That morning, the L&G Insurance Broker office received an email with a striking title:
“URGENT – Insurance Requirement Not Compliant – Project May Be Terminated”
The email came from an Indonesian contractor working on a major civil engineering project in Timor-Leste. The problem was simple yet very serious:
The owner rejected the insurance policy submitted.
According to them, the policy capacity and wording do not meet international standards.
Meanwhile, local insurance companies in Timor Leste are no longer able to increase the coverage limit.
The contractor was given seven days to repair the police.
Otherwise—their contracts will be cancelled.
As many began to panic, L&G was called in to intervene.
And this is the rarely seen story from behind the scenes of Timor Leste’s development.
Why Are Many Major Projects in Timor Leste Being Carried Out by Indonesian Contractors?
There are several strong reasons why Indonesian companies dominate development in Timor Leste:
- Indonesian expertise and experience are more mature
Indonesian contractors have experience handling:
- infrastructure projects
- dam
- bridge
- energy facilities
- EPC project
- housing and public facility development
Timor Leste owners feel safer working with contractors from Indonesia.
- Cost efficiency and speed of execution
Indonesian companies are more competitive and have complete resources ranging from human resources, materials, to heavy equipment.
- Near geographical location
- Cheap logistics costs
- Fast mobilization time
- Easy coordination
However, there is one big challenge:
Insurance coverage for large projects is often beyond the reach of local Timorese insurance companies.
This is no one’s fault—it’s just market conditions.
Timor Leste’s Insurance Capacity Limitations
Timor-Leste is a young country, and its insurance industry is still in its infancy. Challenges facing the local market include:
- Small capacity limit
Large projects require guarantees of up to:
- USD 10 million – 100 million for CAR/EAR
- USD 5 million – 20 million for Public Liability
- USD 5 million – 50 million for Marine Hull & Project Cargo
The local market is not yet able to meet this.
- The risks are very technical
Engineering risk requires:
- experienced underwriter
- global reinsurer support
- specialized technical surveyor
- International wording such as FIDIC is not yet common
Overseas owners often ask for specific wording, for example:
- LEG clause
- Delay in Start-up (DSU)
- 72 Hours Clause
- Vibration, Removal & Weakening
- Principal-Arranged Insurance
Not all local insurances have this.
- Limited reinsurance
Without the support of a major reinsurer, the limit cannot be increased.
This is where Indonesian Insurance can fill the void.
A high-quality and large-capacity Indonesian insurance company can actually provide guarantees for projects and assets located in Timor Leste, as long as:
- risk assessment is carried out
- territorial limits expanded
- customized wording
- underwriting approved by insurance companies and OJK
- broker provides complete supporting documents
As a country with a more developed insurance industry, Indonesia has:
- large engineering capacity
- international reinsurer support
- expert underwriter
- experience handling multi-country projects
However, there is a common misconception:
Many people think that Indonesian policies are only valid in Indonesia.
That is not true.
As long as the policy is extended and a risk assessment is conducted, the Indonesian policy is valid for use on projects in Timor Leste.
Action Point: Why Isn’t Indonesian Jurisdiction an Issue?
Project owners often ask:
“If a claim occurs, what is the legal basis? What if the insured is in Timor Leste and the policy is in Indonesia?”
The facts:
✔The police are valid based on the laws of the country where the police are issued.
Because the policy is issued in Indonesia → it follows Indonesian law.
✔Claims are settled technically, not through litigation.
Insurance industry 95% of claims are settled by:
- guarantor
- insured
- broker
- loss adjuster
✔International arbitration is available in case of disputes.
Each party appoints experts—even from any country.
✔Loss adjusters can come from anywhere
For projects in Timor Leste, adjusters can be from:
- Indonesia
- Portugal
- Australia
- Singapore
- Malaysia
or local Timor Leste adjusters.
With this process, national borders are no longer an obstacle.
Behind the Scenes: The Role of Insurance Brokers That Is Unseen by the Public
Often people only see the end result—policies issued, projects running, claims paid.
But what is not visible is the role of brokers who work hard behind the scenes.
In the case of the civil project that was threatened with cancellation, L&G did several important things:
- Analyze the guarantee requirements according to the project contract
The project contract requires:
- CAR/EAR with large limits
- DSU (Delay in Start-Up)
- Third Party Liability
- Cross Liability Clause
- 72-Hours Clause
- Automatic Reinstatement
L&G maps all these needs.
- Assess the risk (risk assessment)
L&G studied:
- project location
- development stages
- potential hazard
- risk value
- Submit a proposal to an Indonesian insurance company
L&G prepares professional underwriting documents to reassure insurers.
- Explain to the owner and the government of Timor Leste
That the Indonesian police:
- legal
- large capacity
- strong reinsurance
- wording can follow international standards
- Negotiate wording and rates
So that Indonesian contractors meet the owner’s requirements.
- Settling claims in case of damage
Brokers are the most loyal party to the insured.
Without brokers, contractors would be left to fend for themselves against insurers, reinsurers, and adjusters.
True Story: A Civil Project That Almost Failed Finally Underway
L&G works extra fast.
Within 72 hours, L&G:
- contacting a large capacity Indonesian insurance company
- submit a risk assessment
- expand territorial coverage
- adjust wording according to FIDIC
- send official clarification to the owner
- provide an international arbitration mechanism
- prepare a letter of guarantee and a complete policy
The result?
- The owner stated that the policy is of good quality and valid.
- Contract running.
- The project was saved.
- And good relations were established between the Indonesian contractor and the Timor Leste project owner.
What are the Benefits of Using Indonesian Insurance for Projects in Timor Leste?
- Large capacity
Limits of up to tens of millions of USD can be provided.
- Wording according to international standards
Including FIDIC global contracts.
- More competitive prices
Because the Indonesian market is bigger.
- Reinsurance global
Improve financial security.
- Claims can be handled professionally
International loss adjusters can be appointed at any time.
- Support from brokers such as L&G
To ensure the smooth running of the entire process.
Conclusion: The Strengthening Collaboration Between Indonesia and Timor Leste
Timor Leste’s development requires the best support.
And Indonesia—with its more mature insurance industry capacity—can be a strategic partner in providing high-level risk protection.
With professional assistance from L&G Insurance Broker, national borders are no longer a barrier to providing the best protection for infrastructure, energy, maritime projects, and other assets.
Indonesian Insurance + Professional Brokers = Safer and More Sustainable Development in Timor Leste.
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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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Disclaimer
This article is intended for educational purposes regarding cross-border insurance underwriting practices and should not be construed as legal advice or a final recommendation for a policy. Each risk and project has unique characteristics that require specific analysis by licensed insurance companies and brokers. Readers are advised to consult with professionals before making any decisions regarding insurance coverage, especially for projects or assets located outside of Indonesian jurisdiction.
