Indonesia Moves Forward with Mandatory Third Party liability Insurance for Motor Vehicles
The Indonesian government, through the Financial Services Authority (OJK), is advancing plans to implement Mandatory Third Party Liability (TPL) insurance for all motorized vehicles. This initiative,mandated by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (P2SK Law),aims to provide greater protection for accident victims and reduce financial burdens caused by road incidents.
Currently, TPL insurance is voluntary and primarily required for vehicles financed through banks or multi-finance companies.However, the new policy will extend this requirement to all vehicle owners, nonetheless of financing status. Ogi Prastomiyono, Head of Executive Supervision of Insurance, Guarantees, and OJK Pension Funds, emphasized that the implementation hinges on the issuance of government regulations (PP).
“As I said, the mandate of the P2SK Law begins with government regulations. And the government regulation is not in the OJK, in the government. Yes, we will also follow up what government regulations are like,” Ogi stated during the Insurance, Guarantee, and Pension Fund (PPDP) event at the Grand Ballroom Kempinski, Central Jakarta, on Monday, January 3, 2025.What is TPL Insurance?
TPL insurance is designed to compensate third parties for damages or injuries caused by a motor vehicle accident.This coverage ensures that victims are not left bearing the financial brunt of accidents, while vehicle owners are protected from meaningful out-of-pocket expenses.
current Status and Future Plans
While the policy was initially slated for implementation in January 2025, the government is still finalizing the PP Draft (RPP), which will serve as the legal framework for the program. Once the PP is issued, the OJK will prepare the Implementation Regulations (RPOJK) to operationalize the mandatory insurance program.
Ogi highlighted the benefits of this policy, particularly for consumers. “We see from the outlook of consumers who close vehicle insurance, of course this will help consumers in the event of a traffic accident that must bear losses from third parties. If there is insurance then it is borne by the insurance company. That is the advantage,” he explained during the 2024 Insurance Forum on CNBC Indonesia TV.
Key Points at a Glance
| Aspect | Details |
|———————————|—————————————————————————–|
| Policy Name | Mandatory Third party Liability (TPL) Insurance |
| Legal Basis | Law Number 4 of 2023 (P2SK Law) |
| Current Status | Voluntary for financed vehicles; mandatory for all vehicles pending PP |
| Implementation Timeline | PP Draft (RPP) under preparation; RPOJK to follow |
| Objective | Protect accident victims and reduce financial burdens |
Why This Matters
The introduction of mandatory TPL insurance marks a significant step toward enhancing road safety and financial security in Indonesia. By ensuring that all motor vehicles are insured, the government aims to foster a culture of mutual duty and minimize the economic impact of accidents.
As the government finalizes the necessary regulations, vehicle owners and stakeholders are encouraged to stay informed and prepare for the upcoming changes. This policy not only safeguards individuals but also strengthens the broader financial ecosystem by mitigating risks associated with motor vehicle accidents.
For more details on the P2SK Law and its implications, visit the official OJK website. Stay tuned for updates as the government progresses with this transformative initiative.
