Batam, Indonesia’s dangerous maritime gateway
Batam is not only a renowned industrial and free trade zone, but also one of the largest fishing and seafood hubs in western Indonesia. Strategically located along the international waterways of the Strait of Malacca and Natuna Sea, Batam serves as a key hub for seafood imports and exports to Singapore, Malaysia, Japan, and Europe.
Every week, thousands of tons of fish, shrimp, and processed seafood are shipped from the ports of Kabil, Batu Ampat, and Tanjung Bengkhun. Numerous local and foreign companies have built ice plants, cold storage facilities, and fish processing plants in the region. However, despite these significant opportunities, Batam’s fisheries industry faces significant operational and financial risks.
Maritime storms, ship collisions, refrigeration failures, warehouse fires, and even export losses due to air conditioning failures can cost billions of rupees in a single day. Therefore, marine and industrial insurance plays a vital role in maintaining business stability.
However, many business owners don’t understand the complexities of these risks and often choose the wrong policy type. This is where professional insurance brokers like L&G Insurance Brokers come in. Brokers don’t just sell policies; they analyze marine and onshore risks, design appropriate coverage, and ensure full compensation in the event of an incident.
Contact an L&G Insurance agent today at 08118507773 for a free consultation before risks disrupt your business.
Risks of Fisheries and Marine Business in Batam
Batam’s fishery encompasses a wide range of operations, from harvesting and processing to cold storage, distribution, and export. Each stage carries specific risks that must be addressed.
1. Marine risks
- Storms and high waves can cause ships to lose control or sink.
- In busy waterways such as the Strait of Malacca, collisions between ships often result in damage to the hull or main engine.
- A fire broke out on board due to an electrical short circuit or fuel leak.
- The engine failed while sailing in the middle of the sea.
- Loss of catch due to cooling problems or maritime piracy.
- Onshore Risks
- Damage to the cold storage or ice factory due to power outage or overheating.
- Heavy chemicals and electrical systems caused the fire at the processing facility.
- Stealing frozen fish stocks or expensive equipment.
Extreme weather caused damage to buildings and machinery.
3. Export transportation risks
- The refrigerated container (refrigerated container) was damaged during transportation at the port.
- Delays in export shipments resulted in product damage.
- Loss of cargo on board due to storm at destination port or improper handling.
- If not managed properly, all of these risks can result in significant financial losses, production disruptions, loss of export contracts, and even corporate bankruptcy.
Types of insurance that fishery operators must have
1. Ship and machinery insurance
This insurance is designed to protect fishing vessels, offshore transport vessels and refrigerated vessels against the risk of physical damage caused by:
- Collision, sinking or running aground.
- Fires, explosions, and storms.
- Mechanical accident resulting in engine damage.
Example Case:
A fishing vessel valued at 10 billion rupiah (approximately US$80 million) suffered engine damage due to seawater intrusion. Repair costs reached 800 million rupiah (approximately US$80 million). Because the vessel was insured under hull and machinery insurance (H&M), all repair costs were covered.
This policy ensures the safety of cargo (caught fish, frozen fish or processed products) during transport by sea, land or air.
Risks:
- Loss, theft, damage due to temperature, fire or shipwreck.
- Provided under the Institute Cargo Clauses (A) – All Insurance, offering the broadest coverage.
example:
An export company from Batam shipped 15 tons of tuna to Japan. During transit in Singapore, the container’s refrigeration system malfunctioned, causing the temperature to rise. As a result, some of the cargo was damaged. The exporter purchased marine cargo insurance and received full compensation based on the invoiced value of the cargo.
3. Property All Risk (PAR) Insurance
Protect onshore assets such as ice plants, processing facilities and cold storage from FLEXA risks:
- fire
- Lightning
- Thunderbolt
- Airplane (plane crash)
- Smoking (as soon as possible)
The policy could also be extended to cover floods, storms, earthquake disasters and social unrest – important for coastal industrial areas such as Batam.
- Mechanical Breakdown (MB) Insurance
Covers internal mechanical damage to production or cooling machinery, such as:
- The bearing broke.
- axis bending.
- The motorcycle caught fire.
- overpressure.
This insurance is crucial for cold storage facilities and ice plants, as refrigeration equipment is the lifeblood of these facilities. A failure of a large compressor unit could result in billions of rupees in losses due to thawing of fish.
5. Business Interruption (BI) Insurance
Covers loss of income and fixed costs resulting from cessation of business activities due to damage covered by a PAR or MB policy.
Example: A small fire in a cold storage room temporarily halted operations for two weeks. BI Insurance covered employee salaries and the fixed electricity bill during the repair period.
6. Product Liability and Public Liability Insurance
Product liability: Protection against third-party claims if exported products cause damage or fail to meet quality standards.
Public liability insurance: When an accident occurs in a factory or port, the company is legally responsible to external parties.
