The Financial Services Authority (OJK) is currently preparing for the implementation of compulsory motor third-party liability (TPL) insurance.
OJK said that the technical aspects of the implementation of this compulsory branch of insurance are still being studied.
The Indonesian General Insurance Association together with industry players have stated their readiness to support this government programme to provide protection for the community.
Timing
AAUI chairman Budi Herawan said that current economic conditions are difficult. Therefore, the insurance industry will be very careful in determining the premiums for mandatory motor TPL insurance. Mr Budi indicated that the premiums must cover operational costs and claims costs.
"Of course, we will reach an equilibrium between the premium and the amount of benefits that will be received," said Mr Budi.
He said that the objective is for all general insurance companies to be given the opportunity to offer motor vehicle insurance. Therefore, AAUI will draw up a suitable scheme so that there would be no losses when running the mandatory insurance programme.
Also cautious is Association of Indonesian Automotive Industries chairman Yohanes Nangoi, who said that it is not the right time now to implement compulsory motor TPL insurance.
"If possible, don't implement it now because the sales of cars (automotive industry) are declining," he said last weekend.
In the Law on Strengthening and Developing the Financial Sector, which was signed by president Joko Widodo on 13 January 2023, there is a mandate stating that the government can form a mandatory insurance programme where required. Implementing regulations are to be issued no later than two years after the P2SK Law is enacted. This is generally understood to mean that compulsory motor TPL insurance will be launched in 2025. Motor TPL insurance is currently voluntary.