at OJK, Ogi Prastomiyono, stated that the Constitutional Court's decision serves as a reminder to maintain a balance between the interests of insurance companies and policyholders. According to Ogi, OJK welcomes the decision.

"The case of Article 251 KUHD, which has been decided by the Constitutional Court, should be a joint reminder on how we must have regulations that strike a balance between the interests of insurance companies and consumer protection for policyholders," said Ogi during the "PPDP Regulatory Dissemination Day 2025" event at the Grand Ballroom Kempinski Hotel Jakarta, on Monday, Feb 3, 2025.

Furthermore, Ogi mentioned that OJK would collaborate with various insurance associations to further discuss the decision in the near future. "There will be a response to this, but we welcome the Constitutional Court's decision because it maintains a balance between consumers, insurance companies, and the public," Ogi stated.

On the other hand, Ogi subtly hinted that following this decision, insurance policies might become stricter. "This is reflected in the agreements since, from the outset, consumers must understand that the information presented is in accordance with the actual condition. So there’s a balance between consumers and insurance companies," explained Ogi.

As previously reported, the Constitutional Court has ruled that insurance companies are prohibited from unilaterally terminating insurance agreements and must instead rely on mutual consent or judicial decisions. This was articulated in the Constitutional Court's Decision No. 83/PUU-XII/2024, which stemmed from a judicial review of the Commercial Code, petitioned by Maribati Duha.

The Court declared that the provisions stipulated in Article 251 of the Commercial Code (Staatsblad 1847 No. 23) are in conflict with the 1945 Constitution and are therefore not legally binding, unless interpreted to mean that the termination of coverage must be predicated upon either an agreement between the insurer and the insured or a court ruling.

Prior to this decision, Article 251 of the Commercial Code was deemed ambiguous regarding the termination mechanism for insurance claims in instances where certain facts were not disclosed during the formation of the agreement, apart from outlining the ramifications of such non-disclosure. Fundamentally, the nature of a contract necessitates a balanced position between the parties, consistent with the principles of contract law.