Under the Indonesian Commercial Code, insurance is an agreement between the insurer (insurance company) and the insured party under which the insurer agrees to compensate the insured party for losses, damages or loss of revenues on the occurrence of uncertain events, in return for receiving premiums from the insured party.

Under the Law No. 40 of 2014 regarding Insurance (the “Insurance Law”), insurance is a written agreement between the insurance company and the policyholder under which, in return for a premium, the insurance company agrees to either:

  • Provide compensation to the insured party or policyholder for losses, damage, costs, loss of revenue or legal liability to any third party that may be suffered by the insured party or the policyholder due to uncertain event.
  • Provide payment due to the death/life of the insured party according to a stipulated benefit and/or based on the result of fund management.

The object of insurance can be in the form of life, health, liability, goods and services, and any other interest that can be lost, damaged and/or decrease in value (Insurance Law).

In addition, OJK Regulation No. 23/POJK.05/2015 regarding Insurance Products and Marketing of Insurance Products (POJK 23) defines insurance policies as insurance agreement deeds or other documents equated with insurance agreement deeds that:

  • Are integral to the insurance agreement.
  • Are made in writing.
  • Contain an agreement between the insurance company and policyholder.

A reinsurance contract is a written agreement between an insurance company and a reinsurance company to allocate the risk exposure of the insurance company to claims from its policyholders.

The most common types of life insurance contracts are:

  • Term life insurance.
  • Whole life insurance.
  • Endowment insurance.
  • Unit-linked insurance.

The most common types of general insurance contracts are:

  • All-risk insurance.
  • Total loss only insurance.

All insurance and reinsurance contracts are regulated under the:

  • Insurance Law and its implementing regulations.
  • Indonesian Civil Code.
  • Indonesian Commercial Code.