A crucial reason why foreign construction companies, especially from China, Korea, and Japan, entering Indonesia are required to use the services of local insurance brokers.This is the topic of our discussion in this article.
Key Points:
- Local Insurance Obligations: Foreign companies working on large projects (infrastructure, energy, IKN) in Indonesia are required to have local insurance coverage in accordance with Indonesian regulations. Global insurance policies from their home countries are often invalid or have no legal standing in Indonesia without a local partner.
- The Importance of CPM (Contractor’s Plant & Machinery) Insurance: One vital product that is often overlooked is CPM heavy equipment insurance, which protects heavy equipment (cranes, excavators, etc.) from damage or loss. Without a local CPM policy, losses resulting from incidents in Indonesia cannot be claimed from foreign insurance companies, and must be borne by the contractor himself.
- Role of Local Insurance Broker (L&G Insurance Broker): Brokers act as professional risk advisors who bridge the foreign insurance system with local regulations. Brokers work in the interests of the client (insured), unlike agents who work for insurance companies.
- Common Problems of Foreign Companies:
- Global policies do not have legal standing in Indonesia (not registered with the OJK).
- Not understanding local regulations that require certain policies for project tenders.
- Language barriers and claim documents must be in Indonesian.
- Error in determining the insurance value.
- There is no party to defend the interests of the insured during a claim.
- L&G Insurance Broker Advantages:
- Expert in the field of Construction Projects & Heavy Equipment Insurance (CPM).
- 360° support from risk analysis to claim completion.
- Extensive network with local and international insurance companies (meeting OJK and global standards).
- Services in English and Indonesian.
- Independent and transparent (only recommend the best products to clients).
- Benefits of Collaborating with Local Brokers: Ensuring compliance with OJK regulations, cost efficiency (getting the best premiums), clear legal protection, access to specialized insurance products (CPM, CAR, EAR, Public Liability, Performance Bond), and increasing credibility in the eyes of project owners.
WritingThis concludes that working with a local broker such as L&G Insurance Broker is an important risk mitigation strategy to ensure that foreign construction projects in Indonesia run safely and are protected from potential major financial losses.
Contact L&G Insurance Broker now on 08118507773 for free consultation before risk.
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Many foreign construction companies, particularly from China, Korea, and Japan, are now flocking to Indonesia to work on major projects such as infrastructure, energy, smelters, and the Indonesian capital city (IKN). However, despite these significant opportunities, one crucial aspect is often overlooked: the obligation to have local insurance coverage that complies with Indonesian regulations.
One important product that’s often overlooked is CPM (Contractors Plant & Machinery) heavy equipment insurance, a policy that covers all heavy equipment used on projects. Unfortunately, many foreign contractors assume their global insurance from their home country covers Indonesia. In reality, foreign policies are not valid in Indonesia without a local partner.
This is where the role of a local insurance broker like L&G Insurance Broker becomes crucial. Brokers are more than just intermediaries; they are professional risk advisors who bridge the gap between foreign insurance systems and Indonesian regulations, ensuring your company is fully protected from significant losses.
📞Contact us now for a free consultation!
WhatsApp: 08118507773
Email: halo@lngrisk.co.id
Visit:www.lngrisk.co.id
More and more foreign companies are entering Indonesia.
Over the past five years, foreign investment in Indonesia’s construction sector has surged rapidly. BKPM data shows a significant increase in projects from China, South Korea, and Japan, ranging from toll roads and bridges to ports and even smelters in Sulawesi and Kalimantan.
Most of these companies bring their own heavy equipment from their home countries: cranes, excavators, batching plants, bulldozers, and various types of machinery worth millions of dollars.
However, what is often not realized is:
- Once the equipment is operational in Indonesia, all risks are subject to local laws and regulations.
- A global policy does not automatically protect overseas operations, especially in joint operations with state-owned enterprises or the Indonesian government.
Therefore, every foreign company is required to have local insurance protection, one of which is CPM heavy equipment insurance.
What is CPM (Contractors Plant & Machinery) Insurance?
CPM (Contractors Plant & Machinery) insurance is a policy that provides protection against damage or loss of heavy equipment used in construction projects.
The scope of the guarantee usually includes:
- Damage due to accidents, rolling over, or falling.
- Fire, explosion, lightning strike.
- Theft and loss.
- Damage due to operator negligence.
Simple example:
A Chinese tower crane worth Rp 10 billion collapsed during installation on a project. Without a local CPM policy, a claim could not be filed with the Chinese insurance company because the incident occurred outside the coverage area. Consequently, the contractor bore the losses solely.
If the company has CPM heavy equipment insurance from an Indonesian insurance company, then losses can be claimed and the project can continue without major financial disruption.
Common Problems Faced by Foreign Companies in Indonesia
Many foreign companies are unaware that the insurance system in Indonesia differs from that in their home countries. Some common issues include:
- Global Policy Not Valid in Indonesia
Some foreign contractors rely solely on global policies from their headquarters. However, these policies have no legal standing in Indonesia without a local insurance company registered with the Financial Services Authority (OJK). - Not Understanding Local Regulations
Many state-owned enterprises (BUMN) and Indonesian government projects require local policies for project coverage. Without a broker, contractors could mistakenly purchase policies that don’t meet tender requirements. - Language Barriers and Claim Documents
When a claim arises, all documents must be submitted in Indonesian and processed through local legal mechanisms. Without the assistance of a broker, the claims process could stall completely. - Errors in Determining Sum Insured
The value of heavy equipment is often not adjusted to local exchange rates and market values, resulting in claims being paid only partially. - No Support When Claiming
Insurance agents or companies have no obligation to defend the insured’s interests. However, brokers are obligated to fight for their clients’ claims until they are resolved.
