Insurance analyst Tri Joko Santoso has expressed skepticism about the upcoming mandatory third-party liability insurance, suggesting that the policy could predominantly benefit state-owned insurers. The decision by Indonesia’s Financial Services Authority (OJK) to enforce this insurance requirement for drivers has sparked concerns among experts and the public alike.
The third-party liability insurance aims to provide financial protection for drivers in the event they cause damage or injury to others in an accident. This mandate will encompass all vehicles, including motorcycles and cars, once it takes effect in January. Despite several months remaining before implementation, the initiative has encountered widespread disapproval.
Tri Joko Santoso voiced his apprehensions, stating, “It’s difficult to foresee overall benefits for the industry from this policy. Typically, compulsory insurance mandates are centralized, often to government-managed entities such as Jasa Raharja.” His comments imply a potential monopoly by state-run insurers in managing third-party liability insurance, sidelining private insurers.
He elaborated, “This setup means private insurers may not have a role to play. Therefore, the primary beneficiaries would be state-owned insurance companies rather than the entire insurance sector.”
Tri Joko Santoso also highlighted the likelihood of a state-run insurer overseeing the insurance, which could potentially regulate costs for vehicle owners. “In mandatory schemes like this, government tends to assign responsibility to one or two state-owned enterprises, rather than private firms,” he noted.
Meanwhile, insurance expert Wahyudin Rahman outlined two potential operational models for the scheme. The first model advocates for a “free market” approach where vehicle owners can choose their insurer, provided they comply with document registration requirements at Samsat (vehicle registration center). The alternative model involves insurers forming a consortium to collaborate with Samsat.
The forthcoming implementation of mandatory third-party liability insurance continues to stir debate, as stakeholders weigh its implications on insurance market dynamics and consumer choice.
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