Batam’s Fishing Industry and the Risks It Lurks — Why Marine Cargo and Machinery Insurance is a Must

Batam, Indonesia’s Risky Sea Gateway

Batam is not only known as an industrial and free trade zone, but also as one of the largest centers of the fisheries and seafood industry in western Indonesia. Strategically located along the international shipping lanes of the Strait of Malacca and the Natuna Sea, Batam serves as a major hub for seafood imports and exports to Singapore, Malaysia, Japan, and Europe.

From the ports of Kabil, Batu Ampar, and Tanjung Uncang, thousands of tons of fish, shrimp, and processed seafood are shipped weekly. Numerous local and foreign companies have built ice factories, cold storage facilities, and fish processing units in the area. However, despite these significant opportunities, Batam’s fisheries industry faces significant operational and financial risks.

Sea storms, ship collisions, refrigeration failures, warehouse fires, and even export damage due to refrigeration failures can all cause billions of rupiah in losses in a single day. This is where marine and industrial insurance plays a crucial role in maintaining business stability.

However, many business owners don’t understand the complexity of these risks and often choose the wrong policy type. Therefore, the role of a professional insurance broker like L&G Insurance Broker is vital. Brokers don’t just sell policies; they analyze maritime and land risks, design appropriate coverage, and ensure claims are fully paid when incidents occur.

Contact L&G Insurance Broker now at Phone number 08118507773 for a free consultation before the risks haunt your business.

Risks in Batam’s Fisheries and Marine Industry Business

The fishing industry in Batam encompasses a wide range of activities—from fishing and processing to cold storage, to distribution and export. Each stage carries specific risks that cannot be ignored.

1. Risks at Sea

• Storms and high waves can cause ships to lose control or sink.
• Collisions between ships in busy waterways such as the Strait of Malacca often result in damage to the hull or main engines.
• Fire on board ship due to electrical short circuit or fuel leak.
• Engine breakdown while operating in the middle of the sea.
• Loss of catch due to cooling problems or theft at sea.

2. Risks on Land

• Damage to cold storage or ice factory due to power outage or overheating.
• Processing facility fire due to heavy chemicals and electrical systems.
• Theft of frozen fish stocks or expensive equipment.

Damage to buildings and machinery due to extreme weather.

3. Export Transportation Risks

• Damage to refrigerated containers (reefer containers) during transit at the port.
• Delays in export shipments resulting in damaged products.
• Loss of cargo on a cargo ship due to storms or mishandling at the destination port.
• All these risks can cause major financial losses, production disruptions, loss of export contracts, and even business bankruptcy if not managed properly.

Types of Insurance that Fisheries Business Actors Must Have

1. Marine Hull & Machinery Insurance

This insurance is designed to protect fishing vessels, marine transport vessels and refrigerated vessels from the risk of physical damage due to:

• Collision, sinking, or stranding.
• Fire, explosion, and storm.
• Engine damage due to mechanical accident.

Sample case:

A fishing vessel worth Rp 10 billion (approximately US$80 million) suffered engine damage due to saltwater ingress. Repairs cost Rp 800 million (approximately US$80 million). Because the vessel was covered by a Hull & Machinery (H&M) policy, the entire repair cost was covered by insurance.

2. Marine Cargo Insurance

This policy guarantees goods (catch, frozen fish, or processed products) during the shipping process by sea, land, or air.

Bearing the risk:

• Loss, theft, damage due to temperature, fire, or sinking of the ship.
• Available in the form of “Institute Cargo Clause (A)” – All Risks, which provides the broadest protection.

Example:

An export company in Batam shipped 15 tons of tuna to Japan. During transit in Singapore, the container’s cooling system failed, causing temperatures to rise. As a result, some of the cargo was damaged. With Marine Cargo Insurance, the exporter received full compensation based on the invoice value of the goods.

3. Property All Risks (PAR) Insurance

Protecting onshore assets such as ice plants, processing facilities and cold storage from FLEXA risks:

• Fire
• Lightning
• Explosion
• Aircraft (aircraft crash)
• Smoke (asap)

This policy can also be extended to include floods, storms, earthquake damage, and social unrest — which is important for coastal industrial areas like Batam.

4. Machinery Breakdown (MB) Insurance

Covers internal mechanical damage to production or cooling machines, such as:

• Bearing broke.
• Bent shaft.
• The motorbike caught fire.
• Overpressure.

This insurance is crucial for cold storage and ice factories, where refrigeration equipment is the lifeblood of operations. The failure of a single large compressor unit can result in billions of rupiah in losses due to thawing fish.

5. Business Interruption (BI) Insurance

Covers loss of income and fixed costs due to the cessation of business activities due to damage covered by the PAR or MB policy.

