This article is part of a series of true stories documenting L&G Insurance Broker’s experience in overseeing and resolving client insurance claims in high-risk sectors. This series aims to raise awareness that risks do occur, claims are never automatically paid, and that using an experienced insurance broker like L&G is essential—especially for extreme risks like machinery breakdown.
Morning Tremors at the Kolaka Diesel Power Plant: L&G’s Struggle to Oversee the Mitsubishi Genset Machinery Breakdown Claim Until Completion
In diesel power plants (PLTD), vibration is the language of the machine.
It could mean a heavy burden. It could mean an imbalance. And on the morning of February 21, 2014, at the Kolaka Diesel Power Plant in Southeast Sulawesi, the tremors signaled something no one wanted to hear: serious damage had been done.
What followed was not just another story of a broken engine, but a true test of a Machinery Breakdown claim, one of the most complex and most avoided risks in the insurance industry.
Assets Worth Tens of Billions in the Power Supply Center
PT BME operates a strategic diesel power plant in Kolaka. To maintain continuity of electricity supply, this company insures its assets comprehensively:
- Insurance type: Machinery Breakdown (MB)
- Insurer: JRP Insurance
- Interest Insured: 10 Mitsubishi BMGS 1740 generator units complete with transformer
- Total Sum Insured: ± Rp 25.000.000.000
One such unit—Unit #1—was at the center of an incident that tested the patience, skill, and determination of all involved.
February 21, 2014, 06.40 WITA: An Unwritten Alarm
That morning, the generator was operating normally.
However, at exactly 06.40 WITA, the operator felt:
- Engine vibration increases drastically
- Oil is gushing out of the generator coupling
- Smoke coming from the engine area
Without further discussion, an emergency shutdown was carried out.
This decision saved the system—but it couldn’t save the unit from failure.
Preliminary Investigation: Facts Begin to Emerge
At around 7:00 a.m. WITA, the team conducted an initial inspection. After cleaning the remaining oil from the engine area and oil pan, they discovered the most concerning sign:
👉Metal and metal debris in the oil pan.
This is not a minor problem.
This is an indication of severe internal damage.
09.00 WITA: A Decisive Technical Diagnosis
The examination was continued in more depth with the following results:
- The main bearing (metal seat) is badly scratched and burnt.
- Con rod bearing (metal road) is still relatively good
- Thrust bearing damaged
- The rear crankshaft is scratched and there are metal chips attached.
- Exciter motor coils burn out due to extreme vibration
The technical conclusion is non-negotiable:The unit is damaged and cannot be operated.
Layered Risks: Technical, Operational, and Financial
Damage to a generator unit at a PLTD is not just a matter of repair costs.
It means:
- risk of power supply disruption,
- operational pressure,
- and the potential for large financial exposure.
On the other hand, Machinery Breakdown claims are known as the most sensitive claims:
- very technical,
- prone to differences in interpretation,
- and not many insurance companies are willing to guarantee it.
StepsDeterminant: PT BME Contacting L&G
As soon as the incident occurred, PT BME did not hesitate to contact L&G, the broker who had been with them from the start:
- designing insurance programs,
- understand the risk profile of the generator,
- and experienced in handling complex MB claims.
L&G’s first step:
- Reviewing MB policy details
- Ensure premiums have been paid and the policy is active
- Identify potential claim issues early
This foundation is crucial.Without it, claims can stop before they even start.
Claims Reported,ResponsePositive Coming
After the internal review was completed, L&G immediately reported the incident to JRP as the guarantor.
Shortly thereafter, JRP issued a very decisive initial statement:
“This claim can be processed.”
As a follow-up, JRP appointed Prima Adjusterindo Mandiri (PRIMA) as an independent loss adjuster.
But for L&G, appointing an adjuster is just the beginning.
L&G Acts as Claims “Attorney”
In the Machinery Breakdown claim, L&G did not play a passive role.
They act like lawyers defending the interests of the insured.
Concrete steps taken:
- Assist in collecting complete claim documents
- Establish a consistent technical chronology
- Arrange a survey schedule to the Kolaka PLTD
- Accompanying technical discussions with loss adjusters
- Maintain intense communication with the guarantor
Every detail is guarded. Every assumption is tested.
Hot Spots: Replace or Repair?
Like many other MB claims, the process finally hit a rocky patch:
Does the unit need to be replaced or is it sufficient to repair it?
It’s not just about cost.
It’s about:
- long-term reliability,
- risk of re-failure,
- and post-claim technical feasibility.
The debate was serious and heated.
Key Strategy: Engaging Independent Experts
To avoid deadlocked and protracted claims, L&G took strategic steps:
- involving technical experts representing the insured,
- and engine supplier from Mitsubishi.
This approach changes the discussion:
- from opinion to technical fact,
- from tug-of-war to solution.
Meeting Point and Win-Win Solutions
Through targeted communication and data-based argumentation, a common ground was finally reached that was acceptable to all parties.
The final result:
- Claim approved
- The claim value is approximately Rp. 1,250,000,000
- Completion time ± 6 months
Not fast—but perfectly reasonable considering:
- asset value,
- technical complexity,
- and the high risk of Machinery Breakdown.
Important Lessons from Kolaka
This case highlights several important realities:
- Machinery Breakdown is the highest level risk
- Not all insurance companies are willing to guarantee it
- One effective strategy is to accommodate MB with other policies, such as Property All Risks.
- MB claims cannot be left to run their course
- An experienced broker is an absolute must
L&G as a Strategic Need
In this Mitsubishi generator claim at the Kolaka PLTD, L&G once again proved itself to be reliable—not just when the policy was placed, but when the claim was at stake.
The machine can break down at any time.
Risk is unavoidable.
But with the right support, a major loss doesn’t have to be a permanent disaster.
Machinery Breakdown Insurance is a high-risk game.
And L&G knows how to control it until it wins.
Contact L&G Insurance Broker for proper insurance planning and claim monitoring until payment, not just promises.
Disclaimer
This article is written for educational purposes and to share professional experiences. All names, values, and timelines have been modified to maintain the confidentiality of the parties involved. The information contained herein is not intended as legal, technical, or claims underwriting advice, and results may vary depending on the policy conditions and the specific circumstances of each individual event.
