Hundreds of Billions in Mining Losses: Fatal Mistake by Chinese Entrepreneurs Who Chose the Wrong Insurance Agent

One morning in Southeast Sulawesi, a cloudy sky shrouded the nickel mining area that had just been inaugurated six months earlier. This massive project was being undertaken by a consortium of Chinese entrepreneurs in partnership with a local company. Everything seemed to be going smoothly—until heavy rain fell for three consecutive days.

A massive landslide occurred. The mining road collapsed, heavy equipment was buried in mud, and the production area was completely paralyzed. Losses are estimated at over Rp 300 billion.

However, the real problem arose when the management team filed an insurance claim. The insurance company rejected it, citing the absence of a clause landslide and flood extension“in the police.”

The Chinese businessmen were shocked. They were sure they had already bought Comprehensive Project Insurance with complete protection. However, it was later discovered that the policy was prepared by a local agent without OJK authorization, and the entire document was prepared without any risk analysis.

As a result, projects worth trillions of rupiah lost protection because of just one mistake: not using an authorized insurance broker.

The Harsh Reality of the Mining World

The mining industry in Indonesia—whether nickel, coal, gold, or bauxite—is a high-risk business. Every day, there is the potential for:

• Work accident,
• Landslide, flood, or explosion,
• Heavy equipment damage,
• Legal liability towards third parties,
• And operational disruptions due to extreme weather.

Financial losses from a single incident can reach hundreds of billions of rupiah. Therefore, insurance is not merely an administrative obligation, but the heart of mining risk management.

However, many Chinese businessmen who come to Indonesia still think the system is the same as in China—easy, fast, and can be handled by local acquaintances or agents who “usually help with insurance.”

Yet the Indonesian legal system strictly regulates the roles of agents and brokers. This difference often leads to major problems.

Agents Are Not Your Defenders — Brokers Are the One Who Must Defend Entrepreneurs’ Interests

Based on POJK No. 69/POJK.05/2016 and POJK No. 24/2023, the roles of agents and brokers are fundamentally different:

• Insurance Agent → represents the insurance company, is responsible for selling products and increasing premiums.
• Insurance Broker → represents the insured (customer/entrepreneur), is responsible for protecting the client’s interests, preparing insurance programs, and assisting with the claims process until completion.

That is why the OJK only grants permission to official insurance brokers to provide advice and assistance in preparing policies.

In other words:

If Chinese entrepreneurs use unlicensed agents, they are left to fend for themselves when claims arise.

A Tale of Two Mining Projects — Two Different Fates

To illustrate how crucial the role of brokers is, let’s look at two real-life cases that occurred in Indonesia.

📍Case One – Coal Mining Project in Kalimantan

A Chinese company purchased insurance through a local agent without OJK permission. When a conveyor belt was damaged due to overheating, the claim was rejected because “mechanical wear and tear is not covered under the policy.” No Machinery Breakdown Extension, There isn’t any Loss of Profit Clause.
Losses: more than Rp. 75 billion.

📍Case Two – Nickel Mine in Morowali Assisted by L&G Insurance Broker

Before the policy is issued, L&G conducts a comprehensive risk assessment:

1. Analysis of mining areas for landslide and flood risks,
2. Review contracts with EPC contractors and heavy equipment lessees,
3. Addition of important clauses such as:

• Flood and Landslide Clause
• Automatic Reinstatement of Sum Insured
• Debris Removal Clause up to 10%
• Professional Fees Clause

When flash floods occurred and some heavy equipment was damaged, L&G immediately took charge of the claims process. Within 60 days, the insurance company paid the full Rp 42 billion claim.

The difference in results is not a coincidence—it is because legitimate insurance brokers know how to protect the interests of entrepreneurs.

Why Chinese Entrepreneurs Need an OJK-Registered Insurance Broker

There are three main reasons why Chinese entrepreneurs in the mining sector must use an official broker such as L&G Insurance Broker:

• Certainty of Protection
  An authorized broker will ensure that every risk—whether landslides, explosions, heavy equipment damage, or legal liability—is included in the policy with the appropriate clauses.
• Negotiating Premiums and Policy Conditions
  Brokers have extensive networks with local and international insurance companies. They negotiate the best premium rates with maximum protection.
• Claim Assistance
  When a disaster occurs, the broker not only submits a report, but also fully assists in the investigation, loss adjuster documentation, and claims payment.

While an agent can simply say, “we’ll help you send it to the insurance company,” a broker will fight to get the claim paid in full according to the policy.

Types of Insurance that Mining Projects Must Have

L&G Insurance Brokers typically recommend the following combination of coverage for mining companies:

• Property All Risks / Industrial All Risks (IAR) – protects mining facilities and infrastructure.
• Machinery Breakdown – for heavy equipment, conveyor, crusher, and power plant breakdowns.
• Contractor’s Plant and Machinery (CPM) – covers losses to heavy equipment during operation.
• Third Party Liability (TPL) – legal protection against third parties.
• Workmen’s Compensation / Personal Accident – ​​protection for local and foreign workers.
• Business Interruption Insurance – covers loss of income due to operational disruptions.

With this combination, each mining project will be protected from financial risks that could halt operations.

L&G Insurance Broker: A Trusted Partner for Energy & Mining Projects

As an official insurance broker registered with the OJK, L&G has handled major projects in various sectors, including nickel, coal, and mineral mining.

L&G Advantages:
✅Experienced team of experts in the energy & mining sector,
✅Professional risk assessment before the policy is issued,
✅Negotiate premiums & terms with the best insurance companies,
✅Fast and transparent claims assistance,
✅Digital & multilingual services (Mandarin, English, Indonesian) to facilitate cross-cultural communication.

One of L&G’s clients, a Chinese nickel mining company in Halmahera, experienced damage to a smelter plant. Thanks to L&G’s assistance, claims worth Rp 87 billion paid in full, even though initially the insurance company was only willing to pay half.

A Serious Message for Chinese Entrepreneurs’ Staff & Translators

Many Chinese businesspeople entrust insurance matters to their staff or translators in Indonesia. However, this responsibility…very large.

If you choose the wrong agent who is not licensed, then when disaster strikes, you could be accused of negligence and cause losses to the company.

Make sure you only work with an official insurance broker registered with the OJK – Because OJK legally requires brokers to represent the insured, not the insurance company.

Conclusion: Don’t Repeat the Same Mistakes

Every year, millions of dollars are lost because entrepreneurs choose the wrong agent or don’t read the policy properly.
But the real solution is simple: use a licensed insurance broker who is on your side.

If you are a Chinese entrepreneur investing in Indonesia’s mining sector — whether in Morowali, Halmahera, Kalimantan, or Papua — make sure you don’t put your business’s future in the wrong hands.

Contact L&G Insurance Broker today.
An official, trusted broker with over 30 years of experience defending the interests of clients in the energy, mining, and heavy industry sectors.

Don’t let one small mistake cost you hundreds of billions.
Choose the right protection. Choose L&G Insurance Broker—an insurance partner who is truly on your side.

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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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