Many foreign construction companies are now entering Indonesia to work on major projects, ranging from the construction of the Indonesian capital city (IKN), a nickel smelter in Sulawesi, to toll roads and power plants in various regions. However, many are unaware that the Financial Services Authority (OJK) has strict regulations requiring all foreign companies to have local insurance policies for their heavy equipment and machinery.
This regulation is not merely a formality. Its purpose is to protect project assets and ensure that claims can be legally paid in Indonesia. One of the required policies is Contractor’s Plant & Machinery (CPM) Insurance CPM heavy equipment insurance.
However, purchasing insurance in Indonesia isn’t something you can do haphazardly. If you buy directly from an insurance company or through an agent, no one is obligated to represent you in the event of a claim. This differs from an insurance broker like L&G Insurance Broker, who is legally obligated to fight for your interests until the claim is fully settled.
So before your project starts, make sure that insurance matters are handled by a broker who is officially licensed by the OJK and has experience in international construction projects such as L&G Insurance Broker.
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📧 Email: halo@lngrisk.co.id
Find complete CPM heavy equipment insurance solutions for your projects in Indonesia.
The Surge of Foreign Projects in Indonesia and the Risks That Lurk
The Indonesian government is opening the door wide to foreign investment in the infrastructure sector. The result? We now see many large projects being undertaken by contractors from China, Korea, Japan, and Europe.
- Project IKN was carried out by an international consortium.
- The nickel smelter and power plant projects in Sulawesi and Maluku are managed by Chinese and Korean companies.
- Many new MRT and toll road projects are being carried out by Japanese and European contractors.
But along with these significant opportunities come unavoidable risks. These include heavy equipment tipping over in muddy terrain, cranes collapsing due to ground subsidence, and even engine fires caused by short circuits. Each such incident can result in losses ranging from hundreds of millions to billions of rupiah.
And this is where CPM heavy equipment insurance becomes crucial. However, what foreign companies often forget is that foreign policies are not valid in Indonesia. According to OJK regulations, all insurance activities within Indonesian jurisdiction must be conducted by insurance companies registered with and supervised by the OJK.
OJK Regulation: Local Policy Required for Foreign Operations
OJK (Financial Services Authority) is an institution that regulates all financial activities in Indonesia, including insurance.
In Law Number 40 of 2014 concerning Insurance, it is explained that:
“All insurance business activities in the territory of the Republic of Indonesia must be carried out by insurance companies licensed and supervised by the OJK.”
It means:
- Insurance policies issued abroad have no legal force in Indonesia.
- Claims filed under foreign policies cannot be processed without a licensed local partner company.
- In fact, in government and state-owned enterprise projects, local policy ownership is a mandatory tender requirement.
For foreign contractors, this rule means one thing:
You must have a CPM insurance policy issued by a local insurance company in Indonesia. To ensure the entire process is carried out in accordance with regulations, you must be accompanied by an OJK-licensed insurance broker.
Why Brokers Are Important in OJK Regulatory Compliance
Many foreign companies don’t understand the complexities of Indonesian insurance regulations. They come with the mindset of “buy a policy and you’re done.” However, the process is far more complicated.
Without broker guidance, companies often fall into three major mistakes:
- Policy Not Legally Recognized
They purchased foreign insurance without a local partner, so claims could not be paid out. - Documents Do Not Meet Tender Requirements
For state-owned enterprises (BUMN) or government projects, insurance must be issued by a company registered with the Financial Services Authority (OJK). Without it, the project could be disqualified. - Claim Delayed
When losses occur, foreign companies are confused about how to deal with the claims process in Indonesia, which is different from that in their home country.
Insurance brokers like L&G Insurance Broker are officially licensed by the Financial Services Authority (OJK) and experienced in handling foreign projects. L&G helps clients understand regulations, prepare documents accordingly, and ensure all policies are legally valid under Indonesian law.
Agent DifferencesvsInsurance Broker
Agents and brokers are often mistaken for the same thing, but their roles are actually very different. This misunderstanding of their roles often leads foreign companies to make mistakes.
Insurance agents work for insurance companies.
Their job is to sell policies and achieve sales targets. If a claim arises, they are not obligated to help customers fight for their rights.
In contrast, insurance brokers work for clients.
They are independent advisors obligated to protect clients’ interests from the purchase stage through to claim settlement. Brokers are even legally bound to ensure claims are paid as agreed.
So, if you purchase insurance through an agent, you’ll have to deal with the insurance company yourself when making a claim. However, if you use a broker like L&G Insurance Broker, the entire process will be handled by experts on your side.
