Indonesia to Mandate Third-Party Liability Insurance for All Motor Vehicles by January 2025
Jakarta – The Financial Services Authority (OJK) has announced plans to mandate third-party liability (TPL) insurance for all motor vehicles, including motorcycles and cars, by January 2025. This move aims to provide financial protection in the case of traffic accidents.
According to Ogi Prastomiyono, OJK’s Executive Director of Insurance, Guarantee, and Pension Funds Supervision, the new requirement will be enforced through government regulations aligned with the Financial Sector Development and Strengthening Act (PPSK). Currently, vehicle insurance is voluntary, but the PPSK Act paves the way for mandatory coverage.
Prastomiyono emphasized that mandatory TPL insurance is common in many countries, particularly within ASEAN. TPL insurance is considered essential because it helps compensate victims of accidents caused by the policyholder’s vehicle.
The insurance covers legal liabilities arising from accidents resulting in injury or damage to another person’s property. This includes costs for:
- Medical expenses
- Repair costs
- Legal fees
However, Prastomiyono acknowledged challenges in implementing the mandatory insurance, specifically concerning operational mechanisms. A crucial aspect is establishing a system to track insurance coverage effectively. This requires coordination between the police, responsible for vehicle registration, and insurance companies.
“Premium rates will be influenced by the number of participants. More participants in mandatory insurance will lower premiums for each individual,” he explained. This suggests that as more drivers are insured, the cost of insurance for everyone could decrease.
