Bankruptcy Petition for Indonesia Insurance Company

Indah Dwi Miftachul Jannah

Universitas Airlangga, Jl. Dharmawangsa Dalam Selatan, Surabaya, Indonesia

Keywords Bankruptcy, Finance Service Authority, Insurance, Petition.

Abstract The new Indonesian bankruptcy law (Act Number 37 of 2004 on Bankruptcy and suspension of Payment)

gives the opportunity to file the bankruptcy petition for an insurance company to the Indonesia Finance

Minister. This article aims to discuss the bankruptcy petition mechanism within insurance company. This

study employs doctrinal research method. The study shows that the authority to file the bankruptcy for an

insurance company is under the authority of the finance service authority.

1 INTRODUCTION

At the end of 1997, Indonesia got monetary crisis

which made the foreign investors doubtfully bought

some shares in Indonesia. This turmoil made the

enormous of difficulties to the national economy

especially the ability of the businessmen to develop

their business and even to maintain the continuity of

their business activities, which consequently has had

a major influence on the ability of the national

business to fulfill their payment to the creditors.

In a such situation, The Indonesia Government

sought out an international financial institution that

could provide finance to Indonesia, which was finally

signed a Letter of Intent (LoI) between the Indonesian

Government and the International Monetary Fund

(IMF) as one of the financial institutions that gave and

encouraged Indonesia to make an agreement, so the

legal facilities that regulate the matter of fulfilling

obligations by debtors to creditors are corrected. For

this purpose, the regulation regarding bankruptcy

including the issue of suspension of payment is one

of the important issues that must be resolved

immediately with legal facilities that can be used as a

basis for the efforts to settle the debt obligations.

Bankruptcy is the situation when the debtor being

unable to make payments to the creditors. The

situation of being unable to pay is usually due to the

difficulties of financial conditions (financial distress)

(Sutan Remi Syahdeni:72). A bankruptcy petition

for an insurance company can only be filed by the

OJK to be registered in the commercial court.

The bankruptcy petition is a repressive effort

rather than a preventive effort, while building public

effort is a preventive effort, thus the provision (based

on The New Indonesian Bankruptcy law number 37

of 2004, article 2 paragraph (5) concerning

bankruptcy of insurance business entities) is irrational

or illogical (Hajon, explained as the expert witness in

the Material Test of Law number 37 of 2004 article 2

paragraph (5) concerning the bankruptcy of insurance

companies).

The position of OJK as the subject of filing the

bankruptcy of insurance companies brings various

problems both from philosophical and judicial

aspects which need to be answered and it is an

important thing to be reviewed and studied.

Therefore, the author examines the Bankrupt Petition

to the Indonesian Insurance Companies as the subject

of this study.

Based on the background above, the problem of

this study is how is the legal position of The Finance

Service Authority (OJK) to bankrupt the insurance

company.

2 MATERIALS AND METHODS

This paper is a normative legal research (Mahmud

Peter Marzuki:2005). In order to grasp a thorough

understanding of the legal issues, this paper used

statute and conceptual in analyzing and identifying

about the authority of The Finance Service Authority

(OJK) to backrupt the insurance company. Whereas

literature and news were used as the supplementary

source to strengthen the argument

Jannah, I.

Bankruptcy Petition for Indonesia Insurance Company.

DOI: 10.5220/0010050103510354

In Proceedings of the International Law Conference (iN-LAC 2018) - Law, Technology and the Imperative of Change in the 21st Century, pages 351-354

ISBN: 978-989-758-482-4

351

3 RESULTS AND DISCUSSION

3.1 Accountability from the Financial

Services Authority for Bankruptcy

Accountability can be interpreted as a place and form

responsibility for an obligation to the duty that is its

obligation. Accountability is defined as "mandatory

or expected to provide an explanation for someone's

actions".

Accountability is needed or expected to

provide an explanation of what has been done. With

thus accountability is the responsibility to provide

accountability and explain the performance of the

actions of someone / legal entity / lead someone

organization for parties that have the rights and

requirements to request information or

accountability.

