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In the midst of the great enthusiasm of President Prabowo Subianto’s government in encouraging the development of the national fisheries sector, it is important for all stakeholders – from the government, investors, business actors, to fishing cooperatives – to understand that every project must be equipped with a risk protection system from the start.
Through this article, we will review in depth why early insurance protection is an integral part of the success of fisheries projects, both from an economic, social and sustainability perspective.
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Strategic Contribution of the Fisheries Sector to National Food Security
The fisheries sector has a very strategic role in supporting national food security. With a coastline of more than 95,000 km and a sea area that reaches two-thirds of Indonesia’s total territory, this country has enormous potential for marine and fisheries resources. This potential includes capture fisheries on the high seas, freshwater and marine aquaculture, and processing of marine products for domestic consumption and export.
The Prabowo government realizes that fisheries are not only about food production, but also the main instrument in alleviating poverty, creating jobs and strengthening the economy of coastal areas. Therefore, this sector’s development program is directed at increasing production, strengthening supply chains, and expanding market access — including through downstreaming and exporting high-value added fishery products.
Data from the Ministry of Maritime Affairs and Fisheries shows that per capita consumption of fish in Indonesian society continues to increase, making fish the main source of animal protein. This makes the fisheries sector an important support for community nutritional security, especially in the midst of the global food crisis.
However, to realize this maximum contribution, the fisheries sector must be free from risk disturbances that could hamper production and distribution. Climate change, fish disease, infrastructure damage, and market price instability are real threats that could disrupt the national food supply chain.
Therefore, in supporting Prabowo’s priority programs, a solid risk management approach and comprehensive insurance protection support are needed to ensure that the fisheries sector remains productive, sustainable and resilient to external shocks.
Risk of Project Failure Due to Unpreparedness in Risk Management
Even though the fisheries sector holds extraordinary potential, many projects in this field fail to achieve their goals due to unpreparedness in managing risks professionally. In the context of fisheries development projects carried out during the Prabowo administration – starting from modern shrimp ponds, fishing ports, to marine product processing and distribution centers – the threat of project failure can arise from various sides, both internal and external.
Some common causes of failure of fisheries projects that are not prepared for risk management include:
- Natural Risks:
Climate change, extreme weather, tidal floods, rising sea temperatures, and natural disasters such as earthquakes and tsunamis can damage ponds, cultivation ponds, ships and port infrastructure.
- Biological Diseases and Disorders:
The aquaculture sector is very vulnerable to disease outbreaks such as white spot, EMS (Early Mortality Syndrome) virus, and various bacterial infections. Once it spreads, this disease can kill thousands to millions of fish or shrimp in a matter of days.
- Delay or Failure of Infrastructure Projects:
Construction of cold storage, ice factory facilities, and access roads to ponds or ports are often hampered by problems with land, permits or weather, causing costs to balloon and projects to stall.
- Financial Risk and Market Instability:
Fluctuations in export prices, failure to pay from business partners, or global market pressures can disrupt a business’s cash flow. Without mitigation, this could lead to bankruptcy.
- Work Accidents and HR Risks:
Fisheries projects involve a lot of high-risk field labor, both in ponds, ships and processing plants. Work accidents can have major legal and financial impacts on companies.
Unfortunately, many business actors and project managers only focus on technical and financial aspects, without including elements of risk management and insurance protection into their planning. In fact, this preventive approach is actually the key to keeping projects running even when faced with major disruptions.
Failure to manage risks early on can result in billions of rupiah in losses, loss of jobs, and even the cessation of project operations — impacts that could have been prevented with the right protection system.
Insurance as a Sustainable Development Partner in the Fisheries Sector
In the midst of the Prabowo government’s big ambitions to encourage significant growth in the fisheries sector, insurance must be seen as a strategic partner for development, not just passive protection when disaster strikes. Insurance plays an active role in creating a safe, resilient and sustainable system in every stage of a project — from planning, implementation, to distribution of results.
The following are several reasons why insurance is very important in developing the fisheries sector:
- Maintaining Project and Investment Sustainability
Insurance functions as a financial safety net. When losses occur due to natural disasters, fish disease, or damage to production equipment, an insurance policy can provide reimbursement so that the project continues and does not stop completely.
- Increasing Attractiveness for Investors and Creditors
Projects covered by insurance are considered to have a good risk management system. This increases the confidence of investors, banks and multilateral funding institutions to invest capital. They know that risks are well managed and there are concrete mitigation schemes.
- Support Legal and Contractual Processes
Many procurement, construction and export contracts require certain insurance coverage, such as project insurance (CAR/EAR), goods transportation insurance (marine cargo), or legal liability insurance (liabilities). Without this protection, projects may fail to pass audits or disburse funds.
- Providing Risk Engineering and Technical Consultation Services
Professional insurance companies and brokers such as L&G Insurance Broker not only sells policies, but also provides risk analysis and technical advice to minimize potential losses. This is especially important in fisheries projects that are fraught with environmental and technical risks.
