As the Construction Business Grows Rapidly, Risks Also Increase
Indonesia is currently a major destination for Chinese entrepreneurs in the construction and infrastructure sectors.
From factory construction projects, high-rise buildings, to power plants and industrial areas, the presence of Chinese investment is very dominant.
But behind this great opportunity, there is a very high financial risk.
In any construction project, a small mistake can turn into a loss of hundreds of billions of rupiah — especially if the insurance coverage is not properly structured.
Unfortunately, many Chinese entrepreneurs in Indonesia do not understand the difference between insurance agents and OJK-approved brokers, and as a result, when project accidents occur, insurance claims are rejected or paid only partially.
When the New Building Collapsed Before Its Inauguration
Early last year, Mr. Zhang, a Shenzhen-based construction company owner, worked on a 15-story office building construction project in Tangerang.
The project value reaches IDR 350 billion.
For insurance purposes, Mr. Zhang asked his local staff to contact an “insurance agent acquaintance” who claimed to be experienced.
The police were published — it looked complete on paper:Contractor’s All Risks (CAR) Insurance And Third Party Liability.
But six months later, disaster struck.
While casting the 12th floor, the main scaffolding structure collapsed, causing part of the building to collapse and injuring four workers.
Material losses reached more than IDR 25 billion.
Mr. Zhang immediately reported the incident to the insurance, confident that everything would be reimbursed.
But after investigation, shocking news emerged:
“The claim cannot be processed because the casting method and materials differ from the specifications stated in the project contract that is the basis of the policy.”
It turned out that the agent never conducted a site visit or requested technical project documents.
Police are only made based onquotationstandards, without regard to the differences between planning and implementation.
Ultimately, only a small fraction of claims are paid — and the contractors have to bear tens of billions of rupiah in losses themselves.
Common Mistakes That Often Occur in Chinese Construction Projects
Cases like Mr. Zhang’s are not uncommon.
Many Chinese contractors and developers in Indonesia do not use OJK-approved brokers, as they consider purchasing insurance from acquaintances or internal sources sufficient.
Some of the most common mistakes include:
- The CAR/EAR policy does not cover all stages of work (design, testing, commissioning).
- The insured value does not match the total project value (underinsured).
- Important clauses such as “Cross Liability”, “Debris Removal”, and “Professional Fees” are removed to reduce premiums.
- The contractor was unaware of the obligation to notify changes in field conditions.
- There is no broker to accompany you during the claim survey.
However, each project has unique characteristics.
Structural failure, extreme rain, earthquakes, or even human error can cause a chain of losses, including project delays, penalties, and loss of reputation with clients.
The Vital Role of OJK-Registered Insurance Brokers in Construction Projects
This is the role that distinguishes official brokers from ordinary agents.
An OJK-registered insurance broker such as L&G Insurance Broker not only sells policies, but also:
- Conduct a thorough risk assessment of the design, location, and construction methods.
- Develop CAR/EAR policy specifications that cover all stages of work, including testing and maintenance periods.
- Negotiating the best premiums with multiple insurance companies to ensure customers get maximum value.
- Include important additional clauses that agents often overlook, such asMaintenance Period Cover, Expediting Expenses, And Temporary Works.
- And most importantly: accompany customers throughout the claims process until full payment.
Different Examples — Successful Projects with L&G Insurance Broker
A different story comes from PT Great Wall Engineering Indonesia, a Chinese contractor building a steel factory in Cilegon worth IDR 700 billion.
Before starting the project, they appointed L&G Insurance Broker to arrange complete coverage.
L&G conducted a site visit, reviewed the design, inspected the geotechnical conditions, and recommended a combination of policies:
- Contractor’s All Risks (CAR)
- Third Party Liability (TPL)
- Delay in Start-Up (DSU)
- Workmen’s Compensation for local workers
Several months later, major flooding hit the project area due to extreme rainfall.
Some equipment and building materials were badly damaged.
However, thanks to the detailed policy design and risk report prepared by L&G from the outset, the Rp 18 billion claim was paid in full within 60 days.
The client is satisfied — the project remains on schedule, and the relationship with the project owner remains good.
“We are very grateful to have L&G as our partner from the very beginning. They not only helped us create the policy, but they also truly stood by us through difficult times.”
— Mr. Wang, Project Director, PT Great Wall Engineering Indonesia
Why Chinese Entrepreneurs Often Make Missteps
There are several reasons why many Chinese entrepreneurs in Indonesia are trapped with inappropriate insurance coverage:
- Assuming all insurance is the same.
In China, the project insurance system is more centralized and controlled by the government, whereas in Indonesia, the system is based on strict OJK regulations and requires local expertise. - Dependence on local translators or staff.
Many insurance decisions are made by staff who don’t understand the technical details, so important clauses are often missed. - Didn’t know that brokers work for the insured, not for the insurance company.
In fact, the OJK (Financial Services Authority) has stipulated that only official insurance brokers are authorized to represent the interests of the insured, assist in premium negotiations, and assist with claims.
Agents are the opposite — they represent insurance companies.
Risks that Often Occur in Construction Projects
The following are the types of risks that frequently threaten construction projects in Indonesia:
- Structural failure due to poor soil quality
- Workplace accidents involving local and foreign workers
- Damage due to extreme weather such as heavy rain and landslides
- Loss or theft of project materials
- Heavy equipment damage at the project site
- Lawsuits from communities surrounding the project
Without a comprehensive policy and an experienced broker, claims for these risks may be rejected or only partially paid.
Digital Services from L&G — Simplifying Every Process
Now in the digital era, using an insurance broker is no longer complicated.
L&G Insurance Broker has developed a digital system where:
- All policy documents can be accessed online,
- The claim process is monitored in real-time,
- Policy renewal notifications are sent automatically,
- And risk reports can be downloaded at any time.
For Chinese entrepreneurs accustomed to efficient systems, this is a very practical and transparent solution.
L&G Insurance Broker — OJK’s Official Partner for Construction Projects from China
As an official insurance broker registered with the OJK, L&G has extensive experience in handling large projects:
- Construction of heavy industrial plants,
- Commercial and residential buildings,
- Mining and energy projects,
- Bridges and public infrastructure.
L&G not only handles policies, but also protects the investments and business reputation of Chinese entrepreneurs in Indonesia.
Conclusion: Don’t Wait for Your Project to Collapse Before Acting
Mr. Zhang’s case serves as an important lesson.
Project insurance is not just an administrative requirement — it is vital protection for assets, reputation, and business continuity.
One wrong clause could result in a claim worth billions of rupiah being lost.
However, with an authorized broker like L&G Insurance Broker, all risks can be safely controlled.
✅Comprehensive risk analysis
✅Best premium negotiation
✅Complete protection for projects and workers
✅Claims assistance from start to finish
✅Fast and transparent digital services
Chinese entrepreneurs in Indonesia, protect your projects with an OJK-registered broker. Contact L&G Insurance Broker now—a trusted partner that understands your business, culture, and language.
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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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