Overseas Labor Insurance Regulation

Minister of Labor and Transmigration Regulation No. PER.07/MEN/V/2010 on Labor Insurance was recently issued, regulating the insurance that overseas workers must be provided with, and setting out requirements for related insurance companies.

Indonesians that seek to work abroad must register for, and be covered by an Indonesian Overseas Labor (or ‘TKI’) insurance program. That insurance program covers a series of risks to the employee before, during, and after the overseas placement. Timeframes for each insurance period are set out in Chapter VI of the regulation; risks covered during each period are listed in Chapter V; premiums for each period are found in Article 15, and; the extent of compensation for each risk is contained in the regulation’s Attachment. Generally, risks include mortality, sickness, injury, abuse, legal issues, and so on.

Insurance companies seeking to be overseas employment insurance organizers must fulfill a series of requirements. Chiefly, they must (a) be approved to operate by the Minister of Labor and Transmigration through an application to the Director General of Labor Placement Management, and (b) be a member of an overseas labor insurance consortium.

In order to secure Ministerial operational approval, insurance companies must submit a series of supporting documents to the Director General. Those include, among others, a deed of establishment, copy of the insurance business license issued by the Minister of Finance, statement of intent to establish at least 11 branch offices at ports of exit from the country, financial balance sheets, and proof of being financially solvent in an amount of at least IDR 500 million.

Overseas labor insurance providers must organize themselves into consortiums of at least 10 companies, all of which must provide the same mandatory insurance program. In order to provide that insurance, however, the consortium must meet a series of requirements to be approved by the Minister of Labor and Transmigration in the form of a Ministerial Decree. Those requirements include:

First, consortiums must be chaired by the company with the greatest assets, minimal requirements for which are listed in Article 8 (2) of the regulation, and include: at least IDR 2 trillion in assets; capital of at least IDR 500 billion, and; branch offices in at least 15 points of exit from the country. Second, an application must be made to the Minister, attached with security deposits of various sizes (Article 10 (2)), and a copy of the notarized consortium agreement between the member insurance companies.

Once operational, the regulation sets out a series of reporting obligations befallen to consortiums and their member insurance companies (Chapter VIII). Meanwhile, the Ministry of Labor and Transmigration, as well as central, provincial, and district governments are tasked with supervision of labor insurance administration and implementation.

The requirements for each type of insurance claim (i.e., supporting receipts and documents) are set out in Chapter VII of the regulation.

Administrative sanctions are set out by the regulation for violations towards its provisions, and consist of written warnings, suspension of activities, and revocation of appointment as an overseas labor insurance organizer.

The regulation repeals its predecessor, Minister of Labor and Transmigration Regulation No. PER.23/MEN/XII/2008, and has been in force since 31 May 2010.