A Rp 100 Billion Claim Failed to Be Paid! This Is the Financial Disaster Lurking for Chinese Construction Projects in Indonesia.

Jakarta — In recent years, many Chinese companies have invested heavily in Indonesia’s construction and energy sectors. From power plants and transmission lines to bridges and integrated industrial estates, the contracts are valued at trillions of rupiah. However, behind this spirit of cooperation and significant opportunities lies a serious and often overlooked issue: failed insurance claims due to errors in risk management.

1. When the IDR 100 Billion Claim Failed to Be Paid

A case that has become a hot topic among insurance professionals occurred at a coal-fired power plant (PLTU) project in East Kalimantan. The project was carried out by a consortium of Chinese companies in collaboration with local partners.

When construction work reached 80% completion, a major fire broke out in the turbine area due to an electrical short circuit. Material losses were estimated at over Rp 100 billion (approximately US$8.6 million)—including severely damaged imported equipment and a six-month project delay.

However, when the project team submitted an insurance claim to the local insurance company, it was denied. The reason was:

• The policy does not cover losses during the phasetesting & commissioning,
• There is a lack of technical documents that are a requirement in the contract, and
• The policy was administered by an agent who did not deeply understand the risks of large-scale construction projects.

“We really didn’t expect that a claim of this size could fail just because of administrative errors and agent selection,” he said.mr. Li, Project Manager of the Chinese company.
“In China, insurance companies typically assign experts to assist from the outset of a project. We just learned that the system is different in Indonesia.”

2. Common Mistakes of Chinese Entrepreneurs in Indonesia

The above case is not an isolated one. Based on field observations, there are three common mistakes Chinese entrepreneurs often make when arranging insurance for their construction projects in Indonesia:

• Relying on agents or personal acquaintances

Many investors prefer to use insurance agents recommended by friends or business associates without verifying their official license from the Financial Services Authority (OJK). Agents act solely as intermediaries for insurance companies, not advocates for the insured’s interests. As a result, insurance contracts often don’t cover the true risks of a project.

• Lack of understanding of local regulations

Indonesia’s insurance system has strict regulations that differ from those in China. For example, OJK Regulation No. 24 of 2023 stipulates that insurance brokers are required to represent the interests of the insured, not the insurance company.

• Not involving risk experts from the beginning

Many entrepreneurs only seek help after losses have already occurred. However, risk analysis and policy design should be carried out during the planning phase to ensure maximum coverage for every risk.

“As a translator, I often have difficulty explaining the terms in the policy to the Chinese side,” he said Ms. Chen, a project translator who has worked on several large construction projects.
“Sometimes insurance companies use Indonesian legal terms that are difficult for project teams to understand. As a result, many important details are missed.”

3. Why does the OJK require official insurance brokers?

The Financial Services Authority (OJK) understands this issue. Therefore, under the Indonesian legal system, authorized insurance brokers are mandated to represent and defend the interests of the insured.

Unlike agents, insurance brokers registered with the OJK have the obligation to:

• Helping clients analyze risks before purchasing a policy,
• Negotiating the best premiums without compromising on benefits,
• Ensuring policy wording meets project needs, and
• Accompany the claim process until it is paid.

Thus, the broker’s role is not only to sell policies, but also to safeguard the company’s financial interests in the event of a loss.

4. Case Study: When a Legitimate Broker Changes Everything

In comparison, in an electricity transmission project in Sulawesi, a Chinese construction company, in collaboration with an insurance broker, successfully secured a full claim settlement worth over Rp 60 billion after material damage was caused by a storm.

In contrast to the previous case, from the start of the project the Insurance Broker had already done:

• Comprehensive risk analysis, covering geographic conditions and extreme weather,
• Negotiate CAR/EAR policy wording to cover installation and commissioning phases, commissioning
• Professional claim documentation assistance until completion.

“We felt a big difference when working with an official broker,” he said Mr. Li.
“Not only did the claims process run smoothly, but we also received a lot of education about risk management and legal obligations in Indonesia.”

5. Why Are Official Brokers More Efficient in the Digital Age?

In the past, entrepreneurs often thought using a broker would slow down the process due to additional bureaucracy. However, in today’s digital age, the process is much faster and more transparent.

L&G Insurance Broker has developed a digital system for:

• Online bid submission and premium comparison,
• Management of policy documents and claims through a digital dashboard, and
• Real-time reporting of claim status.

This system significantly improves communication between Chinese entrepreneurs, translators, and the Indonesian insurance team. Confusion is eliminated, as all documents are neatly stored and can be professionally translated.

6. Financial Impact of Wrong Choice

Unpaid claims are more than just a temporary loss. The impact can be far-reaching:

• Project delays resulting in penalties from the project owner,
• Loss of reputation in the eyes of local partners and financial institutions, as well as
• Cash flow disruptions that could delay other projects.

For projects worth hundreds of billions of rupiah, one small error in policy wording can lead to huge losses and potential legal disputes.

Therefore, using an authorized broker is not just an option, but a risk management strategy that every foreign company in Indonesia must implement.

7. Conclusion: Protect Your Investment with an OJK-Registered Broker

In the high-risk world of construction and energy, insurance is not just a formality, but a financial protection tool that determines the continuity of a project.

Chinese companies operating in Indonesia need to understand that the insurance system here has different rules and mechanisms. Therefore, the Financial Services Authority (OJK) requires the use of authorized insurance brokers to ensure the insured’s interests are fully protected.

L&G Insurance Broker, an officially registered insurance broker with the Financial Services Authority (OJK), has experience serving numerous large projects in the energy, infrastructure, and mining sectors. With the support of an expert team and modern digital systems, L&G is ready to help Chinese entrepreneurs achieve:

• The best insurance protection at competitive prices,
• Full assistance in the claims process, and
• Assurance of compliance with Indonesian regulations.

“On a multi-billion dollar project, financial protection is not an option — it’s an obligation.”

Don’t wait until your project stops to realize the importance of an official insurance broker. Protect your company’s investment, reputation, and finances together with L&G Insurance Broker — trusted broker and registered with OJK.

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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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