Insurance Industry Aligns Policy Documents, Ensuring Customer Benefits Remain Valid
The life insurance industry is adjusting policy purchase documents in response to directions from the Financial Services Authority (OJK) and the guidelines of the Indonesian Life Insurance Association, based on the Constitutional Court ruling on Article 251 of the Trade Law (KUHD). The adjustments cover the Life Insurance Proposal Letter (SPAJ), policy terms, policy change forms, policy reinstatement forms, claim forms, and operating guidelines. The move aims to strengthen information transparency and consumer protection without changing the benefits of protection already agreed in the policy.
Insurance analyst and Chair of the Abitani Barkah Taim School of Risk Management and Insurance noted that the document adjustments are essentially intended to clarify provisions that have long underpinned insurance practice.
‘In insurance, everything related to the policy and the governance of underwriting must be clearly stated in the policy documents and cannot rely on assumptions. Therefore, with the Constitutional Court decision on KUHD 251, the principle of utmost good faith can be clarified, where policy cancellations must be stated more explicitly so they are not carried out unilaterally and abruptly without a clear process,’ said Abitani.
He explained that in life insurance there is a contestable period which generally lasts for two years. During this period, insurers can seek clarification if risk information previously undisclosed is found.
‘In certain conditions, the company may offer premium adjustments in line with risk levels or other steps agreed jointly,’ he said.
Additionally, customers have the opportunity to study the policy content during a free-look period of 14 days after the policy is received.
‘During this period customers can ensure that the policy contents align with the explanations given. If not, the policy can be cancelled and the premium refunded,’ Abitani clarified.
The document adjustments were also made comprehensively, including on the supporting systems and training for sales personnel and distribution partners to ensure the information conveyed to customers is more accurate and consistent.
The life insurance industry ensures that claim processing and customer service continue normally. With clearer and more standardized provisions, the adjustments are expected to help customers understand the claim flow and reduce potential misunderstandings in the future.
Abitani assessed that strengthening documents and operational procedures is part of regulators’ efforts to reinforce consumer protection and to boost public trust in the life insurance industry.
‘Going forward, financial literacy, particularly regarding insurance, must continue to be improved so that the public better understands their rights and obligations under the policy,’ he said.
Currently, life insurance companies under OJK supervision are entering the implementation phase of document adjustments. The process includes internal reviews, substantive validation, and alignment with regulator and industry association provisions. (E-2)
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