According to The Finance Service Authority, OJK

is an institution that is independent and free from

interference from other parties.

Its functions, duties,

and authorities are to regulate, supervise, examine,

and investigate. OJK has the function of organizing

an integrated system of regulation and supervision of

all activities in the financial services sector (Sentosa

Sembiring:2006).

Before the emerge of OJK as the subject of

bankruptcy petition, these tasks were carried out by

the Indonesian Finance Ministry.

By the enactment

of the finance service authority law, the transition of

this authority has been effectively prevailed since 2

December 2012 from the Minister of Finance for the

functions, duties, and authorities to regulate and

supervise the financial service activities in the capital

markets, insurances, pension funds, financing

institutions, and other finance service institutions.

This article is a bridge to carry out the functions,

duties, and authorities of controlling and supervising

the insurance service sector which has been shifted

from the OJK to the authority of the Indonesian

Minister of Finance.

Insurance to be the only choice for people to

minimize the risk that potentially can result in losses

on their wealth or their lives by ensuring the losses to

the insurance company. In case there is no any

incident which causes a loss, the company has the

opportunity to collect the premiums paid by the

debtors (Abdulkadir Muhammad:2006).

While according to The Oxford Advace Learner's Dictionary,

quoted by The Institute of State Administration (2000).

Seeing on Act Number 21 of 2011 about The Finance Service

Authority (OJK) number 1 article 1.

A bankruptcy petition for an insurance company can only be filed

by the OJK to be registered in the commercial court.

Insurance company is a non-bank institution that

has similar role as bank which provides insurance

service for the customer’s future. Insurance company

as a diversion and risk sharing institution has positive

benefits for both the customers or for the insurance

company and also for the development of the country

(Muhammad Alfi, Etty Susilowati & Siti Mahmudah,

2017). Limited company (Ltd.) is the form of

company that commonly used by the insurance

company. In carrying out its business, the insurance

company collects funds through the premium

withdrawals by promising to give amount of money

as compensation to the customers in case there is

incident causes a loss through an insurance policy

agreement. This relationship makes the insurance

company in the position of a debtor (Yani Ahmad &

Gunawan Widjadja:2006).

Life insurance business is a business that carries

out risk management services for providing payments

to policyholders, trustee or other parties who are

entitled in this insurance in death or alive condition,

or other payments to policyholders, trustee, or other

parties at certain time regulated in the agreement,

with the amount of money which has been

determined, and/ or based on the result of the

management of funds (Man Suparman & Endang,

1997). However, in the insurance agreement, there

are three basic principles which consist of the

principle of insurable interest, the principle of utmost

good faith, and the principle of indemnity (Tuti

Rastuti:2011).

In the event of default by the debtor, the creditor

is given an attempt to file a lawsuit to the court against

the insurance company (Sutedi Adrian :2009). Beside

filing the lawsuit, an insurance company may also file

a bankruptcy statement to the commercial court

which covers the legal position of the insurance

company. Creditors who wish to submit a bankruptcy

statement application that:

1. Having 2 (two) or more creditors; and

2. Having at least 1 (one) debt that is due date

and can be collected.

One of several cases in Indonesia happened to PT

Asuransi Jiwa Bumi Asih Jaya ( PT AJBAJ) which

was bankrupt by the OJK. The OJK’s position in this

bankruptcy case is to represent creditors whose

appointment is based on the special power of attorney

from the board of commissioner of OJK, who can

Seeing on Act of The Finance Service Authority (OJK) article 55

paragraph (1).

Statement application must fulfill the conditions based on the new

Indonesian Law of Bankruptcy and Suspension of Payment number

37 of 2004 article 2 paragraph (1).

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submit a bankruptcy statement request to the

Commercial Court within the legal position of the

debtor domiciled. Basically, the procedure that must

be taken by the OJK through the board of

commissioners of the OJK is the common procedures

which based on the new Indonesian Bankruptcy and

Suspension of Payment Law (UUK-PKPU).

