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Electric Vehicle Transport Risks Increasing, Here is the Reinsurance Perspective

News
07 May 2025
Electric Vehicle Transport Risks Increasing, Here is the Reinsurance Perspective

Jakarta, May 7, 2025 – PT Biro Klasifikasi Indonesia (BKI) held a Focus Group Discussion (FGD) entitled “Safely Transporting Battery-Based Electric Vehicles”, bringing together various stakeholders including the insurance sector, ship operators, regulators, and technology experts. The discussion focused on the increasing fire risk associated with the sea transportation of electric vehicles (EVs), aiming to develop comprehensive, collaborative solutions to address the issue.

Electric vehicle sales are currently dominating the market, with Gaikindo data showing a significant increase in sales from 2022 to 2023. However, this positive trend also presents major challenges—especially in the ferry transport sector—where the risk of fire aboard vessels carrying EVs is on the rise.

Amir Makbul, Sub-Director of Ship Design and Stability at the Ministry of Transportation, revealed that the issue of fires on ships carrying EVs has become a global concern and will be thoroughly discussed by the International Maritime Organization (IMO) in 2027. The Indonesian government has also taken preventive measures by raising surveillance standards and issuing circulars to tighten risk prevention procedures.

Technically, M. Arif Kurniawan, Senior Manager of Research and Development at BKI, stated that based on BKI's research, 57.7% of accidents involving EV-carrying vessels are caused by lithium-oil batteries, which are known to produce hotter and more uncontrollable fires compared to other sources of ignition.

During the FGD, Yohanes Oscarino, Claim Group Head at PT Tugu Reasuransi Indonesia (Tugure), shared the insurance and reinsurance industry's perspective on the risks of transporting EVs by ship. Oscarino explained that according to Q4 2024 data from the Indonesian General Insurance Association (AAUI), the trend in hull insurance premiums has continued to rise in line with the growing fire risk—much of which is attributed to electric vehicle batteries.

“In the past three years, there have been several incidents of shipboard fires suspected to have originated from electric vehicles or motorbike batteries. This will inevitably affect the loss ratio, potentially leading to premium adjustments by insurance and reinsurance companies,” said Oscarino.

He further emphasized that although fires are covered under hull insurance policies, claim payments are still subject to complete documentation and the agreed policy terms.

“Reinsurance and insurance play a key role in managing the financial risks faced by policyholders. However, we continue to adhere to the legal principles governing insurance, and we prioritize transparency of the information disclosed by the insured party, in line with the principle of utmost good faith,” he asserted.

Oscarino also explained that insurance is essentially a contractual agreement. In the absence of specific regulations, insurance companies have the authority to include additional clauses in the policy to mitigate risks. One example is the mandatory possession of fire extinguishers (APAR) or the requirement of a warranted class maintain clause, as already implemented by BKI.

This FGD reinforced the understanding that addressing the risks associated with EV transportation requires an integrated cross-sectoral approach, encompassing regulation, technology, education, and the supportive role of insurance and reinsurance in creating comprehensive solutions.

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