Indonesia's takaful growth attracts MNCs
Source: Middle East Insurance Review | Apr 2015
Indonesia’s Islamic insurance industry is expanding three times as fast as Malaysia’s, prompting AIG and Sun Life Financial to seek a broader presence in the nation.
AIG is considering offering retakaful in Indonesia in two years, the company’s Malaysia CEO Antony Lee told Bloomberg in an interview. This would complement the Islamic insurance business it started in the country in 2010 and speed up the growth in Indonesia’s industry.
AIG’s Indonesian unit offers both Islamic and non-Shariah-compliant service. “People are saying they’d like to have retakaful solutions,” Mr Lee said. “We always want to make sure we build something stable and solid, and not to run before we can walk.”
PT Sun Life Financial Indonesia will add to its 35 outlets in the country, while PT Reasuransi Internasional Indonesia plans to make all its branches fully Shariah compliant. Reasuransi Internasional plans to become fully Shariah-compliant after a series of mergers are approved by the Financial Services Authority, President Director Adi Pramana said at a press briefing in Jakarta.
“Having more Shariah reinsurers would further increase the capacity of national Islamic insurers,” said Ms Srikandi Utami, Head of Islamic services at Sun Life Financial Indonesia. “There also needs to be an improvement in operational and service quality.”
“Shariah reinsurance is a real need that hasn’t been widely addressed,” Mr Riawan Amin, Chairman of the supervisory board at the Islamic Banking Association in Jakarta, told Bloomberg. “The pioneers who move fast to fulfil this demand would benefit greatly considering the industry’s rapid growth.”
Indonesia’s Financial Services Authority holds bazaars across the country to boost awareness of Islamic finance. It is pushing for Shariah-compliant insurance and retakaful services to be offered from booths at regular banks to become independent units, and wants to expand the local Islamic reinsurance industry to stop funds from flowing offshore.
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