Liga Asuransi – Dear readers, how are you? Continuing our previous discussion about risk management and insurance in the construction industry, this time we would like to share with you the good news about the successful application of risk management and insurance knowledge by one of the insurance broker companies, L&G Insurance Broker.
L&G or its full name PT Liberty and General Risk Services has just won the tender and was appointed as a broker and consultant for the Jogja – Bawen Section 1 toll road construction project.
Just for your information, the Jogya – Bawen toll road is planned to have 4 interchanges and operate in 2024 with a total road length of 75.82 KM with a considerable investment value of IDR 14.26 trillion or around 1 billion dollars.
For L&G, this appointment proves that they are indeed the experts and specialists in the field of EPC (Engineering, Procurement, and Construction) insurance.
Having previously handled a lot of insurance needs for various projects in the fields of energy, oil, and gas, power plants, property, infrastructure, and others.
The construction work of the Jogya – Bawen toll road started in May 2022 and is expected to be completed in mid of 2024.
As we know, the purpose of the Indonesian government to build infrastructure including toll roads is to improve competitiveness and productivity.
In addition, the government also believes that the development of toll road infrastructure is an important pillar for economic development and makes toll road projects become a national strategic project.
The government has a target to build 4700 – 5200 km of toll roads by the end of 2024.
The history of toll road construction in Indonesia is still relatively new, starting in 1978 with the operation of the Jagorawi toll road with a length of 59 km (including access roads), which connects Jakarta, Bogor, and Ciawi.
Brief of Yogyakarta-Bawen Toll Road Project
The construction of the Jogya – Bawen toll road will connect the cities of Jogjakarta in the south and Semarang in the north, precisely in the province of Central Java.
This toll road is expected to reduce traffic congestion on arterial roads in the western and southern Central Java regions and in the northern part of Jogjakarta including in the Borobudur tourist area as well as to support industrial areas in the Ungaran – Bawen corridor.
The toll road will support the development of joglosemar tourism areas i.e. (Jogja, Solo, and Semarang).
The construction of this toll road is expected to be able to provide a boost to accelerate economic development in Yogyakarta / Jogja and Central Java.
The construction of this toll road is carried out by PT. Jasamarga Bawen (JJB) is a Toll Road Business Entity formed by a consortium of auction winners.
Construction Design of Jogja – Bawen Toll Road
Jogja – Bawen toll road consists of 6 sections and each section has a different construction character.
The section 1 project has a length of approximately 8 km and has a unique character because it consists of roads built on the ground and those built floating or elevated in a ratio of 50:50.
The construction work of the elevated road of section 1 is above the Mataram Sewer, an irrigation canal built by the Jogja sultanate 70 years ago.
This kind of character requires a special design, work plan, tools, and special skills for complicated work and higher risks.
In line with the character of this kind of work, the risks faced are also high.
Challenges of Managing Toll Project Insurance Section 1 Jogja – Bawen
With the character of a project with a high risk like this, it is certainly not easy for insurance companies to decide to accept or reject this risk.
Risk Review
For this reason, being able to convince the insurers of the potential risks of this project requires a thorough understanding of the scope of work.
Starting from the design, condition of the soil, location around the project, methods of work, tools used, materials used, expert consultants and workers involved as well as the experience of contractors and subcontractors.
This is where the important role of an insurance brokerage company as an insurance expert is needed. Professional insurance brokers can learn all aspects of the project to be able to produce the right risk analysis to be presented to the underwriters.
With the results of the analysis, the insurance broker then makes the right insurance program formulation that can protect and guarantee all potential accident risks that can occur.
Insurance Network
Another challenge faced by insurance brokers to arrange CAR / TPL insurance coverage with a complicated character like this project is how to get full insurance back up because the value of a large project is approximately Rp. 3 trillion, far above the average capacity of an insurance company if it covers itself.
About the small capacity of insurance companies in Indonesia compared to the value of the project, this is also the lack of interest from reinsurance companies abroad for toll road projects from Indonesia due to the high level of claims that occurred before.
For this reason, insurance brokers are required to be able to collect acceptance capacity from several domestic insurance companies. It then combines the capacities of several insurance companies by forming a coinsurance panel. Such as syndication in financing.
In addition to being able to convince the insurance company with a “risk review” and then collecting acceptance capacity in the form of co-insurance then the broker is also required to offer at a competitive cost a maximum of the owner’s estimated value or Owner Estimate.
At what rate?
Commonly, every project manager is very strict with expenses because it is very important for the success of the project.
That’s also what the project manager will do about project insurance. They want their insurance policy to be able to cover all the potential risks they face, covered by a health insurance company and at a cost that is appropriate or below their expectations.
By considering the three aspects above, PT Adhi Karya Tbk as the main contractor of the Jogja – Bawen Section 1 project finally chose and decided and appointed L&G Insurance Broker.
L&G is a leading national insurance brokerage company with more than 16 years of experience. By its vision, L&G focuses on the field of engineering risk or they mention it as an Engineering Procurement and Construction (EPC) specialist.
L&G can provide all the guarantees and insurance needed for a construction project ranging from Surety Bond guarantees, Bank Guarantee, CAR/EAR/TPL Insurance, WCA/EL, Construction Plant and Equipment (CPE), Marine Cargo Insurance, and Professional Liability insurance.
For all your project insurance needs please contact L&G now!
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E-mail: customer.support@lngrisk.co.id
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