A night in the Cikarang industrial area turned into a nightmare for a Chinese businessman. The factory, which had only been operating for a year, produced…plastic molding for automotive components, was suddenly engulfed in flames. In less than two hours, the building, worth tens of millions of dollars, was destroyed.
The management team immediately contacted the insurance company. They were confident the claim would go smoothly because they had purchased a policy.Property All Risks through a local agent. But three months later, shocking news came:
“The claim cannot be paid because the investigation results show that the fire protection system was not active and there were no routine inspections as stated in the policy.”
The businessman was devastated. He felt cheated—even though he had already paid a high premium. However, upon further investigation, it turned out the policy was drawn up without the assistance of a licensed broker, and the agent who sold the policy had never conducted a risk assessment before issuing it.
As a result, the factory, which should have been able to recover with insurance support, instead suffered losses of up to USD 15 million.
Common Mistakes Chinese Entrepreneurs Make in Arranging Factory Insurance
Many Chinese businessmen come to Indonesia with the belief that the insurance process here is the same as in China — fast, practical, and can be entrusted to agents or acquaintances.
However, in Indonesia, the insurance legal system is very different and strict. The Financial Services Authority (OJK) has clear regulations regarding who has the authority to manage the interests of the insured and who represents the insurance company.
Common mistakes include:
- Using an agent without official permission from the OJK – even though the agent only represents the insurance company.
- Standard policy without factory risk analysis – does not assess electrical capacity, raw materials, or fire protection systems.
- Does not include important clauses, such as:
- Automatic Reinstatement Clause
- Fire Extinguishing Appliances Clause
- Machinery Breakdown Extension
- Not adjusting the sum insured with the actual replacement value (replacement value).
As a result, when fires, explosions, or machine failures occur, claims are often denied or only paid a small portion.
Case Study: Two Factories, Two Different Fates
Several years ago, two Chinese companies built factories in the Karawang industrial area. Both manufacture automotive parts, using equipment and machinery worth millions of dollars.
📍Factory A purchased insurance through a local agent. There was no risk survey or assistance in drafting the clauses. When a small fire broke out in the paint oven room, the insurance company denied the claim due to the lack of a fire extinguisher maintenance report.
📍Factory B, on the other hand, used the services of L&G Insurance Broker. Before issuing the policy, L&G’s technical team conducted a comprehensive risk assessment survey: inspecting the electrical system, reviewing chemical storage, and recommending installation.fire alarm systemadditional.
L&G then negotiated with the insurance company to add:
- Fire Protection Clause,
- Electrical Installation Clause,
- And Debris Removal Clause up to Rp. 2 billion.
When a short circuit caused a fire in part of the warehouse, a claim was filed with complete documentation. Within 45 days, the claim payment of Rp 18 billion was received in full.
The difference is simple but crucial: Factory B is covered by a licensed broker who works for them, not for an insurance company.
Why OJK-Registered Insurance Brokers Are So Important
Many foreign entrepreneurs do not yet understand that in Indonesia, the OJK (Financial Services Authority) strictly differentiates between insurance agents and brokers.
📌Insurance agent → Represents insurance companies, focuses on selling policies.
📌Insurance broker → Represents customers (insured), focuses on customer protection and interests.
According to POJK No. 69/POJK.05/2016 and POJK No. 24/2023, brokers are required to:
- Helping customers get the best protection with competitive premiums,
- Negotiating policy terms and clauses,
- Accompanying customers in the claims process until completion.
Only official brokers have OJK permits, certified experts, and legal responsibility in the event of errors or negligence.
This means that in the event of a fire, explosion, or machine failure, the broker will defend the interests of the entrepreneur — not the insurance company.
L&G Insurance Broker: Industrial and Manufacturing Insurance Experts
L&G Insurance Broker has over two decades of experience handling insurance for various industries — from electronics, chemical, textile, to automotive.
Some of L&G’s advantages include:
✅Comprehensive factory risk analysis before policy is issued,
✅Comprehensive industrial insurance program development:
- Industrial All Risks (IAR)
- Fire Insurance
- Machinery Breakdown
- Business Interruption
✅Claims assistance from start to payment, including documentation, loss adjuster reports, and negotiations with insurers,
✅Digital services & multilingual support — Indonesian, English, and Mandarin, to facilitate communication between Chinese entrepreneurs and local teams.
One of L&G’s clients, a Chinese battery manufacturer in Morowali, experienced machine damage due to electrical voltage. Thanks to the broker’s assistance, the Rp 23 billion claim was paid in full because all documents and clauses had been prepared from the outset.
The Role of Technology in Modern Factory Insurance
In the era of Industry 4.0, risks in the manufacturing sector are increasingly complex — from automation system failures to the threat of fires due to machine overheating.
But thanks to L&G’s digital systems, entrepreneurs can now:
- Do risk survey long distance,
- Send inspection reports via the app,
- Track claim status in real-time,
- Store all police documents in a secure cloud system.
This process makes factory risk management faster, more accurate and transparent.
Important Message for Chinese Business Staff and Translators
Many Chinese businesspeople entrust insurance matters to local staff or translators. However, this is a significant responsibility.
If you choose the wrong unlicensed agent, the results can be fatal:
- Claims failed to be paid,
- Project stopped,
- Damaged reputation in the eyes of investors.
Make sure you only work with official insurance brokers registered with the OJK, such as L&G Insurance Broker, who truly side with their customers.
Conclusion: Don’t Wait for Disaster to Destroy Your Business
Insurance is not just a contractual formality — it is protection for the future of your business.
Fire, explosion, or machine failure can occur at any time.
And if your policy isn’t drafted properly, a financial loss could ruin everything.
Before it’s too late, make sure your factory is protected by a party that truly understands the risks of the industry.
Use L&G Insurance Broker, an official insurance broker registered with the OJK, who has the commitment, experience, and courage to defend you in the most difficult times.
—
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
—
