The government is planning new rules for vehicle owners both cars and motorcycles this year. But its implementation will take place in 2025. The rules are related to third party liability insurance (TPL).
TPL is an insurance product that provides compensation to third parties directly caused by the insured motor vehicle, as a result of the risks guaranteed in the policy.
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Ogi Prastomiyono, Chief Executive of the OJK Insurance, Guarantee and Pension Fund supervisor, said that currently vehicle insurance is voluntary. However, the law on the development and strengthening of the financial sector (PPSK law) provides that vehicle insurance can be mandatory for all car and motorcycle owners.
Currently, the government is preparing derivative rules of the PPSK act. “And it is expected that the government regulation related to compulsory insurance is in accordance with the law no later than 2 years since PPSK, meaning that in January 2025 every vehicle has a TPL,” he said
Practices like this, said Ogi, have been applied in various other countries. “If we look at the world countries, including Asean, all of them have implemented compulsory vehicle insurance,” added Ogi.
Ogi continued that compulsory insurance for motor vehicles is mutual. Thus, when there is a traffic accident involving many parties, losses can be suppressed.
But one homework is the mechanism of implementation of compulsory insurance for the motor vehicle. Because it takes one platform that can be used to find out the insurance used by each motor vehicle.
It is known that the mandate for the establishment of compulsory insurance programs is contained in law Number 4 of 2023 on the development and strengthening of the financial sector (PPSK law). This mandate is particularly enshrined in Article 39 A.
Citing Article 39 A, it is explained that the government can form a compulsory insurance program as needed. This compulsory insurance can also be appointed by the government to certain groups.
“The government may oblige certain groups of people to pay premiums or participation contributions as one of the sources of funding for compulsory insurance programs,” the law states.
The further provisions regarding the implementation of the Compulsory Insurance Program are regulated by government regulation after obtaining approval from the DPR. If the PP has come out, it will be downgraded to the Financial Services Authority (POJK) regulations.
Currently, the Financial Services Authority (OJK) is still waiting for the draft government regulation (RPP) related to the compulsory insurance rules. Ogi Prastomiyono, Chief Executive of the Insurance, Guarantee and Pension Fund (PPDP) OJK, said that the regulation is a derivative of the P2SK law.
The compulsory insurance Program has been included in the insurance roadmap 2023-2027. This compulsory insurance is intended to encourage the expansion of insurance penetration and density.
“The government’s policy to require compulsory insurance for certain groups of people also requires support for the development of insurance products. Therefore, the insurance industry must innovate in order to provide insurance products that meet the needs of the community and support national development programs,” as quoted from the insurance road map document.
Until now, these rules are still being reviewed by the government. “The current Update for the PP is still being prepared by the Ministry of Finance, which is the party that made preparations for the formation of the PP,” he said in a virtual press conference, Friday (13/12).
Later, it will coordinate with related industries. “Ministry of finance as a regulator of financial sector policy, in parallel we prepare the regulation in POJK,” he added.
According to him, related to TPL, it is necessary to realize that there are losses that have not been covered by insurance, especially for vehicle owners. Thus, the law on the development and strengthening of the Financial Services Sector (UU P2SK) makes it possible to regulate related to the TPL.
In addition, the TPL policy is also in order to deepen the market in the insurance industry itself where until October 2024 the assets of new insurance companies reached 5.32% of GDP.
“This is so low. So the protection of third-party motor vehicles and increased market deepening of the P2SK law mandates the regulation of compulsory insurance in the form of TPL, ” he said.
However, Ogi said, it needs to be realized that the context of the implementation of the P2SK Act needs government regulations and also readiness from the industry. Thus, there is collaboration and synergy between p2sk derivative financial sector policies through the establishment of government regulations.
“The implementation regulation in this case is carried out by OJK through POJK and also the readiness of the industry to issue TPL products,” he concluded.