Logistics industry Indonesia continues to show significant growth heading into the fourth quarter of 2025. Supported by increased international trade activity, e-commerce expansion, and the development of land, sea, and air transportation infrastructure, the demand for logistics services is growing. Concurrently, the risks faced by businesses are also becoming more complex—from damaged goods and delayed deliveries to transportation accidents.
Amidst these dynamics, logistics insurance premium costs have become a key issue for companies. Many goods owners and logistics service providers remain confused about how premiums are determined, whether they are expensive or not commensurate with the benefits, and what factors influence the differences in premium rates across cargo types, vessels, and routes. These questions are understandable, as insurance premiums are considered an additional cost that can impact operational efficiency.
This article aims to provide a comprehensive overview of the factors that determine logistics insurance premiums in Indonesia, including the types of cargo, the type of vessel used, and the ICC (A, B, C) insurance coverage options commonly used in the international logistics industry. Equally important, this article will also explain how insurance brokers like L&G Insurance Broker can help companies reduce premium costs while ensuring optimal protection.
Contact L&G Insurance Broker now at 08118507773 for a free consultation before the risks haunt your business.
What is Logistics Insurance?
Logistics insurance, also known as marine cargo insurance, is a form of financial protection provided to goods owners and logistics service providers against the risk of loss or damage to goods during transportation. This protection applies not only to sea shipments but also to land, air, and multimodal combinations.
In the modern supply chain world, logistics insurance plays a vital role. Goods worth billions of rupiah move daily between cities and even countries. Risks can arise at any time, whether from transportation accidents, extreme weather, fire, or theft. Without insurance, losses resulting from these incidents are borne entirely by the goods owner or logistics operator, ultimately disrupting the company’s cash flow.
Besides providing protection, logistics insurance also serves as a requirement in many international trade contracts. In export-import practices, companies are typically required to have a cargo insurance policy with specific coverage, such as ICC (A, B, or C), to ensure transaction security. In other words, logistics insurance is not only an asset protector, but also a crucial instrument for supporting business continuity and maintaining trust between parties involved in the supply chain.
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Factors That Determine Logistics Insurance Premium Costs
Logistics insurance premiums in Indonesia vary widely. Insurance companies base their calculations on a number of factors, which can significantly vary between shipments. Understanding these factors is crucial for logistics businesses to manage costs and choose the appropriate protection.
- Type of Goods or Cargo
High-risk goods such as chemicals, mining products, or perishable goods tend to incur higher premiums than ordinary consumer goods. This is because the potential losses covered by insurance are greater.
- Type of Ship or Mode of Transportation
The age and condition of the vessel or vehicle are key considerations. Newer vessels meeting international standards are generally preferred by insurance companies and carry lower premiums, while older vessels or routes with risky conditions will increase premiums.
- Route and Travel Time
International shipping, especially to areas prone to piracy or extreme weather, usually carries a higher premium than relatively safe domestic routes.
- Sum Insured
Insurance premiums are calculated as a percentage of the value of the insured goods. The higher the value of the cargo, the higher the premium.
- Type of Insurance Guarantee (ICC A, B, or C)
The broader the coverage chosen, the higher the premium. ICC(A), for example, offers “all risks” coverage at the highest premium.
- Claim Records and Risk Management
Companies that have a history of high claims or do not implement good logistics risk management will be considered riskier, so they will be charged higher premiums.
- Negotiation Through a Broker
Experienced brokers like L&G Insurance Broker are able to help clients obtain more competitive premiums by tailoring coverage to their needs and connecting them with multiple insurance companies.
Types of Cargo in the Logistics Industry
When determining logistics insurance premiums, the type of cargo is one of the most important factors. Each category of goods has different characteristics and risk levels, which influence the premium amount charged. The following are common cargo types in Indonesia:
- General Cargo
Consumer goods, manufactured products, electronics, and daily necessities fall into this category. The risk of damage is relatively moderate, so insurance premiums are typically lower.
- Bulk Cargo
Bulk goods such as coal, nickel ore, cement, or crude palm oil (CPO). The main risk is shifting cargo, which can lead to shipwrecks. Premiums are typically higher due to the significant potential for loss.
- Liquid Cargo
Petroleum, LNG, and liquid chemicals fall into this category. In addition to the risk of leaks, there’s also the risk of environmental pollution. Premiums for this category tend to be high because potential claims can reach hundreds of billions of rupiah.
- Project Cargo
High-value industrial machinery, construction equipment, or power plant components. Project cargo insurance premiums are relatively high due to their high value, and the goods often require special handling.