- Building Public and Community Trust
Insurance protection also has an impact on the feeling of security among workers, fishermen and the surrounding community. They know that the projects they participate in have mitigation plans against major risks.
By making insurance a part of the development strategy, fisheries projects not only have stronger resilience, but can also provide maximum social and economic results.
Case Example: Fisheries Project Fails Without Insurance Protection
To illustrate the importance of early insurance coverage in fisheries projects, let’s look at two real cases in the field. Both have similar business models, but the end results are very different because of their approach to risk management.
Case 1: Shrimp Farm Project in Sulawesi – No Insurance
A local company is starting a vaname shrimp cultivation project covering an 80 hectare area in Sulawesi in 2022. The initial investment reaches IDR 40 billion, and the project targets exports to the Japanese and South Korean markets. At first, production went smoothly, but in the sixth month, the pond was hit by an outbreak of White Spot Syndrome Virus (WSSV).
Due to the lack of cultivation insurance, the company lost more than 70% of its shrimp population in just two weeks. Losses are estimated at IDR 25 billion. As a result, operations stopped, investors withdrew, and more than 100 employees were laid off. This project finally went bankrupt before even a year had passed.
Case 2: Similar Project in East Java – With Insurance
In the same year, an intensive shrimp farming project in East Java experienced a similar disaster. However, because from the start they had used Aquaculture Insurance and Property All Risks, the insurance claim worth IDR 12.5 billion was successfully paid. The project remains on track, and the next cultivation cycle begins without financial disruption.
These two cases are clear evidence that insurance is not just a complement, but a determining factor in the sustainability of fisheries projects. Careful planning and proper insurance protection can save a business from total collapse.
Insurance Implementation Steps Since Project Planning
So that insurance can function optimally as a risk mitigation tool, the right approach is to integrate it from the start of project planning. This applies to all types of fisheries projects — whether aquaculture ponds, fishing ports, processing centers, to marine product distribution and export systems.
The following are strategic steps recommended by L&G Insurance Brokers to ensure insurance implementation runs effectively:
- Carry out a Structured Risk Assessment
Identify all potential risks from the start: natural disasters, disease outbreaks, equipment damage, legal risks, and even market risks. This is the basis for determining the type of insurance needed.
- Involve a Professional Insurance Broker
A broker’s involvement will help design an insurance program that fits the risk profile, project budget and specific needs of each phase of construction.
- Determine the type of insurance based on the project stage
For example:
- During construction: use Contractors All Risks (CAR).
- When operational: use Aquaculture Insurance, Property All Risks, Marine Cargo, Liability Insurance, and Business Interruption if necessary.
- Include Insurance Costs in the Budget Plan (Capex & Opex)
Procurement of insurance should be considered a major component of investment, not an additional expense. This will simplify the investor approval and financing process.
- Renew Coverage Periodically
As projects evolve, coverage must be adjusted — including coverage amounts, new types of risks, and operational locations.
- Socialize to All Stakeholders
The project team, management, and work partners need to understand the importance of insurance so that the implementation process runs smoothly.
With proper planning, insurance becomes an integral part of project governance, not just an emergency tool. This is a form of seriousness in building a modern, efficient and highly resilient fisheries sector.
The Active Role of Insurance Brokers in Building Safe Fisheries Projects
In large and small scale fisheries projects, the role of professional insurance brokers is vital to bridge the need for risk protection with appropriate and measurable insurance solutions. Brokers are not just policy sales agents, but strategic partners in designing, managing and optimizing insurance programs according to project characteristics.
For example, L&G Insurance Brokers has extensive experience in handling complex risks in the fisheries, construction, energy and logistics sectors. We offer a holistic approach that includes:
- Risk Mapping then Risk Profiling
We help clients identify all relevant potential risks — environmental, technical, legal and financial — to ensure each risk has appropriate mitigation and protection strategies.
- Designing an Integrated Insurance Program
Every project has different needs. L&G will arrange a combination of policies (multi-line coverage) that is tailored to the project stages: from construction, production, to distribution and export.
- Efficient Risk Placement
With a wide network of national and international insurance companies, we place risks with strong and reliable insurance partners, with competitive premiums and fair claim terms.
- Assistance with the Claims Process
When a risk occurs, L&G will accompany the claim process through to settlement, help prepare documents, and fight for maximum claim payments.
- Risk Management Education and Training
We also provide training for project teams so that they are better prepared and aware of the importance of risk management and insurance protection.
With this approach, L&G Insurance Brokers is not just a service provider, but a trusted partner in maintaining the success of national fisheries projects in the Prabowo development era. With us, you build your project with complete security and confidence.
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HOTLINE L&G 24 JAM: 0811-8507-773 (CALL – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: oktoyar.meli@lngrisk.co.id
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