A Time Bomb in China’s Heavy Equipment Industry in Indonesia
In the last decade, the heavy equipment market in Indonesia has been flooded with products from China such as SANY, XCMG, Zoomlion, SDLG, Liugong, Shantui, Lovol, Lonking, Foton, Sunward, and XGMA.
The combination of competitive pricing, soft credit financing, and extensive distribution networks makes these brands dominate various sectors — from construction, mining, plantations, to infrastructure.
But behind the sales success story, there is a big problem that is rarely talked about:
- Thousands of insurance claims for Chinese-made heavy equipment are rejected every year by insurance companies in Indonesia.
- As a result, hundreds of billions of rupiah in losses were borne by distributors, lessors, and companies purchasing the heavy equipment.
What really happened?
And more importantly, how to avoid it?
Big Problem: Chinese Heavy Equipment Insurance Claims Are Often Denied
Based on field experience, there is a recurring pattern in cases of claims for heavy equipment from China that insurance companies fail to pay.
The main problem is not because the heavy equipment is bad, but because of mismanagement in insurance arrangements.
Some common patterns that are often found:
- Police are handled directly without brokers
Distributors or buyers often think:
“Why use a broker? After all, you just pay the premium for insurance.”
However, insurance is not just about “buying a product”.
Each policy contains dozens of pages of complex terms and conditions, full of legal and technical terms.
Small errors — such as the description of the equipment, the coverage area, or the type of risk — can result in an outright claim rejection.
- Using a ‘friend’ agent who doesn’t understand technical matters
Many Chinese heavy equipment companies in Indonesia choose private agents or friends to handle insurance, citing “cheaper and easier communication.”
Unfortunately, many of these agents do not have the licenses or technical skills to negotiate policy wording, understand project risks, or liaise with reinsurance companies.
When a major claim occurs (for example, heavy equipment worth Rp. 5–10 billion sinks in a harbor or catches fire at a mining site), the agent does not have direct access to the board of directors or the reinsurance claims team.
The result? Claims stalled. Rejected. Or partially paid.
- Choosing the wrong type of insurance
Many distributors cover their heavy equipment with the wrong policies, for example:
- Using motor vehicle insurance (Comprehensive Motor) for heavy equipment — when you should be using Contractor’s Plant & Machinery (CPM).
- Does not add guarantee for transportation risk (Marine Cargo) even though the equipment is sent between islands.
- Does not add a credit clause (Credit Insurance) for purchases with an installment scheme.
As a result, when damage occurs outside the coverage scheme, the insurance company has a legitimate reason to reject the claim.
- Claim documents are incomplete or incorrectly formatted
Some distributors from China do not understand the claim standards in Indonesia.
The invoice is still in the name of the finance company in China, the equipment has not been transferred to another name, or there is no official BAST (Minutes of Handover) document.
Indonesian insurance companies are very strict about documentation.
If the basic documents are incomplete, the claim will not be processed — even if the loss is real.
Devastating Financial Impact
Every piece of heavy equipment has a high value — starting fromRp2 billion to Rp15 billion per unit.
If a piece of equipment is severely damaged and cannot be claimed, it can destroy a distributor or lessor’s cash flow.
Some real cases (names changed):
- Case 1: A Chinese heavy equipment leasing company lost four SANY excavators when a cargo ship sank off Kalimantan. The policy was arranged by a local agent without marine cargo insurance. The claim, worth Rp 20 billion, was rejected.
- Case 2: An XCMG distributor in East Java covered damage to a loader caused by a fire at a mine site. The insurance company declined coverage due to the lack of an external explosion clause.
- Case 3: Five SDLG units in Palembang were stolen by unscrupulous tenants. The policy only covers the risk of damage and does not cover theft by third parties.
The result is not only a loss of assets — but also of reputation in the eyes of principals and customers.
Why Does This Error Occur So Often?
There are several fundamental factors that cause Chinese heavy equipment companies to frequently mismanage insurance in Indonesia:
- Lack of understanding of the Indonesian insurance system.
Many Chinese companies think all insurance policies are the same, even though each insurance company in Indonesia has different wording and clauses.
- Lack of risk experts within the company.
Finance or sales teams are often tasked with managing insurance, even though they do not have a technical insurance background.