- Perishable Cargo
Fresh produce such as fruit, vegetables, fish, and even pharmaceuticals carries a high risk of damage due to temperature changes or shipping delays. Premiums are typically charged higher to mitigate the risk of rapid spoilage.
Understanding these types of cargo is crucial for companies to choose the appropriate coverage. With the support of an insurance broker, businesses can reduce premium costs while still obtaining optimal protection for their cargo.
Types of Ships & Their Effect on Premiums
In addition to the type of cargo, the type of vessel used to transport the goods also significantly impacts logistics insurance premiums. Insurance companies typically consider the age, condition, and type of vessel as key factors in assessing risk.
- Container Vessel
Modern container ships are considered the safest for shipping goods due to their international standard stowage systems. Insurance premiums for cargo on these vessels are typically more competitive.
- Bulk Carrier
Ships carrying bulk cargo such as coal, nickel ore, or wheat are at risk of shifting cargo, which can affect the ship’s stability. This leads to higher insurance premiums than container ships.
- Tanker
Specialized vessels for transporting crude oil, LNG, or chemicals. The risk of leaks and environmental pollution is high, so insurance premiums for tanker shipments are typically the highest.
- General Cargo Vessel
These ships carry various types of goods simultaneously without special storage systems. The risk of damage is higher than with containers, so premiums are usually medium to high.
- Age of the Ship
The older the vessel, the higher the premium. Many insurance companies even refuse to provide coverage if the vessel is older than a certain age (for example, 25–30 years).
Thus, choosing a vessel is not only a matter of transportation costs, but also has a direct impact on the logistics insurance premium that the goods owner must pay.
ICC Insurance Guarantee (A, B, C)
In the world of logistics insurance, one of the main determinants of premium costs is the type of coverage selected. The most widely used international standard is the Institute Cargo Clauses (ICC), which consists of three levels of protection: ICC (A), ICC (B), and ICC (C). Each clause offers different coverage, with correspondingly varying premiums.
- ICC (A) – All Risks
This is the most comprehensive guarantee because it covers almost all risks of loss or damage to cargo during the journey, except those specifically excluded (for example, negligence of the owner of the goods).
Examples of protection: fire, explosion, collision, sinking, bad weather, theft, damage during loading and unloading.
Premium: The highest of all the policies due to its nearly comprehensive coverage. Suitable for high-value items such as industrial machinery, pharmaceuticals, or electronics.
- ICC (B) – Medium Cover
Offers intermediate protection, more limited than ICC (A).
Examples of protection: fire, explosion, sinking, collision, earthquake, volcanic eruption, sea water/rain water entering the container.
Premium: lower than ICC (A), often chosen for goods that the risks not too high but still requires more than just basic protection.
- ICC (C) – Minimum Cover
It is the most limited guarantee, only protecting basic risks.
Examples of protection: fire, explosion, shipwreck, collision, stranding.
Premium: the cheapest, but with very limited coverage. Typically used for low-value items or highly secure shipping routes.
Comparison of Premiums and Coverage
For example, for the delivery of machinery worth IDR 10 billion:
- ICC (A) → Premium 0.15% = IDR 15 million
- ICC (B) → Premium 0.10% = IDR 10 million
- ICC (C) → Premium 0.05% = IDR 5 million
This illustration shows that the broader the coverage, the higher the premium. Therefore, the selection of ICC clauses must be adjusted to the company’s risk profile, asset value, and budget.
With the help of an insurance broker, companies can choose the most appropriate clauses to ensure premium costs remain efficient while providing optimal protection.
Simulation of Logistics Insurance Premium Costs in Indonesia 2025
To provide a concrete illustration, let’s look at how logistics insurance premiums are typically calculated in Indonesia. Premiums are generally calculated as a percentage of the sum insured. This percentage varies depending on the type of cargo, the type of vessel, and the coverage selected (ICC A, B, or C).