Example: After a small fire in the cold storage machine room, operations were halted for two weeks. BI Insurance covered employee salaries and fixed electricity costs during the repairs.

6. Product Liability & Public Liability Insurance

Product Liability: protects against third party claims if exported products cause losses or do not meet quality standards.

Public Liability: bears legal responsibility to external parties if an accident occurs in the factory or port area.

Real Case Examples in Batam

Case 1: Fishing Vessel Sinks

A fishing vessel in Nongsa waters suffered a hull leak and sank. The vessel was valued at Rp 8 billion and had a cargo of Rp 2.5 billion. The owner only insured the vessel, but did not cover cargo. As a result, he only received compensation for the vessel, while the value of the catch was lost without compensation.

📘 Lesson:

For fishing businesses, the vessel and its cargo must be insured separately: Hull & Machinery for the vessel, and Marine Cargo for the cargo.

Case 2: Cooling Machine Failure in Cabin

A cold storage facility in the Kabil area experienced a power surge that caused two refrigeration compressors to catch fire. As a result, 20 tons of frozen fish thawed, causing Rp 1.1 billion in losses.

Because the company had Machinery Breakdown and Business Interruption policies, the claim was paid in full, including losses due to operational interruption.

📘 Lesson:

Policy extension is essential — without Business Interruption, losses due to downtime will not be covered.

Insurance Premium Estimates for Batam’s Fisheries Industry

Types of Insurance Insurance Value Estimated Annual Premium

💡Note: Premiums can be more efficient when arranged through an insurance broker who has direct access to many insurance companies and understands the specific risks of the fishing industry.

The Role of Insurance Brokers in the Fisheries Business

Insurance brokers are more than just intermediaries—they are independent risk advisors working on behalf of their clients. In Batam’s fishing industry, the role of brokers is crucial in the following areas:

• Marine and Land Risk Analysis

Brokers assess the condition of the ship, shipping routes, types of refrigeration machines, and factory and warehouse locations.

• Design an Integrated Insurance Program

Combining Marine Hull, Cargo, Property, and Machinery Breakdown in one efficient package.

• Negotiating Premiums and Additional Clauses

Brokers negotiate the best rates and coverage extensions (such as War & Strike, Sue & Labor, and Debris Removal).

• Claims Assistance

In the event of an incident, the broker helps prepare documents, surveyor reports, and negotiations to maximize claim payments.

• Periodic Review and Audit

Brokers ensure policies remain relevant to the latest operational conditions — for example, the addition of vessels or increases in cold storage capacity.

Why Choose L&G Insurance Broker

As a national broker that has been operating for more than 30 years, L&G Insurance Broker has a strong track record in handling clients in the maritime and fisheries sectors.

L&G’s advantages include:

• 🌊Marine Insurance Specialist: handling Hull, Cargo, and Logistics Risks throughout Indonesia.
• 🧊Refrigeration & Cold Storage Industry Expert: understands the risks of machinery and temperature-related losses.
• 🧾Professional Claims Technical Support: assisting in preparing technical reports and communicating with surveyors.
• 🤝Cooperation with national and international insurance: ensuring large capacity and competitive rates.
• 🧭Free risk consulting services for new companies in Batam’s maritime sector.

With the support of a team of insurance technical and legal experts, L&G ensures clients receive appropriate, transparent and reliable protection.

Tips for Fisheries Entrepreneurs in Batam

• Insure the vessel and cargo separately.
• This is important to avoid a gap in protection.
• Use an OJK licensed broker.
• Make sure your insurance partner is legal and has a professional track record.
• Conduct a risk survey before purchasing a policy.
• Many claims are rejected because of inaccurate ship or engine data.
• Select the All Risks and War & Strike expansions.
• It is very important for exports that pass through international channels.
• Record all activities and damage.
• Good documentation speeds up claims and avoids disputes.

Conclusion: Safe Oceans, Sustainable Business

Batam’s fishing industry is a vital part of Indonesia’s maritime economy. However, despite its immense potential, significant risks remain.

Storms, shipwrecks, engine failures, and export disruptions can strike at any time — and only insurance protection can secure investments and ensure business continuity.

With Marine Cargo, Hull & Machinery, PAR, and Machinery Breakdown Insurance, as well asmentoringWith the help of professionals from L&G Insurance Broker, entrepreneurs can focus on growing their business without worrying about losing everything due to unexpected incidents.

🌊The seas may be unpredictable, but your business’s future can be made certain — with the right insurance protection.

DON’T WASTE YOUR TIME AND SECURE YOUR FINANCES AND BUSINESS WITH THE RIGHT INSURANCE.

HOTLINE L&G 24 JAM: 0811-8507-773  (PHONE – WHATSAPP – SMS)

Website: lngrisk.co.id

Email: halo@lngrisk.co.id