The Story of Tom Who Thought Everything Was Safe
Tom Walker, an Australian entrepreneur in the construction and logistics sector, decided to expand his business to Indonesia. He already had experience managing multi-million dollar projects in Perth and Darwin. When entering the Indonesian market, he thought—
“I’m used to taking risks. As long as I have insurance, I’m safe.”
Like many Australian entrepreneurs, Tom purchased an insurance policy directly from a local insurance company without consulting a broker. The price was cheaper and the process quicker. But four months later, a major storm hit West Java, flooding Tom’s logistics warehouse.
Loss: Rp. 8.2 billion.
When Tom filed a claim, he received a reply letter:
“Claim denied because flooding is not covered under your standard FLEXA policy.”
Tom was surprised. He thought “fire” covered all the major risks.
He only learned later that Indonesia has a much higher risk of flooding, earthquakes, volcanic eruptions and environmental risks than Australia.
With his big claim rejected, Tom realized one thing:
He entered the wrong market—without the right partners.
Why Australian Businesses Must Insure All Assets, Projects & Liabilities in Indonesia
Australian investment in Indonesia continues to increase in the following sectors:
- mining
- renewable energy
- construction & EPC
- agribusiness
- logistics & supply chain
- finance & technology
- tourism & hospitality
However, Indonesia is one of the most complex risk countries in the Asia Pacific region. Without proper protection, small losses can turn into major ones.
Here are the main risks facing Australian entrepreneurs:
1. Asset Risk (Property Risk)
- Fire (very common in Indonesia)
- Floods and extreme weather
- Earthquakes and volcanic eruptions
- Machinery breakdown
- Business interruption due to operation stoppage
- Theft, robbery and sabotage
Indonesia has more than 130 active volcanoes, and several industrial zones are located in earthquake-prone areas.
2. Project Risk (Construction & Engineering Risk)
- structural collapse
- design failure
- employee’s fault
- heavy equipment accidents
- risk of delay (Delay in Start-Up)
- third party risks in the project area
Australian EPC projects in Indonesia are typically worth US$50–300 million—uninsured risks could lead to bankruptcy.
3. Logistics & Transportation Risk (Marine Cargo & Transit Risk)
- rough handling at the port
- heavy rainfall → damage to goods
- pencurian (cargo theft)
- fallen container
- ship grounding or collision
Australia–Indonesia is one of the busiest logistics routes—the risks are big.
4. Liability Risk (Third Party Law & Responsibility)
Here are the most expensive risks that are often not realized:
- Public Liability
- Employer’s Liability
- Contractor Liability
- Directors & Officers Liability (D&O)
- Professional Indemnity
- Cyber liability
A single lawsuit from a third party can reach tens of billions of rupiah.
The Big Challenge: Choosing 1 Insurance from 70 Insurance Companies in Indonesia
Indonesia has more than 70 general insurance companies, all of which are supervised by the OJK.
But the difference is huge:
- Different underwriting capacities
- Different policy wording
- Different additional clauses
- Claim payment speed and reputation vary
- Reinsurance quality varies
Many Australian business owners fall into the trap of taking out the “cheapest price” policy—which ultimately results in claims being rejected.
Understanding OJK Regulations: Insurance Obligations in Indonesia
To protect foreign investors and maintain industrial stability, the Indonesian government has established the following important regulations:
- Law 40/2014 – Concerning Insurance
Regulates the legal basis for the operations of insurance companies.
- POJK 69/POJK.05/2016 – Implementation of Insurance Business
Require insurance companies to follow risk management standards.
- POJK 23/POJK.05/2015 – Insurance Products
Establish standard product terms & policy wording.
- POJK 70/POJK.05/2016 – Insurance Supporting Institutions
Including rules for insurance brokers.
- Mandatory Local Insurance Requirement
All assets, projects, and liabilities in the territory of Indonesia must be covered by an Indonesian insurance company.
If Australian employers do not follow these regulations, their policies may be deemed invalid, and claims may not be paid.
Indonesian Insurance Quality Equals International Standards
Many Australian entrepreneurs ask:
💬 “Are Indonesian police safe?”
The answer: VERY SAFE, because Indonesian insurance companies are supported by global reinsurance:
- Lloyd’s of London
- Munich Re
- Swiss Re
- Reinsurers Japan, Korea, Singapore, Hong Kong
Nearly all large project policies—smelters, mines, solar farms, hotels—are structured with international reinsurance support.
Thus, Australian investors do not need to worry about the strength of the guarantee.
Why Australian Businesses MUST Use an Authorized Insurance Broker in Indonesia
In OJK regulations, insurance brokers are:
“Representative of the insured, not a representative of the insurance company.”
This means that brokers work entirely in the interests of Australian entrepreneurs.
Duties of an Official Insurance Broker (Example: L&G Insurance Broker)
- Conduct a Comprehensive Risk Assessment
- Designing the Right Insurance Program
- Best Premium & Clause Negotiation
- Ensuring the Policy Complies with OJK Regulations
- Managing Claims from Start to Payment
- Defending the interests of the insured in every process
- Providing consulting services without conflict of interest
L&G Insurance Broker – Indonesia’s First AI-Based Broker
With decades of experience and multinational clients from:
🇲🇾Malaysia
🇸🇬Singapore
🇨🇳 China
🇰🇷 Korea
🇦🇺 Australia
🇮🇳 India
🇺🇸America
L&G has unique advantages:
TAI Technology in Underwriting & Risk Analysis
- AI risk scoring and underwriting information
- AI wording analyzer
- AI claim analysing
- Automated documentation
Digital Client Dashboard
Clients can see:
- state of the city
- claim status
- risk
- automatic reports
L&G Brokers fight for clients until claims are paid in full.
Real Case Study: How L&G Saved an Australian Business
Back to Tom.
After his flood claim was rejected, he contacted L&G Insurance Broker.
L&G does:
- Audit of old policies
- Identifying wording deficiencies
- Planning a new police with flood & earthquake guarantees
- Placement of Munich Re reinsurance
- Developing risk mitigation SOPs
- Organize all claim documents without hassle
Several months later, another failure occurred to the forklift and conveyor belt.
New claims worth Rp 3.2 billion:
Approved and paid in full.
Tom finally said:
“If I had used a broker from the start, I wouldn’t have lost billions of rupiah.”
Disclaimer
This article is intended for general educational purposes regarding risk management and insurance for Australian businesses in Indonesia. The information contained herein does not constitute legal, financial, or insurance advice. Each company has unique risk circumstances that require professional analysis before deciding to purchase a policy. L&G Insurance Broker is not responsible for decisions made based on this article without further consultation. To ensure coverage that complies with OJK regulations and your business needs, it is recommended to discuss your coverage directly with a licensed insurance broker.
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DON’T WASTE YOUR TIME AND SECURE YOUR FINANCIAL AND BUSINESS WITH THE RIGHT INSURANCE.
HOTLINE L&G 24 JAM: 0811-8507-773 (CALL – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: halo@lngrisk.co.id
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