Welcome to Liga Asuransi—your trusted source for expert insights on risk management and insurance in Indonesia, tailored specifically for capital-intensive industries such as energy, infrastructure, and mining. As a Singapore-based investor or project developer, you know that the opportunities in these sectors are huge—but so are the risks.
In this article, we dive deeper into the unique exposures that come with operating in Indonesia’s high-growth sector and explore how industry-specific insurance solutions can protect your investments. Whether you’re building a power plant, constructing a toll road, or extracting natural resources, having the right insurance program in place is critical to the success of your project.
We also highlight how working with an experienced broker like L&G Insurance Broker can simplify complex insurance placement, ensure regulatory compliance and support long-term business resilience.
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Why Industry Specific Insurance Is So Important
As Singaporean businesses accelerate their growth in energy, infrastructure and mining, they are increasingly stepping up as major investors, project developers and technology providers. With billions of dollars committed to capital-intensive ventures across the archipelago, these sectors offer the potential for high returns, but also carry equally high risks.
Unlike service-based industries, energy, infrastructure, and mining projects involve large upfront capital, complex operations, long project schedules, and exposure to environmental and regulatory challenges. A power plant fire, a landslide at a mining site, or a highway construction delay can result in devastating financial consequences, missed deadlines, reputational damage, and even contract termination.
That’s why industry-specific insurance isn’t optional—it’s essential. Generic or “off-the-shelf” policies rarely offer the depth of protection needed in these sectors. Tailored coverage that aligns with the technical, legal, and operational realities of each project is critical to long-term success.
In this article, we explore the key risks in Indonesia’s energy, infrastructure and mining sectors—and how specialist insurance, backed by experienced brokers like L&G Insurance Broker, plays a vital role in protecting your investments.
Key Risks in Energy Projects
Indonesia’s energy projects—from coal and gas plants to renewables such as solar, hydro and geothermal—are critical to the country’s economic development. For Singaporean investors, these projects offer substantial returns but also come with unique and high-risk risks.
- Construction and Engineering Delays
Energy facilities often require complex engineering and custom-made components sourced from multiple countries. Delivery delays, equipment failures, or labor disputes during the construction phase can lead to significant cost overruns and missed milestones.
- Regulatory and Licensing Risks
Energy investment is highly regulated. Changes in energy policies, environmental requirements, or permit revocations—especially at the regional level—can disrupt operations or delay commissioning. Foreign investors must also comply with local content rules and land use regulations.
- Exposure to Environmental and Natural Disasters
Geothermal power plants near volcanic zones, hydroelectric facilities in mountainous areas, and solar farms in flood-prone areas face significant exposure to Indonesia’s natural disaster risks. Damage to installations or transmission lines can result in long-term outages and costly repairs.
- Third Party Liability and Community Risk
Disputes with local communities, pollution claims, or workplace accidents can lead to legal liability, reputational damage, or closure. In large-scale projects, managing stakeholder relationships and environmental impacts is as important as technical execution.
Without specialized insurance, these risks can translate into multi-million dollar losses and project failure. Energy sector investors must secure tailored insurance products that provide coverage from initial construction through long-term operations, ensuring financial resilience and project viability.
Risk Infrastructure
Infrastructure development in Indonesia is booming, with massive investment flowing into toll roads, bridges, ports, railways, airports and urban utilities. Singaporean companies play a key role as investors, developers and contractors. However, these projects are often exposed to a range of operational, financial and regulatory risks.
- Construction Phase Challenges
Infrastructure projects involve extensive groundwork, civil engineering, and coordination with multiple subcontractors. Risks such as design errors, site accidents, unforeseen ground conditions, or equipment failure can cause delays and increase costs. Without adequate Construction All Risks (CAR) insurance, even a single disruption can cause a major financial setback.
- Delayed Start-Up (DSU)
Even minor issues—such as late equipment delivery, flooding, or permit suspension—can delay project completion. Delayed Start-Up (DSU) risk is especially important for projects with fixed revenue schedules or tight performance guarantees. Insurance solutions should be tailored to cover potential revenue loss during such delays.
- Political and Legal Risks
Regional autonomy can complicate land acquisition, environmental approvals, and permits. Shifting local government priorities or infrastructure funding can change contractual conditions. Foreign investors should prepare for legal and bureaucratic uncertainties that can affect schedules and cost estimates.
- Long Term Maintenance Obligations
Once completed, infrastructure assets must meet performance obligations. Defects, premature wear and tear, or service interruptions can trigger penalty clauses or third-party claims, especially in Public-Private Partnership (PPP) arrangements. This makes post-construction liability coverage essential.
Given the complexity and capital intensity of infrastructure development, standard insurance is not enough. Singapore businesses must implement project-specific insurance programs to ensure all stakeholders are protected during the construction and operational phases.
Mining Risks
Indonesia’s mining sector—rich in coal, nickel, bauxite, gold and other minerals—has long been a magnet for foreign investment, including from Singaporean companies. But mining operations are among the most dangerous and tightly regulated industries, presenting significant risks that demand special insurance protection.
- Operational Hazards and Equipment Risks
Mining involves heavy equipment, explosives, underground tunnels, and open pit excavations. These activities expose companies to accidents, equipment failures, and the risk of fire or explosion. Without proper All Risks Machinery and Property Damage coverage, even a single incident can shut down production and incur significant replacement costs.
- Environmental and Social Risks
Mining operations often face scrutiny for deforestation, water pollution, and waste management. Spills or ecological damage can lead to community protests, government intervention, and multimillion-dollar liability claims. Environmental Damage Liability (EIL) insurance is essential to address these exposures.
