A Claim-based Risk Mapping of Construction All-Risk Insurance in Indonesia

Construction All-Risk (CAR) insurance is widely used within the construction market. Although constituting a modest fraction of the global insurance market, it registers more claims than other types of insurance. Therefore, identifying the root cause or origin of potential losses is pivotal. This study aims to map the risks that CAR covers based on historical data from the policies and claims of two major Indonesian insurance firms. The study employed descriptive statistics to summarize the frequency and characteristics of claim values for each risk and inferential statistics to determine significant differences in claim values among various attributes. A total of 15 risks were found to cause CAR claims, with six risks accounting for 77% of the overall claim values: “hurricanes and storms,” “poor quality of work,” “heavy rain, lightning, and flooding,” “landslides,” “fire, exposure, short circuit, and electrical failure,” and “material or equipment damage due to accidents or disasters.” Geographical area emerges as a determining factor in claim values. No significant differences in normalized claim values were found for different work progress statuses or types of construction projects. Most risks causing substantial claims are attributed to natural disasters based on their characteristics. This study acknowledges its limitations, notwithstanding its strengths.