Indonesia’s Financial Sector Development and Strengthening Act (PPSK) may soon enforce mandatory insurance for all car and motorcycle owners, replacing the current voluntary system. OJK’s Executive Director of Insurance, Guarantee, and Pension Funds Supervision, Ogi Prastomiyono, announced this development, highlighting its alignment with government regulations expected within two years.
Prastomiyono emphasized that Third Party Liability (TPL) insurance, already a norm in many ASEAN countries, serves crucial communal purposes. It helps mitigate losses in multi-party traffic accidents by covering legal liabilities for injuries or property damage caused by insured vehicles. This coverage includes medical expenses, repairs, and legal fees if the policyholder faces litigation.
Despite these benefits, Prastomiyono acknowledged challenges in implementing mandatory TPL insurance, particularly regarding operational logistics. Coordination between vehicle registration authorities, law enforcement, and insurance companies is essential to establish a robust coverage tracking system.
He further explained that broader participation in mandatory insurance will likely drive down premiums per individual, reflecting economies of scale in risk pooling.
