At 9:30 PM Jakarta time, a call came through to the L&G Insurance Broker team. On the other end of the line, the voice of a project manager from an Indonesian construction company sounded hurried. A power plant project in Dili, Timor Leste, was in danger of being unable to start due to one unmet requirement: insurance coverage for a large-capacity project.
Problems arose when the local insurance company in Timor Leste—which had been very helpful—declared it was unable to provide the insurance coverage required by the owner. The requested limits were too high, the engineering risks too complex, and their reinsurer couldn’t support the needs.
Meanwhile, the Indonesian contractor has only 48 hours to submit an insurance policy for the Notice to Proceed to be issued. Without it, the multi-million dollar project—which has been in preparation for months—could be cancelled.
It was in this critical situation that L&G stepped in to take on the role.
And this is where the story begins.
Why Do Many Projects in Timor-Leste Experience Insurance Problems?
Development in Timor-Leste is progressing rapidly, spanning the energy sector, infrastructure, civil engineering, and maritime transportation. However, there’s one reality that needs to be viewed objectively:
- The capacity of insurance companies in Timor Leste is still limited
Timor Leste is a young country. Its insurance industry is still developing, particularly in general insurance:
- guarantee capacity (limit) is still low
- not many underwriters have experience handling engineering risks
- supporting reinsurers are also limited
Most of the contractors are from Indonesia
Due to geographical proximity and quality of human resources, many projects are carried out by Indonesian contractors.
But…
Indonesian contractors are accustomed to extensive coverage standards—from CAR/EAR, Property All Risks, Machinery Breakdown, Public Liability, to Marine Hull.
When faced with the market capacity of Timor Leste, a wide “gap” occurs.
Owner or government requirements often ask for large limits.
Especially for energy, infrastructure, or port projects.
Limits above USD 10 million to USD 100 million are commonplace.
The local market is not ready—not because of a lack of professionalism, but because it is still developing.
At this critical point, Indonesian insurance companies could actually be the solution.
Why Can Indonesian Insurance Provide Coverage in Timor Leste?
This is where many misunderstandings occur.
In fact, Indonesian insurance companies can provide guarantees to assets or projects abroad, including Timor Leste, on the condition that:
- There is a risk assessment from an Indonesian insurer
- Policy territory extended (extension of coverage)
- There is compliance with OJK regulations & internal insurer
- There is technical justification from the broker
If all are met, then:
👉Indonesian policy legally guarantees projects or assets located in Timor Leste
👉The legal basis of the policy follows Indonesian Jurisdiction, in accordance with the rules of issuance
👉claims can be processed without any cross-border obstacles
And keep in mind:
Insurance policies always follow the laws of the country where the policy is issued.
Because the policy was issued in Indonesia, Indonesian law applies—and this isn’t a problem for the Timorese government. In fact, in practice, this is actually beneficial, because:
- Indonesian insurers have greater capacity
- more professional and transparent claims process
- stronger global reinsurer support
Biggest Concern: “What If a Claim Occurs?”
This is a question that often arises from Timor Leste owners or regulators.
Fair question.
But it is necessary to understand:
- Almost no claims ever reach court.
In the global insurance industry, 90–95% of claims are settled between the insurer and the insured with the help of:
✔ broker
✔ loss adjuster
✔ surveyor
Because this industry is governed by international best practices, not a litigation culture.
- International loss adjuster can be appointed at any time
For projects in Timor Leste, adjusters can come from:
- Indonesia
- Singapore
- Malaysia
- Australia
- even local Timor Leste adjusters
There are no limits.
- If there is a dispute, arbitration is the final solution.
Arbitration is a professional mechanism in which both parties appoint independent experts, who can even be from any country.
This is much faster than the court process.
- The most important thing is the completeness of the claim documents.
As long as the documents are complete and the policy terms are complied with, the Indonesian insurer will process the payment.
The Important Role of Brokers in Ensuring the Security of Cross-Border Projects
Many people don’t realize that insurance brokers are actually the most important parties when it comes to cross-border projects.
In the case of Timor Leste, L&G’s role is crucial in several ways:
- Conduct an Initial Risk Assessment
L&G ensures:
- true project value
- mapped risks
- exposure analyzed
- the right insurer is chosen
- Explain the legality of the policy to regulators & owners
L&G has explained to the Timor Leste government several times that:
- Indonesian insurance is legal to use
- claims can be resolved internationally
- arbitration can be used if necessary
- Prepare policy wording according to the project contract
Example:
- FIDIC
- EPC Contract
- Joint Venture Agreement
- Marine Charter Party
- Connecting all parties professionally
Brokers work for the insured, not for the insurer.
L&G facilitates communication between:
- contractor
- owner
- insurer
- reinsurer
- adjuster
so that the project runs smoothly.
- Handle claims until completion
This is the most important part.
Many companies have difficulty handling cross-border claims.
L&G ensures the process runs:
- fast
- objective
- transparent
- according to police regulations
True Story: A Saved Energy Project
Back to the story at the beginning.
When L&G received the sudden request, the team immediately:
- contacting Indonesian insurers with large engineering capacity
- conduct a quick review of the project design
- ensure compliance with OJK and internal insurers
- prepare CAR/EAR wording according to international standards
- explain the situation to the Timor Leste owner via official letter
- complete documents within 24 hours
The result?
The owner accepts the policy.
Contract number issued.
Mobilization begins.
And the project that almost failed finally got underway.
L&G managed to become a savior in this critical situation.
Why Should the Timor Leste Government Not Hesitate to Use Indonesian Insurance?
Because:
✔stronger capacity
✔broader experience
✔international reinsurer support
✔more professional claims mechanism
✔there are brokers who bridge communication
✔arbitration is available as a neutral solution
In the modern insurance world, the quality of protection is far more important than the country of origin of the insurer.
Let’s Build Timor Leste with the Right Guarantees
Timor Leste’s development is progressing rapidly.
Big projects require big guarantees.
And the right insurance will determine whether the project runs smoothly or not.
With the support of Indonesia’s large-capacity insurance companies, coupled with the role of professional brokers such as L&G Insurance Broker, cross-border project risks can be managed safely, legally, and effectively.
In an era of regional cooperation, the best protection knows no borders—only quality and commitment.
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Disclaimer:
This article is intended for general educational purposes regarding cross-border insurance coverage and should not be construed as legal, financial, or final insurance recommendations. Each project has different risk characteristics and requires specific analysis by authorized insurance companies and brokers. Readers are advised to consult directly with a qualified professional or broker before making any decisions regarding insurance coverage.
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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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