JURISTIC OBSTACLE IN DECLARING BANKRUPTCY AGAINST INSURANCE COMPANY WHICH FAIL TO SETTLE ITS DEBT LIABILITY

Abstract

Legal obligation to pay compensation of an insurance company arise immediatelyafter the evenement occurred, if this obligation not being settled right away it can becategorized as fall due debt and claimable, and this can be used as a reason to proposebankruptcy application. The creditors fundamental rights practically impeded by Section 2article (5) of Insolvency Act, which give absolute authority to Minister of Finance in proposingbankruptcy application for insurance company. This authority is attached to the status of Ministerof Finance as the guider and supervisor of insurance institution in Indonesia, but this authorityoften might reduce peoples trust to insurance institution itself if it is not used carefully andwisely. For the sake of law and justice, Minister of Finance should acts proportionally if thebankruptcy application doesnt have enough reason, according to Ministers authority in thecase of bankruptcy application for insurance company against their insured and other creditors.