That morning, the Indonesian contractors’ meeting room in Dili suddenly became tense.
An email from a project owner developing an energy facility in Timor Leste came in with a surprising request:
“We require CAR/EAR, Public Liability, and DSU coverage with a total limit of USD 50 million. The policy must meet international standards.”
The contractor immediately contacted the local insurance company in Timor Leste.
But the answer is the same as in previous cases:
“Sorry, our capacity is limited. We cannot accommodate this limit.”
The high value tender must be submitted within 5 days.
Without a qualified policy, Indonesian contractors will be automatically disqualified.
Amidst the confusion, one of the company directors contacted L&G Insurance Broker, hoping that an urgent solution could be provided.
They did not make the wrong choice.
Field Facts: Why Do Timor-Leste’s Projects Use So Many Indonesian Contractors?
This is no coincidence. Timor-Leste’s construction sector currently relies heavily on Indonesian companies because:
- Competitive skill level
Indonesia has long experience in large-scale infrastructure development.
Starting from roads, bridges, power plants, to energy networks.
- Efficient operational costs
Due to geographical proximity, logistics become cheaper and faster.
- Availability of complete assets and equipment
Indonesian companies bring:
- heavy equipment
- crane
- excavator
- batching plant
- ships and barges
- industrial generators
All this facilitates mobilization in Timor Leste.
However, all these advantages can collapse if they are not accompanied by strong insurance guarantees that meet the owner’s demands.
And that’s where the challenge arises.
Key Issue: Timor Leste’s Local Insurance Capacity is Very Limited
The insurance market in Timor-Leste is still developing. They can handle small to medium-sized projects. But projects worth tens to hundreds of millions of dollars?
A big challenge arises.
- Insufficient guarantee limit
CAR/EAR for large projects generally requires:
- USD 10 million – 100 million
- Public Liability up to USD 20 million
- DSU (Delay in Start-up) up to USD 50 million
Local insurance companies are not able to provide such large limits.
- Not all types of policies are available
Police like:
- LEG 2/3
- DSU/ALoP
- Principal Arranged Insurance
- Wording FIDIC
- Marine Advance Loss
usually only available at insurance companies with large capacity.
- Lack of global reinsurer support
Without strong reinsurance, capacity cannot increase.
- Engineering risks are too high for a small market
Energy, EPC and heavy construction projects require underwriters with specific specializations.
Therefore, Indonesian contractors often encounter obstacles when requesting guarantees from local Timor Leste insurance companies.
Here, Indonesian Insurance Becomes a Rational and Effective Solution
Many people think that Indonesian insurance companies are not allowed to provide guarantees for assets or projects located abroad.
Even though the explanation is different.
Indonesian insurance can guarantee projects abroad, including Timor Leste, if:
- territorial coverage expanded
- risk assessment is carried out
- underwriting approved by insurance company
- wording adjusted to the project contract
- broker provides complete supporting documents
Because the policy was issued in Indonesia, then:
The applicable law is Indonesian law (Indonesian Jurisdiction)
And it is legal, valid, enforceable and internationally recognized.
In fact, Indonesian insurance companies have been covering a lot of:
- export
- overseas projects owned by Indonesian contractors
- Marine Hull international ships
- EPC projects abroad
- cross-border liability
Including several projects in Timor Leste that have been handled together with L&G.
Owner Concerns: “What If I Make a Claim?”
This is a classic question from many parties in Timor Leste.
Let’s explain it simply.
- 95% of insurance claims are settled without trial
All run through:
- loss adjuster
- guarantor
- insured
- broker
Without a litigation process.
- International loss adjuster can be appointed at any time
Both from Indonesia and other countries.
- International arbitration is available
If a dispute arises, arbitration can be conducted anywhere with experts from any country.
- The most important thing is the completeness of the claim documents.
If everything is in accordance with the policy provisions, the Indonesian insurer is obliged to pay.
With this mechanism, the legal basis is no longer an obstacle to cross-border protection.
Action Point: This is where insurance brokers are the key to success.
Many cross-border projects fail to secure collateral simply because there is nobrokerwho understands how to bridge:
- contractor
- owner
- insurer
- reinsurer
- adjuster
This is where L&G Insurance Broker plays a vital role.
L&G’s strategic role in cross-border projects:
- Prepare a complete risk assessment, including project value, work methods, and technical risks.
- Arranging communications with Indonesian insurance companies, L&G ensured the insurer was ready to provide coverage as far as Timor Leste.
- Negotiate policy wording according to owner standards. Including FIDIC, DSU, LEG clause, Cross Liability, etc.
- Convincing the owner and the Timor Leste government that the Indonesian policy is legal and internationally valid.
- Manage claims through to completion. Including arranging loss adjusters, claim documents, and communication with the insurer.
Without an experienced broker, this process is almost impossible to run smoothly.
True Story: How L&G Secured a Major Energy Tender in Timor-Leste
Let’s go back to the initial case of the tender that was threatened with failure.
After receiving the complaint from the contractor, L&G immediately took action:
Steps taken by L&G in 72 hours:
- Assessing project value and risk
- Contacting a large capacity Indonesian insurance company
- Submit a special underwriting application
- Arrange a video conference with the project owner in Timor Leste
- Explaining the legality of the policy and claims mechanism
- Adjust wording according to international EPC standards
- Regulating territorial extension to Timor Leste
- Prepare guarantees that meet the terms of the contract
Two days later, the project owner gave official confirmation:
“Insurance requirements fulfilled. Proposal accepted.”
The tender that almost failed was finally won.
Indonesian contractors also received great trust from the owners.
This is all due to the strong collaboration between the contractor, Indonesian insurance, and L&G as a broker.
Why Should the Timor Leste Government Support the Use of Indonesian Insurance?
There are many benefits to be received:
- The project proceeded smoothly without any delays due to insurance. The large limit was met.
- Country risk is better protected. Major assets such as roads, ports, and energy facilities are protected to high standards. Investors have greater confidence.
- Strong protection always attracts investors. Technology transfer and best practices
- Indonesian insurance helps local industries grow. Premiums are more efficient.
Because large capacity allows for more competitive rates.
L&G Ready to Become a Bridge of Protection between Indonesia and Timor Leste
The development of Timor Leste is a long journey that requires support from various parties.
Insurance is not just a formality, but a determinant of the success and sustainability of a project.
With:
- strong Indonesian insurance company
- global reinsurer support
- experience handling overseas projects
- and professional assistance from L&G Insurance Broker
so that the development of Timor Leste can take place safely, efficiently and protected according to international standards.
The best protection knows no borders. What matters is capacity, commitment, and professionalism.
And L&G is ready to support that.
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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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Disclaimer
This article is intended for educational purposes regarding cross-border insurance underwriting practices and should not be construed as legal advice or a final recommendation for a policy. Each project has unique risk characteristics that require specific analysis by licensed insurance companies and brokers. Readers are advised to consult with professionals before making any decisions regarding insurance coverage, particularly for assets or projects located outside of Indonesian jurisdiction.
