When Mr. Nguyen, a Vietnamese entrepreneur, opened an electronics factory in an industrial area in Bekasi, he was optimistic about the potential growth of the Indonesian market. Production ran smoothly for several months, until one night the factory alarm went off. A small short circuit caused a spark in one of the electrical panels, sparking a fire that destroyed part of the production warehouse.
What seemed like a simple loss could have turned into a major disaster: major machinery failure, finished goods fire, and weeks of production shutdown. Fortunately, Nguyen had used an Indonesian insurance broker to arrange Industrial All Risks (IAR) and Business Interruption (BI) policies from the outset.
Within three months, the claim, worth Rp 72 billion, was paid in full. Without the broker’s assistance and the right policy, Nguyen’s business would likely have come to a complete standstill.
This story shows one important thing:
Vietnamese entrepreneurs must manage risks professionally when investing in Indonesia.
Why Indonesia is a Favorite Investment Destination for Vietnamese Entrepreneurs
Vietnam-Indonesia economic relations are growing rapidly. Many Vietnamese companies in the electronics, logistics, component manufacturing, energy, retail, and technology sectors have chosen Indonesia as an expansion market.
The reason:
- Indonesia is the largest economy in ASEAN.
- A population of 280 million provides massive market potential.
- The Indonesian government provides various investment incentives.
- Industrial and logistics infrastructure is developing rapidly.
However, the greater the opportunity, the greater the risk that follows.
Key Risks Faced by Vietnamese Entrepreneurs in Indonesia
Every investment—whether a factory, warehouse, construction project, logistics, or professional services—carries specific risks. The following are the major risk groups:
- Asset Risks (Property Risks)
- Fire and explosion
- Electrical short circuit
- Theft and robbery
- Earthquakes, floods, hurricanes
- Damage to factory machinery and equipment
- Sabotage or mass riots
Indonesia is located on the “ring of fire”, so the risk of earthquakes and volcanic eruptions must be taken seriously.
- Project Risks (Construction & Engineering Risks)
For Vietnamese entrepreneurs involved in EPC, fabrication, or construction of facilities:
- Structural failure
- Heavy equipment damage
- Work accident
- Technical installation error
- Project delays resulting in fines
- Operational & Production Risks
- Sudden engine failure
- Business interruption due to accident
- Supply chain disruption
- Liability Risks
- Third party injury
- Damage to third party property
- Product liability
- Professional misconduct
- Directors & management liability (D&O Liability)
- Logistics & Transportation Risks
Especially for Vietnamese export–import companies in Indonesia:
- Damage to goods during shipping
- Theft of goods
- Old ship or extreme weather
- Handling error
- Financial Risk
- Bad credit
- Fraud internal
- Contractual risks in B2B transactions
Important Types of Insurance for Vietnamese Entrepreneurs
To address these risks, Vietnamese companies need a comprehensive protection package:
- Industrial All Risks (IAR) / Property All Risks (PAR)
Covers damage to factory assets, warehouses and machinery due to fire, flood, earthquake and other unforeseen damage.
- Business Interruption (BI)
Compensate for financial losses due to the cessation of production activities.
- Contractors All Risks (CAR) / Erection All Risks (EAR)
For construction projects and machine installation.
- Machinery Breakdown (MB)
Covers sudden and unexpected engine failure.
- Marine Cargo Insurance
Protection of goods during land, sea and air shipping.
- Comprehensive General Liability (CGL)
Protects against third party claims.
- Product Liability Insurance
Mandatory for Vietnamese companies selling products to the Indonesian market.
- Directors & Officers Liability (D&O)
Protecting directors/management from lawsuits.
- Cyber Insurance
Essential for IT, app, cloud and fintech businesses.
- Professional Indemnity Insurance (PI)
A must for engineering, IT, EPC consultants, auditors and architects.
The Challenge of Choosing the Best Insurance from 70 Insurance Companies in Indonesia
There are over 70 insurance companies in Indonesia, but not all of them are suitable for the needs of Vietnamese entrepreneurs.
Some challenges:
- Not all companies have a large risk capacity.
- Differences in the quality of policy wording.
- There are companies that are strong in claims, there are those that are weak.
- Differences in underwriting standards.
- Not all companies have international reinsurance support.
