This article is one of a series of real-life case studies from L&G Insurance Brokerage, documenting the company’s experience in handling insurance claims from clients in high-risk industries. This series aims to raise public awareness, emphasizing that risk is real and claims are not automatically paid out, making it crucial to engage experienced insurance brokerages like L&G—especially in extreme risk situations such as mechanical failures.
Vibrations at the Kolac diesel power plant this morning: L&G is working to monitor Mitsubishi generator set mechanical failure claims until completion.
In a diesel power plant (PLTD), vibration is the language of the machine. It can mean a heavy burden or an imbalance. On the morning of February 21, 2014, at the Kolakka diesel power plant in southeastern Sulawesi, vibrations heralded something no one wanted to hear: serious damage had already occurred.
What happened next was not just another story of engine failure, but a real test of mechanical failure claims, one of the most complex and easily avoided risks in the insurance industry.
The power supply center has assets worth tens of billions of US dollars.
PT BME operates a strategic diesel power plant in Koraca. To maintain and ensure a continuous power supply, the company has comprehensive insurance coverage for its assets.
- Insurance type: Mechanical failure (MB)
- Insurance Company: JRP Insurance Company
- Insured object: 10 Mitsubishi BMGS 1740 generator sets (including transformers)
- Total insured amount: Approximately 25,000,000,000 Indonesian Rupiah
One of the units—Unit 1—was involved in an incident that tested the patience, skills, and determination of all those involved.
February 21, 2014, 06:40 WITA: An Unwritten Warning
That morning, the generator was operating normally. However, at 06:40 WITA time, the operator felt:
- Engine vibration increased sharply
- A large amount of engine oil is being sprayed out from the generator coupling.
- Smoke coming from the engine room
Without further discussion, an emergency work stoppage was immediately implemented.
This decision saved the system, but it couldn’t save the device from failure.
Preliminary investigation: The truth is beginning to emerge.
Around 7 a.m. (WITA time), the team conducted an initial inspection. After cleaning the engine compartment and oil pan to remove residual oil, they discovered the most worrying sign:
👉There is metal and metal debris inside the oil pan.
This is no small matter. It indicates severe internal damage.
09.00 WITA: A Decisive Technical Diagnosis
Further in-depth examination yielded the following results:
- The main bearing (metal housing) is severely scratched and charred.
- The connecting rod bearing (metal rail) is still relatively good.
- Thrust bearing failure
- The rear crankshaft has scratches and metal fragments attached.
- The exciter coil burned out due to severe vibration.
The technical conclusion is beyond dispute: the equipment is damaged and unusable.
Layered Risks: Technology Risk, Operational Risk, and Financial Risk
Damage to PLTD generator sets is not just a matter of maintenance costs. It means:
- Risk of power supply interruption
- Operational stress
- And the potentially huge financial risks.
On the other hand, mechanical failure claims are considered the most sensitive claims:
- Very technical.
- This can easily lead to different interpretations.
- Few insurance companies are willing to provide guarantees for this.
Steps and Decision Factors: PT, BME, Contact L&G
Following the incident, PT BME immediately contacted L&G, the agency they had been working with from the beginning:
- Design insurance plans,
- Understand the risks associated with the generator.
- And they have extensive experience in handling complex MB claims.
L&G’s first step:
- Review of MB policy details
- Please ensure that the premium has been paid and the policy is valid.
- Detect potential claims issues as early as possible.
This foundation is crucial. Without it, the claim might stop before it even begins.
Good news about the reported claim response is coming soon.
After the internal review was completed, L&G immediately reported the incident to the guarantor, JRP.
Shortly thereafter, JRP issued a very clear initial statement:
“This claim can be accepted.”
As a follow-up action, JRP appointed Prima Adjusterindo Mandiri (PRIMA) as an independent loss adjuster.
But for L&G, appointing a claims adjuster was just the beginning.
L&G acts as the “lawyer” in the claims.
In mechanical failure claims, L&G did not play a passive role. They acted like lawyers, protecting the interests of the insured.
Specific measures already taken:
- Assist in collecting complete claim documents
- Establish a consistent technology timeline
- Schedule the investigation of Kolac PLTD
- Technical discussion with the claims adjuster
- Maintain close communication with the guarantor
Every detail was kept strictly confidential. Every assumption was tested.
Hot Topic: Replacement or Repair?
Like many other MB claims, this claim process ultimately encountered obstacles:
Does this equipment need to be replaced or can it be repaired?
This is not just a cost issue. It’s about:
- Long-term reliability
- The risk of failure again
- And the technical feasibility after making a claim.
The debate was very intense, and the atmosphere was tense.
Key strategy: Hiring independent experts
To avoid a stalemate and protracted litigation, L&G adopted the following strategies:
- Including technical experts representing the insured,
- And engine suppliers from Mitsubishi.
This approach changed the direction of the discussion:
- From viewpoints to technical facts,
- From a tug-of-war to a solution.
Intersection point and win-win solution
Through targeted communication and data-driven arguments, a common position acceptable to all parties was ultimately reached.
Final result:
- The claim has been approved.
- The claim amount is approximately 1.25 billion Indonesian Rupiahs.
- Completion time ±6 months
The speed isn’t fast, but considering the following factors, it’s perfectly reasonable:
- asset value
- Technical complexity,
- And the high risk of mechanical failure.
Kollaca’s Important Lesson
This case highlights several important realities:
- Mechanical failure is the highest level of risk.
- Not all insurance companies are willing to provide coverage for this.
- An effective strategy is to combine MB with other insurance policies, such as all-property insurance.
- MB claims cannot be allowed to continue unchecked.
- An experienced agent is absolutely necessary.
L&G as a strategic requirement
In Kolaka PLTD’s Mitsubishi generator claim, L&G once again proved its reliability—not only in taking out the insurance, but also in making the claim.
Machines can malfunction at any time. Risks cannot be avoided.
However, with the right support, significant losses do not necessarily turn into permanent disasters.
Mechanical failure insurance is a high-risk business. L&G knows how to control the situation and ultimately achieve victory.
Contact L&G Insurance Brokers to obtain a suitable insurance plan and claims tracking services until compensation is received, not just a promise.
Disclaimer
This article is intended to provide educational information and share professional experience. To protect the privacy of all parties involved, all names, values, and timelines have been modified. The information contained herein is not legal, technical, or claims underwriting advice, and actual results may vary depending on policy terms and specific event circumstances.
