Abstract
Insurance is primarily used to evaluate all risks associated with the uncertainty of an event. Individuals and companies have never faced such uncertainty. All individuals and companies cannot survive the damaging effect of any unforeseen event. However, many insured individuals and companies experience challenges while filing legitimate insurance claims. This study aims to examine how Indonesian insurance policyholders are protected legally if insurance companies fail. The legislative framework controlling insurance policies and policyholder rights in the case of insurance company default are both examined in the study. The laws relating to the registration of insurance or reinsurance companies and the compensation mechanism according to such regulations are discussed. The methodology employed in this study was a qualitative research design with a normative juridical approach. The default cases of Jiwasraya and Bumiputera are material evidence of the inefficiency of insurance companies running their business in Indonesia. In case of default, the insurance policyholder can claim compensation through Alternative dispute resolution, healthy financial planning, the continuation of policy, and distribution of assets through liquidation, as elaborated in this study with relevant laws. The Government of Indonesia provides insurance policyholders to apply for Bankruptcy in the commercial courts if the company has refused to fulfill the contractual obligations due to a scarcity of funds. The results uniqueness comes from seeing holes in the legal system and creating suggestions for improving policy. According to the study's findings, strengthening the legal protection of insurance policyholders in Indonesia is essential for fostering confidence in the insurance industry and ensuring policyholders' financial security. Keywords : Bankruptcy, Insurance, Legal Protections, Policyholders, Resolution DOI： https://doi.org/10.35741/issn.0258-2724.58.2.43
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