Welcome to Liga Asuransi— a trusted resource dedicated to helping businesses navigate the complex world of insurance and risk management in Indonesia. If you’re a Singaporean business owner, executive, or risk manager expanding into Indonesia, this platform is made for you. Here, we outline essential strategies to protect your assets, ensure compliance, and support your long-term growth.
In today’s feature, we reveal the top 10 insurance mistakes that Singaporean companies make in Indonesia—mistakes that can have serious financial and operational consequences. Whether you’re involved in infrastructure, energy, manufacturing, logistics, or services, avoiding these common pitfalls is critical.
If you found this article helpful, please share it with your team and network. And be sure to explore hundreds of other expert articles on this blog—all designed to help you reduce risk, save costs, and thrive in Indonesia’s evolving business environment.
Risiko Overconfidence
Singaporean businesses are widely known for their operational excellence, financial discipline and strong risk culture. However, this same confidence can sometimes lead to blind spots when expanding into overseas markets, especially ones as complex as Indonesia.
Many companies assume that what works in Singapore will work seamlessly in Indonesia. They bring in pre-established insurance programs, assume global coverage applies locally, or rely on offshore brokers without local insight. Unfortunately, these assumptions often lead to costly mistakes, regulatory issues, or uninsured losses that could have been avoided with the right guidance.
Indonesia’s regulatory environment, limited infrastructure and exposure to natural disasters require a localized and well-informed insurance strategy. From inappropriate policies to inadequate coverage and poor claims processes, even experienced companies can fall into common pitfalls.
In this article, we highlight the top 10 insurance mistakes that Singaporean companies make when operating in Indonesia—and how these pitfalls can be avoided with the help of a qualified local insurance broker.
Mistakes 1–5: Costly Missteps in Insurance Planning
Even well-established Singapore businesses can stumble when managing insurance for their operations in Indonesia. Below are five of the most common—and costly—mistakes that can undermine risk protection and operational continuity.
Mistake #1: Assuming Singapore policy covers Indonesian operations
One of the most common mistakes is to assume that a company’s insurance policy issued in Singapore automatically extends to overseas operations. In reality, most insurers limit territorial coverage or exclude countries with specific legal frameworks, such as Indonesia. Without a locally valid policy, the company may be uninsured at the time of claim.
Solution: Always validate territorial boundaries and work with a broker who can set appropriate local policies or coordinate global-local program structures.
Mistake #2: Ignoring Indonesia’s Local Mandatory Insurance Rules
Indonesian law requires certain types of insurance, such as property, motor, liability, and construction risks, to be placed with a registered domestic insurance company. Failure to comply may result in claim denials, legal penalties, or delays in project approvals.
Solution: Partner with a licensed local broker to ensure each policy is regulated in accordance with OJK (Financial Services Authority) regulations.
Mistake #3: Under-Insuring Property or Equipment
Many businesses use outdated asset values, book values, or omit certain assets altogether when declaring the amount insured. In Indonesia, where theft, fire, and flood risks are high, this can lead to severe undercompensation during claims.
Solution: Conduct regular asset valuations and ensure full replacement value coverage taking inflation into account.
Mistake #4: Ignoring Natural Disaster Coverage
Indonesia is prone to earthquakes, volcanic eruptions, floods and landslides. However, many standard policies exclude these risks unless specifically endorsed. Lack of catastrophe coverage could mean a total loss is uninsured.
Solution: Confirm that natural disaster coverage is included or added through endorsements such as Earthquake and Flood extensions.
Mistake #5: Choosing Price Over Protection
Choosing the cheapest premium often comes at the expense of coverage scope, sub-limits, claims service, or the stability of the insurer. In Indonesia, where policy wording and insurer performance can vary widely, this trade-off can be dangerous.
Solution: Let brokers compare policies not just on price, but also on coverage details, exclusions and claims reputation.
Mistakes 6–10: Overlooked Details That Lead to Big Losses
Beyond the obvious pitfalls, there are some less obvious—but equally damaging—mistakes that Singaporean businesses make when dealing with insurance in Indonesia. Here are Mistakes 6 through 10.
Mistake #6: Relying on Non-Local Policy Wording
Some companies use global policy wording or translations that are not aligned with Indonesian market norms. In a claims situation, ambiguity or inconsistency can lead to delays, disputes, or outright denials—especially if the insurer or court interprets the wording unfavorably.
Solution: Use locally tailored policy wording that is consistent with OJK and reflects the local legal and business environment.
Mistake #7: Inadequate Third Party Liability Coverage
The Indonesian legal system recognizes broad third-party liability, especially in cases involving workplace accidents, environmental damage, or public incidents. Companies often underestimate the necessary limits or overlook coverage for contractual obligations.
Solution: Work with a broker to assess potential exposures and set appropriate coverage limits for General Liability, Employer’s Liability, and Product Liability.
Mistake #8: Poor Claims Documentation and Process Readiness
When claims arise, Indonesian insurers typically require detailed supporting documentation—often in Bahasa Indonesia—and strict procedural compliance. Without proper claim preparation and local support, settlement can be delayed or denied.
Solution: Engage a broker who can assist with documentation, coordinate with appraisers, and provide local language support for smooth claims handling.
