Cars pass along Jl. Gatot Subroto in Jakarta on June 19, 2024. - Photo: Antara file
JAKARTA: The government is preparing to require vehicle owners to participate in a mandatory insurance scheme, which many see as part of a larger effort to enlarge the country’s insurance industry.
The scheme, called third-party liability (TPL), will provide coverage of vehicle damage caused by accidents.
Vincent C. Soegianto, president director of insurance provider PT Asuransi Bina Dana Arta or Oona Insurance, estimated the mandatory insurance premium could cost Rp 250,000 (US$15.5) per year.
“The limit [for the coverage] could be around Rp 50 million. So, the premium [might be] Rp 250,000 per year,” he said on Wednesday (July 17) as reported by CNBC Indonesia.
The plan was stipulated in the 2022 law on financial sector development and strengthening (PPSK).
The regulation is expected to apply to both two-wheelers and four-wheelers, but there is not yet clarity on whether the former will have different premium pricing.
The law also includes other mandatory TPL insurance that could apply to home fires and natural disasters.
Similar stipulation is also available for mandating that workers participate in a pension fund.
Ogi Prastomiyono, head of supervision of insurance, guarantee and pension funds at the Financial Services Authority (OJK), said on Tuesday that vehicle insurance remained voluntary, for now.
As of now, the government is preparing the implementing regulations that must be done no more than two years after the law was passed in 2022.
“This means that every vehicle will have a TPL by January 2025,” he said separately, as quoted from CNBC Indonesia.
He went on to say that such a rule exists in other countries, saying that “all countries in the world, including Asean member states, have implemented mandatory vehicle insurance.”
Confederation of Indonesian Trade Unions (KSPI) chairman Said Iqbal rejected the plan, asking the government not to make regulations that could put too much burden on the people.
Moreover, people in the lower middle class mainly use motorbikes to carry out their daily activities, he added.
“Don't make rules that burden people's living costs. People are having a hard time now,” Said said in Jakarta on Wednesday, as reported by Bisnis.
The Indonesian General Insurance Association (AAUI) has stated that the premium would not be burdensome for car owners, arguing that those who own a four-wheeler have more than enough purchasing power to afford it.
Insurer PT Asuransi Cakrawala Proteksi Indonesia (ACPI) deputy director Nicolaus Prawiro A. said the cost of the premium may depend on the number of participants in the mandatory insurance program.
“The more participants partake in the mandatory insurance program, the cheaper the premium [price] will be,” he was quoted as saying by CNBC Indonesia in a news article published on Wednesday.
The OJK defended the policy on Thursday, saying that it would greatly help lighten the financial burden of Indonesians involved in accidents, according to a statement on Thursday. - The Jakarta Post/ANN
