Unexpected Financial Risks
Many Chinese entrepreneurs have successfully invested in Indonesia’s mining, construction, and energy sectors. They bring advanced technology, machinery, and heavy equipment backed by financing companies such as SANY Finance, XCMG Leasing, and Chailease.
However, many also end up facing major problems: heavy equipment is lost, damaged, or burned, but insurance claims are not paid. The result? Delinquent financing, disrupted cash flow, and strained business relationships with local partners.
This problem is not because insurance does not exist — but because insurance management is carried out without proper understanding, often through unofficial agents or personal acquaintances who do not understand the financial risks of leasing in Indonesia.
True Story: The Loss of an Excavator Worth Rp 12 Billion
This case occurred in East Kalimantan. A local mining company leased two SANY SY500H excavators for over Rp 12 billion from a Chinese leasing company. The agreement included insurance against loss and total damage to the equipment.
However, while being transported along the river to the mining site, the barge carrying the heavy equipment sank due to extreme weather. The equipment was completely damaged and declared a total loss.
When the claim was submitted to the local insurance company, the results were surprising:
The insurance policy does not cover risks during transportation (transit risk).
The agent who handled the previous policy did not add the mandatory Institute Cargo Clause (A) for heavy equipment in transit.
A claim worth Rp12 billion was rejected, the mining company ceased operations, and the leasing company suffered huge losses.
“In China, all financing insurance automatically covers transportation and operations. We didn’t expect the system in Indonesia to be different,” said Mr. Zhang Wei.Head of Risk Management SANY Finance Indonesia, when interviewed.
Main Problems: Choosing the Wrong Agent and Lack of Understanding of Regulations
Many Chinese entrepreneurs are accustomed to the insurance system in their home country, where standard policies cover all stages of risk.
In Indonesia, the system is different. Each risk must be specifically outlined in the policy, and only authorized insurance brokers registered with the Financial Services Authority (OJK) have the authority to analyze the insured’s needs and negotiate the best coverage.
Insurance agents, on the other hand, legally represent the insurance company, not the customer.
This means that if there is an error in the policy wording or a claim is rejected, the agent is not responsible for defending the interests of the entrepreneur or leasing company.
“Our mistake was assuming all agents are the same. In Indonesia, only authorized brokers can assist clients with claims,” said Ms. Lina Chen.translatorand also a liaison officer on the project.
OJK Regulation: Special Protection for Foreign Entrepreneurs
The Indonesian government, through POJK No. 70/POJK.05/2016, emphasizes that insurance brokers are required to defend the interests of the insured, not the insurance company.
This rule was created to protect business actors — especially foreign investors — from potential losses due to administrative errors, incorrect wording, or claim rejections.
Official insurance brokers have an obligation to:
- Analyze the insured’s business needs and risks.
- Prepare an insurance proposal with the right clauses.
- Negotiate the best premiums and coverage with insurance companies.
- Accompanying customers in the claims process to payment.
In today’s digital age, this entire process can be done quickly and efficiently — from application to claim — without the hassle of physical meetings.
The Strategic Role of an Authorized Insurance Broker: A Case Study of L&G Insurance Broker
As an official insurance broker registered with the OJK, L&G Insurance Broker has extensive experience in handling the risks of heavy equipment leasing, mining projects, and energy.
In a similar case, L&G assisted a Chinese leasing company that suffered Rp8.5 billion in damage to heavy equipment due to an accident at a mining site.
In contrast to the previous case, this time the claim was paid in full because the policy was structured with the following additional clauses:
- Automatic Reinstatement Clause
- Transit and Loading/Unloading Cover
- Debris Removal Clause
- Waiver of Subrogation to protect the relationship between lessor and lessee
As a result, in less than 90 days, the claim payment was completed without dispute.
“L&G’s approach was very professional. They understood the risks on the ground and effectively bridged our communication with local insurers,” Mr. Zhang said in an internal company report.
Leasing Insurance Is Not a Formality, But a Financial Protection Tool
Many leasing companies still consider insurance policies to be merely an administrative formality — a requirement to fulfill the financing contract.
In fact, in Indonesia, every policy is a legal document that must be adapted to operational conditions in the field.
Minor mistakes like not listing operational areas, not updating heavy equipment data, or not adding a force majeure clause can result in claims worth billions of rupiah being rejected.
Insurance brokers act like financial risk consultants who ensure every potential hazard is covered comprehensively.
L&G Insurance Broker, for example, not only prepares policies, but also provides:
- Audit risk asset leasing,
- Potential loss analysis (loss scenario analysis),
- Claim simulation, and
- Training for leasing staff on insurance and risk mitigation.
With this approach, Chinese leasing companies can ensure that every piece of heavy equipment on the job is fully protected — from the start of the project to the end of the financing period.
Why Chinese Entrepreneurs Should Choose an OJK-Registered Broker
There are three main reasons why Chinese entrepreneurs in Indonesia should be careful and only work with OJK-approved insurance brokers:
- Legal Protection and Claim Certainty
A licensed broker is legally responsible for defending the client’s interests and ensuring that any claims are paid according to the contract. - Transparency and Accountability
Official brokers are required to report their activities to the OJK, ensuring there is no conflict of interest with any insurance company. - Facilities at Era Digital
L&G Insurance Broker, for example, has developed a digital system for policy submission, claims monitoring, and risk reporting that can be accessed directly by leasing management in Jakarta, Beijing, or Shenzhen.
Conclusion: Protect Investment, Maintain Trust
The heavy equipment leasing industry is the backbone of many large Chinese projects in Indonesia. However, without proper risk management and insurance coverage, a single incident can wipe out years of profits.
Leasing insurance is not just a formality.
It is a financial fortress that ensures a business’s assets, capital, and reputation remain safe — even amidst the most severe risks.
Therefore, every Chinese entrepreneur and financing company in Indonesia should only entrust their insurance matters to official and experienced insurance brokers such as L&G Insurance Broker, who understand local risks, comply with OJK regulations, and always side with the interests of the insured.
Because in the multi-billion dollar financing business, the wrong insurance isn’t just about losses — it’s about the company’s survival.
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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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