Why Are Insurance Brokers Superior to Agents or Direct Buyers?
Many people still misunderstand, thinking that insurance brokers and insurance agents are the same. However, the two are very different, especially in terms of their legal roles and responsibilities.
The main difference lies in who they represent.
- Insurance agents work for insurance companies.
- Insurance brokers work for you, as a customer or insured.
An insurance agent’s primary responsibility is to sell products from the insurance company with which they are registered. They are not obligated to assist clients with the claims process. Their goal is to achieve the company’s sales targets.
Meanwhile, insurance brokers stand on the client’s side. Brokers act as independent advisors, helping analyze risk needs, finding the most appropriate policies from various insurance companies, and assisting clients from start to finish in the claims process.
Furthermore, insurance brokers are registered and directly supervised by the Financial Services Authority (OJK), not by a specific insurance company. This means the broker’s position is completely neutral and prioritizes the client’s interests.
In other words:
- Agents work for insurance companies.
- Brokers work for you.
So, if you are a foreign construction company that wants to ensure that the insurance policy truly fits the needs of the project in Indonesia, then an insurance broker is the only party on your side.
L&G Insurance Broker Advantages
- Expert in Construction Projects & Heavy Equipment Insurance (CPM)
The L&G team has extensive experience preparing Contractors’ Plant and Machinery (CPM) policies for major construction projects throughout Indonesia. We understand every detail of heavy equipment insurance needs, from excavators and cranes to batching plants, to ensure optimal protection for all your project assets.
- 360° Support from Start to Claim
We not only help you choose the best policy but also guide you throughout the process. From risk needs analysis and policy document preparation to claims assistance in the event of a loss, the L&G team will ensure everything runs smoothly and your rights are met.
- Extensive Network with Local and International Insurance Companies
L&G collaborates with numerous major OJK-registered insurance companies and has international reinsurance support. This enables us to provide coverage that meets global standards while still complying with Indonesian law.
- Services in English and Indonesian
We understand the communication challenges of multinational projects. Therefore, the entire L&G team is available in both English and Indonesian, facilitating coordination with expatriate teams and ensuring all documents meet international project standards.
- Transparency and Independence
As an independent broker, L&G is not tied to any single insurance company. We only recommend the best products that are most beneficial and protect your interests objectively and transparently.
Case Studies in the Field
Imagine you’re a Chinese contractor building a cement factory in Kalimantan. You’re bringing five excavators, two cranes, and one batching plant, with a total value of around Rp80 billion.
One day, one of the cranes was badly damaged by strong winds during the process of lifting a steel structure.
If you rely solely on the global policy from the head office in Beijing, it is highly likely that the claim will be rejected, because:
- The location of the incident is outside the policy coverage area.
- There are no local insurance companies registered in Indonesia.
- Claim documents are not available in Indonesian.
- There is no local broker to take care of coordination between parties.
However, if you work with L&G Insurance Broker from the start, all of these risks can be avoided. L&G will ensure all your heavy equipment is protected with a local CPM policy designed in accordance with OJK regulations and international standards.
When an incident occurs, the L&G team will immediately:
- Contact local insurance companies.
- Assist in preparing claim reports and field documentation.
- Coordinate with surveyors and loss adjusters.
- Ensure claim payments are made on time.
The result: your project doesn’t stall, heavy equipment can be repaired promptly, and your company’s finances remain secure.
Advantages of Working with a Local Broker in Indonesia
For foreign companies, working with a local broker isn’t just about purchasing a policy; it’s a crucial part of their business risk mitigation strategy. Here are the tangible benefits you’ll gain:
- Assurance of Indonesian Regulatory Compliance (OJK & Project Tender)
Brokers ensure that every policy you own meets the requirements of government or state-owned enterprise projects, and complies with Indonesian regulatory provisions.
- Cost Efficiency
By comparing the market with various insurance companies, brokers can help you get the best premium without compromising on the quality of protection.
- Clear Legal Protection
All documents and claims processes will be carried out in accordance with Indonesian law, thus protecting you from unnecessary potential legal risks.
- Access to Special Insurance Products
L&G can help you access different types of cover such as:
- Heavy Equipment Insurance (CPM)
- Contractors’ All Risks (CAR)
- Erection All Risks (EAR)
- Public Liability
- Performance Bond
- Increase Credibility in the Eyes of Owners & Investors
Companies that comply with regulations and have comprehensive insurance protection will be more trusted by project owners, investors, and business partners in Indonesia.
Conclusion
Entering the Indonesian market presents a significant opportunity for foreign construction companies, but it also carries significant risks if they don’t understand local systems. One of the most overlooked risks is the protection of heavy equipment and project machinery, which should be covered by local CPM insurance.
To ensure everything runs smoothly, L&G Insurance Broker is the right partner. We don’t just sell policies, but become professional risk advisors who are truly on your side.
Don’t let your project be threatened just because you chose the wrong policy.
Together with L&G Insurance Broker, we help you manage all your insurance needs, from CPM, CAR, EAR, to Performance Bonds, with project standards in Indonesia.
📞 Contact Us for Free Consultation
WhatsApp: 08118507773
Email: halo@lngrisk.co.id
Website: www.lngrisk.co.id
Because in the construction world, one small decision can save billions of rupiah and L&G is here to make sure you are always protected.
