Customer Protections in Insurance Contracts in Indonesia

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SSEK Indonesian Legal Consultants founding partner Ira A. Eddymurthy and Maria Yudhitama, an associate at the firm, have contributed the Indonesia chapter of the new Practical Law global guide to insurance and reinsurance.

SSEK Legal Consultants has one of the leading insurance law practices in Indonesia and has been involved in numerous high-profile cross-border transactions. SSEK’s insurance clients include ACE, Chartis Insurance, Dai-ichi Life, Hanwha Life and Prudential.

The following is an extract from the Indonesia chapter of the Practical Law global guide to insurance and reinsurance written by SSEK Legal Consultants.

Under the Indonesian Consumer Protection Law (Law No. 8 of 1999 dated 20 April 1999), consumers have the right to receive correct, clear and honest information on the services to be provided to them by business actors. Therefore, insurance companies must provide correct, clear and honest information that is not misleading in any documentation (such as insurance policies, brochures, advertisements or terms and conditions documents) to customers.

Insurance policies

The Financial Services Authority (Otoritas Jasa Keuangan or OJK) has issued Regulation No. 1/POJK.07/2013 regarding Consumer Protection in the Financial Service Sector (Customer Protection Regulation). This applies to customers of insurance and reinsurance companies.

Requirements of the Consumer Protection Regulation relating to insurance policies include:

  • The insurance company must provide information regarding its products and services which is accurate, truthful, clear and not misleading in its insurance policies, advertisements, brochures or any other related documents. Such information must be in a written form that is capable of being used as evidence. The above information must be given:
    • when providing information to the consumer on his rights and obligations;
    • when entering into an agreement with the consumer;
    • in any advertisement made by the insurance company.
  • The insurance company must submit updated and easily accessible information to consumers on the company’s products and services.
  • The insurance company must use simple, easy to understand terms, phrases and sentences in the Indonesian language in every document that sets out the rights and obligations of the consumer, that may be used by the consumer to make a decision and that legally binds the consumer. The Indonesian language may be used in conjunction with another language.
  • The insurance company must provide an explanation of the terms, phrases, sentences, symbols, diagrams and signs that are not understood by the consumer.
  • The insurance company must provide a summary of its products and services. This must be done in writing and set out the benefits and risks, and the terms and conditions under which the products are offered.
  • The insurance company must provide the consumer information on the costs of a product or service. The insurance company is prohibited from offering any product or service that automatically increases costs without the consumer’s written approval.
  • Before the consumer executes an agreement to purchase products or services, the insurance company must provide a document that contains the terms and conditions of the product or service.
  • The insurance company must inform the consumer within 30 days before any effective change in benefits, costs, risks, terms and conditions provided, including any change to the provisions under the relevant insurance policy.
  • The insurance company must include its name and/or logo in any offering of its products or services and a statement that the company is registered with (that is, that the company has a business licence) and supervised by the OJK.

To read the full guide to insurance and reinsurance in Indonesia, click here.

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