Mistake #9: Not Reviewing Scope After Business Changes
Businesses grow—new locations, new partners, more staff, different operations. Yet many companies fail to update their insurance policies accordingly, leaving new exposures uninsured.
Solution: Conduct regular insurance reviews (at least annually or when operations change significantly) with your broker to ensure ongoing coverage.
Mistake #10: Managing Insurance Without Local Broker Support
Trying to manage Indonesian insurance from Singapore or through non-local advisors often leads to mismatched expectations, delays or compliance failures. Without local market insight, companies are at greater risk of being under-protected or non-compliant.
Solution: Collaborate with a licensed Indonesian insurance broker who understands the local terrain, regulations, and insurance companies. They act as your advocate and risk partner in the country.
Avoiding these mistakes not only saves money but also protects your operations, people, and reputation. Next: we’ll look at the financial consequences of insurance mistakes.
The Hidden Costs of These Mistakes
Insurance mistakes are rarely just administrative oversights—they can have significant and sometimes irreversible financial consequences for Singaporean businesses operating in Indonesia. What may seem like a small error in placement, policy wording, or compliance can quickly spiral into a major loss.
- Rejected or Reduced Claims
The most direct cost of insurance mistakes is in claims. A fire, flood, or equipment failure can result in millions of dollars in damages. If the policy is not up to par, lacks a primary endorsement, or is underinsured, the claim may be partially paid or denied outright. This leaves the company on the hook for the full loss, affecting cash flow and project schedules.
- Project Delays and Penalties
Many contracts, particularly in the construction, energy, and infrastructure sectors, require proof of specific insurance before work can begin. Failure to provide the correct policies—or facing delays due to inadequate documentation—can trigger liquidated damages or contract cancellation.
- Legal Fines and Regulations
Failure to comply with Indonesian insurance laws can expose businesses to audits, sanctions, or blacklisting by government agencies. The cost of fixing these problems retroactively is often higher than doing them in the first place.
- Stakeholder Reputation and Trust
Client, partners, and investors expect strong risk management. Repeated mistakes in insurance, especially highly publicized claims disputes, can damage a business’s reputation, reduce competitiveness, and strain stakeholder relationships.
These hidden costs show why insurance should be treated as a strategic function, not a back-office formality. In the next section, we’ll explore how insurance brokers help eliminate these risks.
How Brokers Prevent Mistakes Before They Happen
Insurance brokers are not just intermediaries—they are risk advisors, compliance specialists, and claims advocates who play a proactive role in preventing costly mistakes before they happen. For Singaporean businesses operating in Indonesia, partnering with a qualified local broker can be the difference between full protection and financial exposure.
- Local Expertise and Regulatory Compliance
Brokers ensure your insurance placement meets all OJK (Financial Services Authority) requirements and complies with Indonesian regulations. From identifying the types of local insurance required to ensuring documentation and placement are issued through a registered insurance company, brokers help you avoid regulatory pitfalls and ensure your operations remain compliant with the law.
- Customized Risk Assessment
Rather than offering generic products, brokers start by understanding your business model, sector-specific risks and geographic footprint. They conduct a tailored risk assessment and recommend appropriate coverage, ensuring nothing is overlooked and all exposures are accounted for.
- Policy Arrangement and Clarity of Wording
Experienced brokers negotiate tailored policy terms, including support relevant to the Indonesian market—such as floods, earthquakes, strikes/riots/civil unrest (SRCC), and startup delays. They ensure your policy wording is clear, enforceable, and tailored to local legal interpretations.
- Market Comparison and Insurance Company Selection
Brokers have access to a wide network of insurance companies—local, regional, and global. This allows them to compare premiums, coverages, exclusions, sub-limits, and claims service records. As a result, you get the best balance of cost and protection.
- Sustainable Program Management
As your business grows, your broker updates your insurance program. Whether you’re expanding into new territories, taking on new projects, or introducing new services, your broker makes sure your coverage keeps up with your growth.
- Claim Advocacy and Documentation Support
If a claim arises, your broker will manage the process, working with adjusters, preparing documentation, and negotiating with insurance companies to ensure fair and timely payment. This frees up the internal team and ensures technical accuracy in handling claims.
In short, brokers don’t just place coverage—they build a risk framework around your business that protects your operations and your reputation. Next, we’ll conclude with the key takeaways from this article.
Conclusion: Proactive Protection Pays
Insurance oversight in Indonesia can cost far more than premiums—they can jeopardize entire projects, trigger financial losses, and damage long-term reputations. Singaporean businesses must realize that overseas insurance is not just an extension of a home policy—it requires local knowledge, regulatory alignment, and hands-on management.
Avoiding the top 10 insurance mistakes starts with proactive protection—and that means working with the right partner from day one.
At L&G Insurance Broker, we specialize in helping international businesses, including those from Singapore, navigate the complexities of the Indonesian insurance landscape. With deep local expertise, OJK compliance, strong insurance company relationships and bilingual support, we provide end-to-end insurance solutions tailored to your risk profile.
From initial assessment to claims settlement, our team ensures that your insurance program supports—not hinders—your business goals.
Don’t wait until it’s too late. Partner with L&G Insurance Broker and protect your investment in Indonesia with confidence.
Looking for insurance products? Don’t waste your time and contact us now
HOTLINE L&G 24 JAM: 0811-8507-773 (CALL – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: oktoyar.meli@lngrisk.co.id
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