- Natural Disasters
Many Indonesian mining operations are located in mountainous or forested areas that are prone to landslides, flooding, and earthquakes. These natural events can damage infrastructure, disrupt supply chains, or endanger workers. Insurance coverage should cover specific disaster risks relevant to the mine site.
- Regulatory Compliance and Permit Risk
Mines operate under strict permitting and environmental regulations. Delays or revocations of permits, especially with regional autonomy, can shut down operations and impact export schedules. Regulatory and Political Risk Insurance coverage may be required in more volatile regions.
- Transportation and Stock Risks
Extracted minerals often require land and sea transportation to processing centers or export terminals. Theft, loss or damage during transit is common, especially for high-value commodities such as gold or nickel. Marine Cargo and Stock Throughput Insurance can mitigate these losses.
Mining projects demand a robust sector-specific insurance program. Working with a broker who understands the technical, environmental and legal dimensions of mining is critical to protecting assets and long-term investment value.
Best-Fit Insurance Products for Each Sector
Energy, infrastructure, and mining projects in Indonesia require insurance programs that go far beyond standard corporate policies. These capital-intensive ventures demand specialized, layered coverage tailored to the lifecycle of each project, from development and construction to full operations. Below are the best-fit insurance solutions that Singaporean investors should prioritize.
- Energy Sector
Construction/Erection All Risks (CAR/EAR): Covers damage to energy facilities during the construction and installation phase.
- Delay in Start-Up (DSU): Protects against loss of income due to construction delays caused by an insured event.
- Machinery Breakdown: Important for power plants, turbines, generators and transformers.
- Property All Risks: Covers operational assets including buildings, machinery and systems.
- Third-Party Liability: Covers damage or injury to third parties due to energy operations.
- Environmental Liability Insurance: Required for geothermal and hydro projects with higher ecological impact.
- Infrastructure Sector
Contractor’s All Risks (CAR): Important for roads, bridges, airports, and tunnels under construction.
- DSU or Advanced Loss of Profits (ALOP): Compensates for lost revenue due to construction delays.
- Professional Indemnity: Covers architects, engineers, and project managers for design errors or oversight.
- Performance Bonds and Sureties: Often contractually required to secure milestones and obligations.
- Operational Responsibility: Once the infrastructure is operational, it includes the ongoing risks of use and maintenance.
- Mining Sector
- Property and Equipment All Risks: Covers excavators, crushers, conveyors, and supporting infrastructure.
- Machinery Breakdown: Essential for underground mines or remote areas with limited access to spare parts.
- Business Interruption: Compensates for lost revenue due to machine failure or disaster-related outages.
- Environmental Impairment Liability (EIL): Protects against claims of pollution or ecological damage.
- Marine Cargo & Stock Throughput: Covers minerals in transit from the mine to the port or refinery.
- Employer’s Liability & Workers’ Compensation: Vital in hazardous operations involving large workforces.
Each project requires a unique mix of these coverages depending on location, scope, phase, and risk profile. Brokers like L&G Insurance Broker can design an integrated insurance package that meets regulatory requirements and investor expectations—protecting your project at every stage.
The Role of Brokers in High-Risk Industries
In high-risk industries like energy, infrastructure and mining, insurance is not just a compliance requirement—it is a strategic risk management tool. Singaporean businesses investing in Indonesia must navigate complex local regulations, technical exposures and operational hazards. This is where a professional insurance broker becomes invaluable.
- Local Expertise and Regulatory Compliance
The Indonesian insurance market is heavily regulated by the Financial Services Authority (OJK), with strict rules on local placement, documentation and permitted policy structures. Licensed Indonesian brokers ensure that all insurance programs are OJK compliant, avoiding costly legal penalties or denied claims. Brokers also keep clients informed of regulatory changes affecting their sector.
- Industry Specific Risk Advisory
Each project presents different risks. Brokers help identify these risks through detailed assessments and match them with the right insurance products. For example, a mining broker will understand the importance of pollution liability, while an infrastructure broker will focus on construction delays and contractor liability exposure.
- Technical Policy Arrangement
Brokers negotiate with insurers to ensure policies reflect the technical requirements of the project. This includes appropriate sum insured, specific deductibles for catastrophic risks, tailored support (e.g., for earthquakes or DSU), and proper coordination between construction and operational policies.
- Claims Support and Advocacy
In high-value claims scenarios, documentation can be intensive and the process complex. Brokers assist in claim preparation, coordinate with adjusters, and encourage fair settlement. Their understanding of local claims culture and insurance company expectations greatly enhances the client’s position.
- Multi-Stakeholder Coordination
Projects in these sectors often involve multiple parties—investors, contractors, government agencies, and financiers. Brokers help draft contractually required insurance clauses, issue certificates of insurance (COIs), and ensure all parties are properly protected and indemnified.
At L&G Insurance Broker, we specialize in managing insurance for complex, high-risk businesses across Indonesia. Our local expertise, technical capabilities and bilingual support enable us to provide comprehensive protection and peace of mind, so you can focus on building and operating world-class projects with confidence.
Conclusion: Safe Growth Through Smart Coverage
Investing in Indonesia’s energy, infrastructure and mining sectors offers tremendous opportunities—but also high risks. From regulatory uncertainty and environmental exposure to construction delays and equipment failures, every stage of a project demands thoughtful insurance planning.
A generic policy won’t cut it. What’s needed is a sector-specific, locally tailored, expertly structured insurance program—built to protect your capital, schedule, and reputation.
At L&G Insurance Broker, we help Singapore businesses secure growth through tailored insurance solutions designed for Indonesia’s most complex industries. Let us protect your investments, so you can build boldly and operate with confidence.
Contact us today to explore customized coverage for your next project.
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