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Jul 2019

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Indonesia: Retakaful company targets general insurance market to grow business

Source: Middle East Insurance Review | Jul 2019

Retakaful company Reasuransi Syariah Indonesia (ReINDO Syariah) plans to expand its general reinsurance business as its current portfolio is dominated by life business.
 
ReINDO Syariah’s managing director, Mr Ahmad Sya’roni said life business accounts for 70% of the company’s portfolio, while general reinsurance contributes only 30%.
 
Mr Sya’roni said the composition of the ideal portfolio should be in line with the international reinsurance industry where general reinsurance business is bigger than life reinsurance, reported Republika.
 
He aims to raise the share of general reinsurance in the company’s business portfolio to 40% this year.
 
Mr Sya’roni sees some potential that has not yet been explored in the general reinsurance sector. An example is umrah insurance. The rules of the Financial Services Authority (OJK) require umrah insurance to be covered by Islamic reinsurance which presents an opportunity for ReINDO Syariah to add to its general reinsurance operations. In addition, the retakaful sector has begun to develop other products like health insurance.
 
According to Mr Sya’roni, the retakaful industry still faces a number of challenges. It needs to design new products, especially those that are shariah-specific.
 
“This is a challenge we must think about so that shariah products are not considered to be just a ‘copy and paste’ version of conventional products,” he said.
 
As for regulations, he said the retakaful industry needs tighter policies, especially those related to market segmentation. According to Mr Sya’roni, the Indonesian government can follow the example of Malaysia which has regulated market segmentation in accordance with the feature of the product.
 
“What we hope for the shariah market must be for shariah insurance,” he said. Citing sukuk as an example, he noted that the conventional insurance sector can also participate in this instrument. “These things must be regulated further,” he said. M 
 
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