In an era of massive investment by Chinese companies undertaking construction projects in Indonesia, it is crucial to recognize that project risks are not just a small part of the budget, but can be a significant eroding of investment, reputation, and business continuity. This article takes you through a series of real-life cases where Chinese projects in Indonesia have suffered significant losses due to a lack of adequate safeguards insurance for Chinese projects As a broker with over 30 years of experience, L&G Insurance Broker emphasizes that choosing an insurance broker over purchasing through an agent or directly from an insurance company is not simply a choice, but a strategic move. Brokers can thoroughly analyze risks, negotiate appropriate policies, and, when claims arise, oversee the process until they are paid. Agents or purchasing directly from an insurance company often stop after the policy is issued, but when a risk occurs, you may be left alone facing the complex claims process.
If you are a Chinese company running a project in Indonesia, then a FREE consultation with the L&G team is a very important first step.
Contact via WhatsApp 0811-8507-773 or email halo@lngrisk.co.id to get your project risk analysis and insurance solutions for China projects precisely.
1. The Reality of Common Mistakes
When a project undertaken by a Chinese company in Indonesia is not equipped with insurance for Chinese projects or a policy that is not tailored to local conditions, a number of serious consequences can arise:
- Claim rejected because policy coverage does not comply with local area or regulations Many foreign companies believe that a master policy from their head office is sufficient, even though project contracts in Indonesia often require a local policy in addition to global insurance. Without local Contractor’s Plant & Machinery (CPM) insurance, foreign projects in Indonesia could suffer losses of hundreds of millions of rupiah.
- Project delays resulting in fines, reputation and additional operational costs In a study, a foreign project in Indonesia without protection experienced heavy equipment damage due to landslides and was forced to cover repairs and operational downtime.
- Non-compliance with contracts or regulations resulting in sanctions or termination of the contract For Chinese companies with projects in Indonesia, local legal and regulatory responsibilities, including insurance obligations, are crucial.
These mistakes often arise from the perception that “local insurance isn’t necessary” or that “a global policy is sufficient,” as well as from choosing an agent or purchasing directly without the assistance of a broker who understands local conditions. As a result, when risks arise, losses can be substantial, and your project may be left to pay out-of-pocket without claims support.
2. Real Case Study: China’s Unprotected Projects That Cost Money
To provide a more concrete picture, here are some illustrations of the real results of cases of Chinese projects or foreign projects in Indonesia that were not accompanied by the program insurance for Chinese projects.
Case A: Infrastructure Projects in Sulawesi
In a recent article by ligaasuransi.com, it was stated:
“A Chinese construction company is working on a dam project in Sulawesi. They are bringing more than 15 units of heavy equipment… One night, heavy rains lashed the project site. A landslide struck one of the heavy equipment units… Repairs were estimated at Rp 600 million. Unfortunately the company has not had the opportunity to purchase a local CPM insurance policy…” ligaasuransi.com
The impact of the incident: the project experienced two weeks of downtime, operational costs ballooned, and the company’s reputation suffered in the eyes of the local project owner. Lacking a local insurance policy or proper program, the company paid for the entire cost itself.
Case B: Neglected Insurance Obligations
Another article noted that many Chinese companies in Indonesia failed to comply with the requirement that insurance policies be placed through local brokers or licensed local insurance companies. This non-compliance resulted in claims being rejected when damage occurred due to being outside the policy area, or not complying with regulations. ligaasuransi.com+1
Case C: Comparison of Projects With and Without Protection
In one illustration presented by ligaasuransi.com:
“Case A: No Protection – foreign company suffered heavy equipment damage due to flooding. The project was delayed three months… Case B: With Insurance Broker – foreign company used a broker and purchased CAR + Equipment Insurance policy. During the flood, the claim was approved within two weeks, delaying the project by only three days.” ligaasuransi.com
The simple conclusion: protection through the right insurance program for China projects (and with a broker) makes a huge difference in the speed of recovery and the burden of losses.
3. Why is the Presence of a Broker Important for China Project Insurance?
To ensure that the program insurance for Chinese projects is truly effective, the presence of an insurance broker like L&G is a key factor. Here are some logical reasons:
Brokers understand local regulations, agents or direct purchases often do not.
Chinese companies’ projects in Indonesia face not only technical construction risks but also complex local regulations, including local policy obligations, OJK licensing, and tender requirements for government or state-owned enterprise projects. Brokers like L&G have experience and understanding of these regulations. Agents or direct buyers often overlook these aspects, potentially invalidating policies or denying claims.
Brokers work for you, not for insurance companies.
As mentioned, agents typically act as representatives of insurance companies. Independent brokers, on the other hand, act on your behalf as the client. This is especially important when a major claim arises on a construction project; you want someone on your side.