- There is no local team experienced in handling large claims.
When a claim occurs, they don’t know who to coordinate with in the insurance company.
- Misconception about costs.
Many people think that using a broker will increase costs, even though the broker’s fee is paid by the insurance company, not the client.
Solution: Use a Professional Insurance Broker in Indonesia
It’s time for Chinese heavy equipment companies to stop the “do it yourself” or “use a friend” practice when it comes to insurance.
The safest, most efficient and proven solution isusing an authorized insurance broker who is experienced in the heavy equipment and construction industry.
One of the most experienced is L&G Insurance Broker.
Why L&G Insurance Broker Is The Best Solution
- Extensive experience in Chinese made heavy equipment
L&G has covered thousands of Chinese heavy equipment brands — including SANY, XCMG, Zoomlion, SDLG, Liugong, Shantui, and others — with total coverage reaching hundreds of millions of US dollars.
We understand the technical characteristics of Chinese equipment, operational risks in Indonesia, and complex credit distribution patterns.
- Expertise in negotiating Terms & Conditions (TC)
L&G’s main strength lies in its ability to negotiate policy wording.
We ensure that each clause is in accordance with field conditions and your business needs.
For example:
- Added Theft by Hirer clause for rented equipment.
- Marine Inland Transit Clause for equipment shipped between islands.
- Automatic Reinstatement Clause to keep the policy active after a claim.
The result? The risk of a claim being rejected is almost zero.
- Full support during claims
When a major loss occurs, L&G does not leave clients alone.
We work directly with insurance and reinsurance company management to expedite claim payments.
We have a claims team ready to collaborate with independent loss adjusters, expert surveyors, and legal support to ensure all claims processes run smoothly and fairly.
- Access to top insurance and reinsurance companies
As an official broker licensed by the OJK, L&G has close relationships with many major insurance companies in Indonesia as well as global reinsurance partners such as Swiss Re, Munich Re, and Korean Re.
This means that when you need protection for a large project — worth tens of millions of dollars — we have access to the best capacity and pricing.
- Complete solution from upstream to downstream
L&G doesn’t just prepare policies. We provide end-to-end risk management services, including:
- Risk analysis and coverage recommendations,
- Preparation of underwriting documents,
- Coordination with finance and distributors,
- Insurance audit assistance,
- And claim settlement to payment.
Real Illustration: From Rejected Claim to Paid Claim
One of our clients, a Chinese heavy equipment distributor in Kalimantan, suffered a major loss when an XCMG crane worth Rp12 billion fell into the sea during loading and unloading.
Initially, the insurance company rejected the claim on the grounds that there was no “loading & unloading” clause.
However, after the broker intervened, we proved that the risk was included in “ordinary transit operations” and brought documentary evidence and field witnesses.
The result: the claim was paid in full within 3 months.
Cases like this can only be won by brokers who understand the technical language of insurance and are able to discuss directly with underwriters and reinsurers.
Strategic Steps for Chinese Heavy Equipment Distributors in Indonesia
To prevent your business from becoming the next victim, here are the steps you must take:
- Audit all currently running insurance policies.
Make sure the type of insurance, sum insured, and risk are appropriate.
- Use an official broker licensed by the OJK such as L&G Insurance Broker.
Avoid private agents or unlicensed associates.
- Make sure all credit, leasing, or project contract agreements are covered by the policy.
- Provide complete documentation for claims from the start (BAST, invoice, photos, log book).
- Use a digital monitoring system so that all equipment is protected and properly monitored.
Conclusion: Choose the Safe Way, Choose a Professional Broker
The Chinese heavy equipment market in Indonesia is growing rapidly — but without the right protection, that growth could lead to significant losses.
Don’t let equipment worth billions of rupiah disappear just because of a technical error in the policy.
In collaboration with L&G Insurance Broker, a partner with experience handling thousands of Chinese brand heavy equipment and successfully resolving dozens of large claims.
We are not just intermediaries — we are guardians of your interests amidst the complex insurance system.
✉️Contact L&G Insurance Broker today
For a free consultation regarding your heavy equipment and project protection:
HOTLINE L&G 24 JAM: 0811-8507-773 (PHONE – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: halo@lngrisk.co.id
