Apindo: High Mining Risks Lead to Increased Insurance Claims and Disputes
High risks in the mining business not only affect company operations but also trigger claim disputes and pressure the performance of the involved insurance industry.
Chairman of the Mining Committee for the Energy and Mineral Resources Sector of the Indonesian Employers Association (Apindo) Hendra Sinadia assesses that the potential for disputes between mining companies and insurers is indeed wide open due to the complex nature of the risks.
“This can happen in all mining operations, so insurers need to understand the high-risk mining business,” said Hendra in a press statement on Monday (20/4/2026).
Nevertheless, Hendra reminds mining companies to continue implementing good mining practices.
“But I think permit holders, whether IUP or Contract of Work, are already doing that, because in IUP or Contract of Work, rights and obligations are regulated in great detail,” he said.
He added that changes in natural conditions due to global warming are also increasing disaster potential in the mining sector.
“What happened in the Freeport underground mine, for example, due to hydrometeorology, cannot be avoided,” he added.
“Similarly with the Toka Tindung mining company when it was hit by a natural disaster landslide, that is very possible,” he continued.
Executive Director of CESS Ali Ahmudi Achyak explained that the mining industry has high risks ranging from landslides, floods, mining accidents, to operational disruptions.
“Insurance companies entering this sector should have underwriters and risk engineers who understand mining characteristics,” he said.
According to Ali, the mining sector currently faces pressures from various sides at once, from geological risks and natural disasters, global commodity price fluctuations, to rising oil prices due to the Iran, United States, and Israel conflict.
In addition, increasing operational costs as well as financing and insurance uncertainties further enlarge the challenges for business players.
In practice, mining companies generally use insurance as part of risk management to protect assets and operational disruptions.
As an illustration, PT Merdeka Copper Gold Tbk recorded significant insurance claims in 2021 and 2022. In the first semester of 2022, insurance claim income reached 42.56 million US dollars or approximately Rp 701.24 billion (exchange rate Rp 16,500 per US dollar), related to material damage and business interruption.
Insurance observer Irvan Rahardjo assesses that the potential for coal production cuts of up to 40 percent risks pressuring premiums in several lines.
“A production decline will reduce coal shipment volumes, thus marine cargo premiums have the potential to fall,” he said, quoted from Kontan, Sunday (1/3/2026).
“Lower utilisation of heavy equipment also impacts heavy equipment and engineering insurance premiums,” he continued.
He added that such conditions also have the potential to increase claim risks due to contract disruptions, project delays, to equipment damage from prolonged non-operation.
According to Irvan, the marine cargo, heavy equipment, and property all risk lines in mining areas are the most affected.
“A decline in production/export volume reduces goods shipment activities (marine cargo), lowers heavy equipment needs, and reduces insured asset risks, which impacts premium declines and potential claims,” he explained.