Without a broker, you could be left alone facing a complex claims process, negotiating with adjusters, or even being denied coverage due to unmet policy requirements.
Brokers perform thorough risk analysis and customize programs.
Chinese company projects in Indonesia have unique characteristics: imported heavy equipment, local contractors, difficult terrain, complex logistics, weather risks, floods, landslides, and changing regulations. An experienced broker will conduct a project risk audit, tailor the policy (e.g., for heavy equipment, delays, and third-party liability), and ensure that the insurance program for Chinese projects covers all key aspects.
Brokers control the settlement of claims until they are liquidated
The key to all protection is how your claim is resolved when a risk occurs. Without a broker, you could face rejection, lengthy processing, or partial payment. With a broker, you’ll be assisted with evidence collection, loss adjuster negotiations, and even reserve submissions. One case study found that a project protected by a broker resolved its claim within two weeks, while without a broker, it took months. ligaasuransi.com+1
4. Impact of Losses If You Don’t Have the Right Project Insurance
If you, as a Chinese company, fail to secure proper insurance for your Chinese project through a broker, you could face the following consequences:
- Direct losses on assets and operating costs: heavy equipment breaks down, project structures are damaged, imported materials are lost or damaged, all of which are your own burden.
- Project delays resulting in fines or loss of bonuses: When a project is completed is a critical factor. Downtime means wasted money and a tarnished reputation.
- Damaged reputation to the point that future collaboration is at riskLocal owners or investors will evaluate how you manage risk. Without proper insurance, your perception as a partner is compromised.
- Contracts are delayed or even cancelled due to not meeting insurance requirements.Many government and state-owned enterprise projects in Indonesia require a local policy or registered broker. Failure to comply could result in your ineligibility to participate in future tenders.
- Rejected claims or incomplete paymentsIf your policy doesn’t match your region, or if mobilization requirements aren’t met, or if the global policy isn’t valid in Indonesia, your claim could be denied in the event of an incident. Studies show that many foreign projects suffer losses because of this. ligaasuransi.com+1
Simply put: the cost of “not having protection” is far greater than the insurance premium that is truly designed for your project’s purposes.
5 Practical Steps to Ensure Your China Project Insurance is Covered
So that you as a Chinese company in Indonesia can take concrete steps to have appropriate insurance for Chinese projects, here are some practical guidelines:
Involving brokers from the tender stage
Don’t wait until the project contract is already underway or until issues arise. Engage an insurance broker as soon as you submit your tender to ensure a risk analysis, policy terms, and protection strategy are developed. A broker can help you ensure the policy aligns with the project’s specifics, including imported heavy equipment, local conditions, logistics, and regulations.
Ensure local policies and local brokers are registered
Ensure the policy is issued through an insurance company licensed in Indonesia and that your broker understands OJK regulations and national project requirements. This will prevent claim denials due to “inappropriate policy areas.”
Tailoring policy coverage to the characteristics of your project
Ensure coverage includes material damage, heavy equipment damage, third-party liability, and delay or downtime, if applicable. You should inquire about whether the policy covers the specific risks of your project. A broker can help you evaluate this.
Negotiate premiums and terms with the broker
With a broker, you have access to multiple insurers, allowing you to choose the most competitive product while still covering your risks. Don’t just choose the lowest premium; what’s important is that the coverage aligns with your project.
Proactive claims management
When an incident occurs, your broker must be immediately involved: documenting, coordinating with the loss adjuster, communicating with the insurer, and ensuring your claim progresses smoothly until it’s disbursed. This is a key reason to choose a broker over an agent.
6. Why Is Now the Right Time to Act?
The investment value of Chinese companies’ projects in Indonesia continues to rise, including in the construction and infrastructure sectors. As the scale and complexity of projects increase, so do risks, such as extreme weather, stricter local regulations, complex logistics, subcontractors with different work cultures, remote project locations, and so on. Risk exposure in construction projects is not static; the closer to the handover stage, the greater the risk exposure.
Therefore, every day that passes without protection means you’re delaying a potentially significant loss that could occur at any time. Acting now by engaging a broker to secure insurance for your Chinese project is a strategic move that will bring long-term benefits, not only protection but also competitive advantage, trust from local partners, and reduced unforeseen operational costs.
7. Closing
The real cases above show that Chinese companies in Indonesia do not have program insurance for Chinese projects. A company that chooses the right policy through a broker will incur significant financial, reputational, and operational losses. On the other hand, companies that use a broker and tailored policies can recover projects more quickly, maintain the trust of local owners, and effectively mitigate risks.
Don’t let your project become another losing statistic without protection.
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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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