However, before undergoing the procedure at UUK-

PKPU, there are other provisions governing the

procedure for the bankruptcy petition for the

insurance company as in the Law concerning of

insurance No.40 of 2004 article 51:

(1.) Creditors submitted a request to the Financial

Services Authority (OJK) to file the

bankruptcy petition to the commercial court.

(2.) OJK approves or rejects the application

submitted by the creditors, as referred to the

paragraph (1) no later than 30 days after the

application is completed.

(3.) In the event that the OJK rejects the

application submitted by the creditors as

referred to the paragraph (2), the refusal must

be made in the writing along with the reasons.

(4.) Further provisions regarding the procedures

and requirements for applications from

creditors as referred to the paragraph (1),

paragraph (2), paragraph (3) is regulated in the

OJK’s regulations.

Based on the procedure above, it can be seen that

there are several mechanisms for submitting a

bankruptcy petition application to an insurance

company, such as:

1. The creditor of the insurance company submits

an application to the OJK and then the OJK

conducts a study or a review whether it is

possible to submit the bankruptcy petition to

the relevant insurance company or not;

2. OJK through its Board of Commissioners can

directly apply for a bankruptcy petition against

the insurance company in case there are

considerations related to the stability and the

financial condition of the insurance company.

In the case of PT AJBAJ which bankrupt by the

OJK, as in the supreme court rulings with the case

unable to fulfill the level of solvency at least 120% of

the losses which may arise as a result of the deviation

in management of assets and liabilities, equity -Rp.

931,56 billion, and it also had two (or more) creditors

who did not pay at least one debt that was due date,

and it could be collected by fulfilling the obligations

to the customers or policyholders. The result of the

decision of the commercial court stated that PT

AJBAJ (insurance company) was in bankruptcy bv

with all of its legal consequences had been proven

having more than two creditors and having more than

one debt which were due date. After all of the

bankruptcy elements had been proven, then based on

the new Indonesia bankruptcy and suspension

payment law (UUK-PKPU) article 8 paragraph (4)

the request of petition should be granted by the judges

of supreme court who adjudicated.

Then, based on the new Indonesia bankruptcy and

suspension payment law (UUK-PKPU) article 16

paragraph (1) all of the debtor’s assets were

confiscated, and the task of regulating and / or settling

the bankrupt assets is within the authority of the

curator (Hartini Rahayu:2007). Since this shifting

regulation determined, the debt payment from the

creditors will automatically be carried out by the

curator. In this case, the role of OJK through the board

of commissioners in filling the bankruptcy petition

for the insurance company is important, because the

OJK has the responsibility to maintain the public trust

especially customers who are the policyholders, and

it also has responsibility to protect the private right of

the customers of the policyholders.

After the decision from the court stated, based on

the new Indonesia bankruptcy and suspension

payment law (UUK-PKPU) article 16 paragraph (1),

all of that the debtor’s assets were confiscated, and

the task of regulating and / or settling the bankrupt

assets is within the authority of the curator. Since this

shifting regulation determined, the debt payment

from the creditors will automatically be carried out by

the curator.

4 CONCLUSION

From the research, it is concluded that; The legal

consideration of the OJK in submitting the

bankruptcy petition for PT Asuransi Jiwa Bumi Asih

Jaya (PT AJBAJ) was in accordance with the duties

and authority of the OJK in protecting creditor’s

interest (policyholders). Based on the law concerning

about insurance number 40 of 2014 article 19 that PT

Asuransi Jiwa Bumi Asih Jaya (PT AJBAJ) did not

have enough fund to fulfill the claims or other liability

based on policy and it was bankrupt. The legal

position of OJK as the bankruptcy petitioner has been

given a legal protection in the form of regulations and

law of insurance, and it is based on the legal position

of its debtors. the Financial Services Authority has

authority in filing for bankruptcy against PT AJBAJ

because PT AJBAJ can’t meet financial health and

can’t fulfill it’s obligations to policyholders.

Bankruptcy Petition for Indonesia Insurance Company

353

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