When a Vietnamese logistics company opened a distribution hub in Bekasi to support its e-commerce expansion in Indonesia, everything seemed to be going smoothly. Freight volumes steadily increased, and new clients arrived from Jakarta, Surabaya, and even Medan.
However, they unwittingly discovered that their warehouse was located in a flood-prone area. One night of heavy rain, the water overflowed, flooding the warehouse floor to knee-deep depths. Thousands of packages were damaged, dozens of shelves collapsed, and the main forklift was rendered unusable.
Losses are estimated to reach Rp. 6.5 billion.
Worse still, the company only had standard basic fire insurance, not Property All Risks (PAR) coverage, which covers floods and operational damage. Because the policy was inaccurate, some claims were denied.
This incident became an expensive lesson:
The biggest risks in business are not the visible ones, but the hidden ones.
And only the right policy can save the company.
Indonesia: A Large Market With Unique Risks
Indonesia provides great opportunities for Vietnamese entrepreneurs:
- The largest population in ASEAN
- Stable economic growth
- The digital market is growing rapidly
- Logistics infrastructure continues to improve
- The energy and manufacturing sectors are growing rapidly
But Indonesia also has unique risks which is not available in many other countries:
- Ring of Fire → earthquakes, volcanic eruptions
- Extreme rainfall → floods & landslides
- Uneven infrastructure
- High risk of electrical shock & short circuit
- Social risks such as theft and riots
This is what Vietnamese investors often don’t realize—until something bad happens.
12 Hidden Risks Often Ignored by Vietnamese Entrepreneurs in Indonesia
Here is a list of risks that are invisible but often cause major losses:
- Electrical short circuits are the most common cause of factory fires in Indonesia.
- Flood Risks Not Mentioned in Area Brochures. Many industrial area developers fail to disclose the level of flood risk.
- Production Machine Failure. Especially machines imported from Vietnam, China, or Korea without MB protection.
- Business Interruption. This loss is usually greater than physical damage.
- Supply Chain Risk. Delays in overseas supplies can result in contractual penalties.
- Damage During New Machine Installation. Major risks during commissioning or testing.
- Logistics Risks on Indonesian Roads: Truck overturns, theft, container falls, forklift accidents.
- Third Party Claims (Liability). Claims from the public or vendors can reach billions of rupiah.
- Legal Risks Due to Mismanagement (D&O). Directors can be sued personally.
- Cyber Risk: Ransomware attacks are on the rise in Southeast Asia.
- Earthquakes. Almost all of Indonesia is in a disaster-prone zone.
- Human Error. A forklift operator, technician, or security guard makes a small mistake that has a big impact.
All of these risks can bring business operations to a halt in a matter of hours if not protected.
Insurance Solutions That Eliminate Hidden Risks
Each of the risks above can be covered with the right insurance program. Here’s the best coverage:
- Industrial All Risks (IAR) / Property All Risks (PAR)
Protect factories, warehouses and offices from almost all physical risks.
Ensure:
- Fire
- short circuit
- Flood
- Hurricane
- Sabotage
- Damage due to accident
Additional: Earthquake Insurance.
- Machinery Breakdown (MB)
For machines that suddenly break down.
- Business Interruption (BI)
Replacing lost income.
- Marine Cargo Insurance
For goods:
- imports from Vietnam
- inter-island distribution
- export
- Contractors All Risks (CAR) & Erection All Risks (EAR)
For construction and installation projects.
- Comprehensive General Liability (CGL)
Addressing third party claims.
- Cyber Security Insurance
Protecting company and customer data.
- Directors & Officers Liability (D&O)
Protecting Vietnamese directors from lawsuits.
- Professional Indemnity (PI)
For engineering, IT, EPC and technical consultants.
Why Do Many Vietnamese Companies Buy the Wrong Insurance in Indonesia?
This is a common phenomenon I encounter as a broker:
- Assuming All Insurance is the Same
Even though every insurance company has:
- different financial strengths
- different claim payment history
- different risk capacities
- Not Understanding Local Risks
Example: a factory is built in an earthquake-prone area without an earthquake extension.
- Buy Cheap Police
Cheap policies usually:
- many exceptions
- small limit
- difficult to claim
- Not Using Brokers
Without broker:
- policy wording not reviewed
- risks not analyzed
- claims are often problematic
Indonesian Insurance Meets International Standards—Why?
Because the Indonesian insurance industry:
- strictly supervised by OJK
- must have a minimum solvency of 120% (POJK 71/2016)
- required to maintain a claim reserve
- must use standard wording (POJK 23/2015)
- Reinsured to the world’s top companies such as:
- Lloyd’s
- Munich Re
- Swiss Re
- Hannover Re
- Korean Re
This is why Vietnamese investors need not doubt the quality of Indonesian insurance.
The Role of Insurance Brokers—The Biggest Protectors of Vietnamese Entrepreneurs
POJK 70/2020 states:
The broker is the representative of the insured (Vietnamese businessman), not the representative of the insurance company.
Brokers on duty:
- Analyzing business risks
- Designing the best policy
- Choosing the best insurance company
- Negotiating premiums and clauses
- Preparing claim documents
- Monitor claims until they are paid
- Train client teams on risk management
The broker is the difference between a “paid in full” claim and a “denied” claim.
Case Study — Large Claims Saved by Broker
A Vietnamese company is undertaking an EPC project for a food factory in East Java.
During the installation of the electrical panel, a fault occurred which caused a small fire.
Loss: Rp. 5.2 billion.
Because the EAR program was created by professional brokers:
- losses incurred in testing & commissioning
- deductible minimal
- claim reports prepared quickly
- international reinsurer approves payment
Claims paid 100%.
If the policy is purchased outright, losses may not be covered.
Why L&G Insurance Broker is the Best Choice for Vietnamese Entrepreneurs
L&G has assisted multinational companies from:
- Malaysia
- Singapore
- China
- India
- Korea
- Japan
- Europe
L&G Advantages:
- >30 years of experience
- Major risk specialist (factories, EPC, energy, logistics)
- Successfully handled claims worth billions of rupiah
- Network with all major insurance companies in Indonesia
- LIGASYS transparent digital system
- Expertise in selecting underwriters with large capacity
L&G doesn’t just provide policies—but long-term peace of mind for business.
Conclusion – Protect Your Business from Unseen Risks
The biggest risks are not the obvious ones, but the hidden ones.
And in Indonesia, those risks are diverse and often surprise new investors.
With professional insurance design and the right broker, all these risks can be controlled.
Protect your business. Protect your future.
And do it with L&G Insurance Broker, a trusted partner of Vietnamese companies in Indonesia.
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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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Disclaimer
The names, locations, and case studies in this article are fictitious and are used solely for educational purposes for Vietnamese entrepreneurs investing in Indonesia. The information provided does not constitute formal advice and may vary depending on business conditions, asset type, project location, and individual insurance company policies. For an accurate risk analysis and professional insurance program recommendations, please consult directly with an L&G Insurance Broker.