L&G Insurance Broker’s Strategic Role in Foreign Projects
As an OJK-licensed insurance broker with over 30 years of experience, L&G Insurance Broker has assisted many foreign contractors in major projects in Indonesia.
Here are L&G’s important roles in ensuring OJK compliance and the security of your project:
- Project Risk and Feasibility Audit
The L&G team assesses the project conditions and the type of heavy equipment used, to ensure protection meets the actual needs in the field. - Choosing the Best Insurance Company
L&G is not tied to any one insurance company. We choose combination policies from various OJK licensed companies. - Preparing Tender Documents
Many government projects require proof of local insurance. L&G prepares all documentation to ensure regulatory compliance and audit compliance. - Claims Assistance from Initial to Disbursement
When a heavy equipment accident occurs, the L&G team immediately assists in preparing a report, coordinating with the loss adjuster, and negotiating the claim amount until it is paid in full. - Bilingual Communication (Indonesian & English)
Facilitates coordination between foreign and local teams without language barriers.
In other words, L&G doesn’t just sell policies, we sell security and certainty.
Case Study: Foreign Projects Saved by OJK Compliance
A South Korean contractor was working on a toll road project in Central Java. Initially, they used insurance from their head office in Seoul and didn’t purchase a local policy. When one of their cranes collapsed due to a landslide, they filed a claim with a foreign insurance company. However, the claim was rejected. The reason was simple: the loss occurred in Indonesia, and the foreign policy wasn’t licensed to operate there.
The company then contacted L&G Insurance Broker. L&G helped them restructure their insurance program in accordance with OJK regulations and purchased a CPM heavy equipment insurance policy from a recognized local company. Six months later, when another piece of equipment broke down, the claim was quickly settled without any legal hurdles.
The important lesson:
👉Compliance with OJK regulations is not just an administrative matter, but also determines whether claims can be paid or not.
Why Foreign Companies Should Care About Insurance Regulations
Some foreign contractors think, “The important thing is to get the project underway.” However, in Indonesia, without complying with OJK regulations, project contracts can be at risk of being cancelled, and work permits can even be revoked.
In addition, companies also face:
- OJK legal and audit risks,
- Difficulty transferring claim funds across countries,
- Bad reputation in the eyes of project owners and the government.
By engaging a local broker like L&G, foreign companies can ensure that all documents, policy wording, and claims mechanisms are fully compliant with Indonesian law.
Claims Are a Critical Moment — Here’s Where Brokers Make the Difference
Buying a policy is easy. But when a claim occurs, that’s where the difference between having a broker or not really becomes apparent.
In the real world, many insurance companies reject claims for various reasons:
- “Damage is not included in the definition of an accident.”
- “The operator does not meet the qualifications.”
- “Work area not listed on the policy.”
Without a broker, you’re on your own. But with L&G Insurance Broker, you have a team of professionals who understand policy wording and negotiate directly with insurance companies to ensure your claim is paid in full.
That is why many foreign contractors choose L&G not because of the low price, but because of the guarantee of certainty of claims.
Practical Steps: How to Meet OJK Regulations and Secure Your Project
Before your heavy equipment operates in Indonesia, please follow these simple steps:
- Contact a Local Insurance Broker (L&G Insurance Broker)
Requesting protection needs analysis according to the type of equipment and project location. - Ensure the Policy is Issued by an OJK-Licensed Insurance Company
Only local policies are legally valid and can be used in tenders. - Save All Insurance Documents and Project Contracts
The broker will help archive and prepare documents for OJK audits if necessary. - Prepare a Claims Mechanism from the Start
Don’t wait for problems to arise. L&G can help create report templates and claims guides from the start of a project.
Conclusion
OJK regulations are more than just bureaucratic red tape. They are a safeguard system to ensure every foreign project in Indonesia has legitimate and trustworthy financial security. Without complying with these regulations, your project could be stalled, claims rejected, and losses could reach billions of rupiah. But with an insurance broker like L&G Insurance Broker, all of these risks can be avoided.
Don’t buy insurance through an agent or directly from an insurance company. When you file a claim, no one will be there to represent you. Brokers like L&G are your authorized representatives in the insurance world, ensuring every penny of your claim is paid according to your rights.
📞 FREE consultation now!
Contact us at08118507773
📧 Email: halo@lngrisk.co.id
🌐 Visit: www.lngrisk.co.id
L&G Insurance Broker — Project Insurance Experts and CPM Heavy Equipment Insurance in Indonesia.