In general, the premium rate range is as follows:
- Domestic general cargo: 0.05% – 0.10% of the value of the goods
- International cargo: 0,10% – 0,20%
- Dangerous or high value goods: 0.20% – 0.50%
- Perishable cargo (fresh food, pharmaceuticals): 0.15% – 0.30%
To clarify, here is a simulation of the premium calculation:
| Value of Goods (Sum Insured) | ICC Guarantee | Premium Rate (%) | Premium Fee (Rp) |
|---|---|---|---|
| Rp10,000,000,000 (Machine) | ICC (A) | 0,15% | Rp15.000.000 |
| Rp10,000,000,000 (Machine) | ICC (B) | 0,10% | Rp10.000.000 |
| Rp10,000,000,000 (Machine) | ICC (C) | 0,05% | Rp. 5,000,000 |
| Rp. 5,000,000,000 (General Cargo) | ICC (B) | 0,08% | Rp. 4,000,000 |
| Rp20.000.000.000 (CPO) | ICC (A) | 0,25% | Rp50.000.000 |
The table above shows that the choice of coverage significantly impacts premium costs. ICC (A) provides the most comprehensive protection but commands the highest premium. Conversely, ICC (C) is less expensive, but offers limited coverage.
Therefore, goods owners and logistics companies need to balance premium costs and protection levels. Insurance brokers play a crucial role in providing such simulations to help clients make informed decisions.
The Important Role of Insurance Brokers in Reducing Premium Costs
For many logistics companies, insurance premiums are often perceived as an additional cost. However, premiums can be managed efficiently with the help of a professional insurance broker. Brokers act not only as intermediaries but also as consultants, helping clients obtain maximum protection at competitive prices.
- Premium Negotiation
Brokers have access to a wide range of insurance companies, both local and international. With their extensive network, brokers can compare quotes from multiple parties and negotiate the best premiums based on their clients’ risk profiles.
- Guarantee Adjustment
Not all shipments require expensive ICC (A) protection. Brokers help clients choose between ICC (A), (B), or (C) based on the value of the goods, the route, and their budget, resulting in more efficient premium costs without sacrificing protection.
- Risk Consultation
Brokers play a role in providing risk management advice, such as selecting a standard vessel, cargo packaging methods, and risk reduction strategies. The better the risk management, the lower the premium rates that can be obtained.
- Claim Management
One of the biggest advantages of a broker is assisting clients when claims arise. The claims process can be complex, but brokers help ensure claims are paid on time, preventing significant losses for the company.
- L&G Insurance Broker Case Study
For example, L&G Insurance Broker has experience working with logistics companies, e-commerce companies, and large contractors in Indonesia. L&G has successfully helped clients obtain lower premiums while securing payment of large claims, including a Rp 17 billion claim for heavy equipment losses. Support from LIGASYS’s internal digital system also makes monitoring policies, premiums, and claims more transparent and easier.
With the support of a broker like L&G, companies not only get financial protection, but also a sustainable premium cost efficiency strategy.
Tips for Choosing the Right Logistics Insurance
With so many logistics insurance products on the market, goods owners and transportation companies often feel overwhelmed when choosing the most suitable one. To avoid making a mistake, here are some important tips for choosing the right logistics insurance:
- Don’t Just Look at Cheap Premiums
Low premiums may seem attractive, but the coverage often comes with limited coverage. It’s important to compare the extent of the policy’s coverage with your shipping needs.
- Pay attention to the reputation of the insurance company.
Make sure the insurance company has a good track record of paying claims. A cheap policy is useless if claims are difficult to pay.
- Adjust the Type of Guarantee to the Cargo Risk
High value goods should be insured with ICC (A), while general goods with low risk can use ICC (B) or (C).
- Consider the Type of Ship and Route
Modern ships with international standards and safe routes can usually lower premiums. A broker can help you assess these factors objectively.
- Use the Services of an Insurance Broker
An experienced broker like L&G Insurance Broker can help you choose the best policy, reduce premium costs, and ensure claims are processed smoothly in the event of a loss.
By following these tips, companies can secure their cargo while managing premium costs more effectively.
Conclusion
Logistics insurance premiums in Indonesia are primarily determined by many factors, including cargo type, vessel type, travel route, insured value, and the type of coverage selected (ICC A, B, or C). The broader the coverage, such as ICC (A), the higher the premium. Conversely, basic coverage, such as ICC (C), is less expensive, but its coverage is limited and may be insufficient in the event of a major loss.
Premium simulations clearly demonstrate that differences in coverage can result in costs that are two or three times greater. Therefore, both goods owners and logistics companies must be able to balance protection needs with operational budgets.
This is where the role of an insurance broker becomes crucial. Brokers not only help find more competitive premiums but also provide risk consultation, selection of appropriate coverage, and claims assistance. With the support of a trusted broker like L&G Insurance Broker, companies not only receive optimal financial protection but also significant cost savings.
Ultimately, insurance premiums are not just an additional expense, but rather an investment to protect assets and ensure business continuity. In the increasingly complex logistics industry of 2025, having the right insurance protection is a strategic step to maintaining client trust and business continuity.
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