The Constitutional Court of the Republic of Indonesia (Mahkamah Konstitusi Republik Indonesia) has issued a landmark decision in Constitutional Court Decision No. 83/PUU-XXII/2024, ruling Article 251 of the Indonesian Commercial Code (Kitab Undang-Undang Hukum Dagang/“KUHD”) conditionally unconstitutional. This article previously allowed insurance policies to be annulled based on false or incomplete information, even if provided in good faith.

Under the new ruling, policy cancellations now require either mutual agreement between the insurer and insured or a court decision, ensuring greater fairness and protection for policyholders. Insurers must update their contracts, enhance compliance procedures, and adopt more transparent practices, while policyholders gain stronger legal standing and security in contractual relationships.

This decision marks a transformative step toward fairness, transparency, and justice in Indonesia’s insurance industry.

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