Batam Island Real Case
Case 1: Fishing boat sinks
A fishing boat sank in the waters off Nongsa due to a leak. The boat was valued at 8 billion rupiah and was carrying cargo worth 2.5 billion rupiah. The owner had insured the boat but not the cargo. As a result, he received compensation only for the boat, but lost the entire value of his catch, receiving no compensation at all.
📘Course :
Fishing companies, vessels and their cargoes must be insured separately: vessels with hull and machinery insurance, and cargoes with marine insurance.
Case 2: Passenger cabin refrigeration unit failure
A power surge at a cold storage facility in the Kabyle region caused a fire in two freezer compressors, thawing 20 tons of frozen fish and resulting in losses of 1.1 billion rupees.
As the company had mechanical breakdown and business interruption insurance, the claim was paid in full, including losses due to interruption of operations.
📘Course :
Policy extension is crucial – if there is no business interruption, losses caused by downtime will not be covered.
Batam Fisheries Insurance Cost Estimates
Insurance Type Insurance Value Estimated Annual Premium
| Hull and machinery | 10 billion rupees (ships) | 50 million to 100 million rupees | Depends on the age and condition of the vessel |
| Ocean freight | 5 billion rupees (annual shipment volume) | 200,000-3 million rupees | With the expansion of comprehensive insurance |
| Property Insurance | 20 billion rupees (factories and warehouses) | 25 million to 35 million rupees | Including floods and storms |
| Mechanical failure | 5 billion rupees (freezers) | 10-15 million rubles | Including overload and wear |
| Product Liability | 1 billion rupees | 5 million rupees | Important for exports |
💡Note : Arranging your premium through an insurance broker can be more efficient as they have direct access to many insurance companies and understand the specific risks of the fishing industry.
The role of insurance brokers in the fisheries business
Insurance brokers are not just intermediaries; they are independent risk advisors working on behalf of their clients. In Batam’s fisheries industry, brokers play a vital role in the following areas:
- Marine and land risk analysis
Brokers assess the condition of the vessel, shipping route, type of freezer, and location of factories and warehouses.
- Designing a comprehensive insurance plan
Combine hull, cargo, property and machinery breakdowns into one efficient package.
- Negotiate premiums and additional terms
Brokers negotiate the best rates and coverage extensions (such as war and strikes, prosecutions and labor, and wreckage removal).
- Claims Assistance
In the event of an incident, the broker will help prepare documentation, inspection reports, and negotiate to maximize the claim payout.
- Regular reviews and audits
Brokers ensure that policies remain relevant to the latest operating conditions – for example, additional vessels or increased refrigerated capacity.
Why choose L&G Insurance Brokerage
As a national brokerage firm with over 30 years of experience, L&G Insurance Brokers has a strong track record in handling clients in the maritime and fisheries sectors.
L&G’s advantages include:
- 🌊Marine Insurance Experts: Handling hull, cargo and logistics risks throughout Indonesia.
- 🧊Refrigeration and cold storage industry experts: Understand the risks of mechanical and temperature-related losses.
- 🧾Professional claims technical support: Assist in preparing technical reports and communicating with inspectors.
- 🤝Partnering with domestic and international insurance companies: ensuring strong underwriting capabilities and competitive pricing.
- 🧭Provide free risk consulting services to new companies in the Batam maritime sector.
Backed by a team of insurance technology and legal experts, L&G ensures clients receive appropriate, transparent and reliable protection.
Advice for Batam fishery entrepreneurs
- Insure the ship and cargo separately.
- This is very important to avoid protection vulnerabilities.
- Use an OJK licensed broker.
- Make sure your insurance partner is legitimate and has a professional track record.
- Do your risk research before purchasing insurance.
- Many claims are rejected due to inaccurate vessel or engine data.
- Select the “All Risks” and “War & Strike” expansions.
- This is very important for exporting through international channels.
- Record all activity and damage.
- Good documentation can speed up claims and avoid disputes.
Conclusion: Safe Oceans, Sustainable Business
Batam’s fisheries are a vital component of Indonesia’s maritime economy. However, despite its enormous potential, the risks remain significant.
Storms, shipwrecks, engine failures and export disruptions can occur at any time – only insurance protection can ensure the safety of your investments and ensure business continuity.
With marine cargo, hull and machinery, PAR and mechanical breakdown insurance, as well as guidance from L&G Insurance Brokers professionals, entrepreneurs can focus on growing their business without worrying about losing everything due to unexpected events.
🌊The ocean may be unpredictable, but the future of your business can be secure—with the right insurance coverage.
Don’t waste time, protect your finances and business with the right insurance.
L&G 24-hour hotline: 0811-8507-773 (Phone – WhatsApp – SMS)
Website: lngrisk.co.id
Email: halo@lngrisk.co.id
