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OJK Requests Lower Electric Car Insurance Rates

OJK Requests Lower Electric Car Insurance Rates

Chief Executive of the Supervision of Insurance, Underwriting and Pension Funds of the Financial Services Authority (OJK) Ogi Prastomiyono said the OJK had issued a letter to industry players so that insurance companies could charge lower electric car insurance rates.

"In order to encourage government policy on electric cars, OJK has issued a letter to industry players. In essence, OJK provides an opportunity for insurance companies to charge electric car insurance rates at a lower or different level," said Ogi in a Press Conference of the Monthly Board of Commissioners Meeting (RDKB), quoted on Tax.com , ( 12/6 )  .

Thus, the rates charged will be lower than the rates set forth in the Financial Services Authority Circular Letter Number 6/SEOJK.05/2017 concerning Stipulation of Premium Rates or Contributions to the 2017 Property Insurance and Motor Vehicle Insurance Business Lines (SEOJK 6/2017 ). This regulation has regulated the lower limit and upper limit of the vehicle insurance rates that are imposed.

"The determination of premium or contribution rates can be set at a lower rate than the lower limit as stipulated in OJK Circular Letter Number 6 of 2017 and is valid until December 31, 2023. So, currently electric car insurance arrangements still refer to the provisions that were in force before," said Ogi.

In general, the OJK is also in the process of drafting regulations regarding increasing capital and equity. The capital increase policy is needed to strengthen the structure, resilience and competitiveness of the insurance industry and increase the company's economic scale. In addition, policies are also needed to help companies face the challenges and demands of innovation in technology-based insurance products and services.

“With greater equity, the company has a larger buffer in absorbing risks arising from investment activities and company asset management. That way, the company has sufficient capital support to meet the company's payment obligations to policyholders. Industry players agree with the urgency of strengthening capital and equity in the insurance industry sector," said Ogi.

According to him, the OJK has held meetings with three associations in the insurance sector to strengthen policies, namely the Indonesian Life Insurance Association (AAJI), the Indonesian General Insurance Association (AAUI), and the Indonesian Sharia Insurance Association (AASI).

On a different occasion, AAUI Executive Director Bern Dwyanto said that electric vehicles have slightly different risks from conventional vehicles. This is what causes protection and the price also needs to be considered specifically.

"In order to support the electric vehicle program, AAUI considers it necessary to conduct a study of the risks of KBLBB (Battery-Based Electric Motorized Vehicles) considering that this is a new type of risk," said Bern.

As is known, the Government of Indonesia is focusing on encouraging the development of the electric vehicle ecosystem by issuing various policies, such as discounts on purchasing electric vehicles to providing tax incentives for investors.

The government is targeting the use of 1 million or more four-wheeled electric vehicles and 3.22 million two-wheeled electric vehicles in 2035. With this target, the government estimates that it can save 12.5 million barrels of fuel oil (BBM) and reduce 4.6 million tons of carbon dioxide (CO2) for four or more wheeled vehicles.