Without broker assistance, it is difficult to determine which company is suitable for:
- investment > USD 10 million
- large factory
- high-value EPC projects
- risk of a major earthquake
- high-risk products (electronics, chemicals, automotive components)
Why Vietnamese Entrepreneurs Shouldn’t Worry About the Quality of Indonesian Insurance
Insurance companies in Indonesia operate with international standards because:
- Supervised by OJK (Financial Services Authority)
OJK requires:
- Minimum solvency ratio of 120% (POJK 71/2016)
- Transparency of financial reports
- Risk management and corporate governance
- The majority of Indonesian insurance is reinsured with global companies.
For example:
- Lloyd’s of London
- Munich Re
- Swiss Re
- Hannover Re
- Korean Re
This means that if a large claim occurs—for example, a loss of USD 20 million—payment is still guaranteed by international reinsurance.
- Insurance Product Regulations (POJK 23/2015)
Ensure all products meet consumer protection standards.
Important Indonesian Regulations That Vietnamese Investors Must Understand
Here is a summary of the core rules:
- Law No. 40 of 2014 – Concerning Insurance
The legal basis for the entire Indonesian insurance industry.
- POJK 69/POJK.05/2016 – Implementation of Insurance Business
Manage operations, policies, reinsurance, and reporting of insurance companies.
- POJK 71/POJK.05/2016 – Financial Health
Insurance companies are required to maintain minimum solvency.
- POJK 70/POJK.05/2020 – Insurance and Reinsurance Brokers
At an important point this regulation emphasizes:
A broker is a representative of the insured, not a representative of the insurance company.
Here are the reasons why Vietnamese investors should use a broker.
Why Insurance Brokers Are So Important for Vietnamese Entrepreneurs
Managing insurance without a broker is like entering the market without a map. Many “unseen” risks only emerge when a claim occurs.
Insurance brokers such as L&G Insurance Broker have a strategic role:
- Analyze Business Risks in Detail, from location risks, production processes, safety, to business contracts.
- Designing the Right Insurance Program. Including choosing the best policy type, limit, deductible, and wording.
- Finding the Best Insurer. Brokers are not tied to a single insurance company.
- Premium Negotiation & Policy Clauses. Brokers always fight for the interests of the insured, not the insurer.
- Assisting in the preparation of claim documents, including coordination with loss adjusters.
- Policy monitoring, endorsements, and renewals. This ensures that no policies expire.
- Providing Risk Management Training. For client teams in factories or projects.
In other words, without a broker, investors are highly vulnerable to losses when claims occur.
Real Case Study – How Brokers Saved Vietnamese Entrepreneurs
Case:
A Vietnamese company opened a chemical plant in Cikarang. In its first year of operation, a minor explosion occurred in one of the reactor tanks.
Loss:
- Facility damage: Rp. 25 billion
- 45-day production disruption: Rp 10 billion
- Additional engine damage: Rp 4 billion
Total loss: Rp. 39 billion
How does L&G help?
- The IAR and BI policies were previously drafted by L&G.
- L&G’s claims team handles the investigation and negotiations with the loss adjuster.
- All claim documents are prepared properly.
- Within 90 days, the claim was paid in full by the international insurer and reinsurer.
The company continues to operate without losing cash flow.
Why L&G Insurance Broker is Right for Vietnamese Entrepreneurs
L&G has more than experience30 yearsin handling multinational companies from various countries such as:
- Malaysia
- Singapore
- China
- India
- Korea
- Japan
- Europe
L&G Advantages:
- Expert in handling EPC projects, factories, logistics, mining, renewable energy, and financial risk.
- Has a wide network with more than 70 Indonesian insurance companies.
- Underwriter and claims team experienced in high-value cases.
- Operates with CRM and LIGASYS technology which makes policy monitoring easier.
L&G is not just a broker, but a strategic business partner.
Protect Your Investment, Protect Your Future
Vietnamese investment in Indonesia has a bright future. However, without proper risk protection, a small incident can lead to significant losses that halt business operations.
Using an Indonesian insurance broker like L&G Insurance Broker is the safest, most economical, and most professional way to:
- protect assets,
- maintaining business continuity, and
- ensure claims are paid in full when a disaster occurs.
For every Vietnamese entrepreneur, the wisest decision is:
“Use an Indonesian insurance broker from the first day you start doing business in Indonesia.”
L&G is ready to assist you.
Disclaimer:
The names, locations, and case studies in this article are fictitious and are intended solely for general educational purposes for Vietnamese entrepreneurs and investors operating in Indonesia. The information provided does not replace professional advice and may vary depending on business conditions, project location, industry type, and insurance company policies. For official recommendations and more accurate analysis, please consult directly with an L&G Insurance Broker.
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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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