Indonesia: Shariah insurance body upbeat about takaful market
Source: Middle East Insurance Review | Feb 2020
The Indonesian Shariah Insurance Association (AASI) projects that the contribution of the takaful sector in 2020 will grow by 10%. AASI is optimistic that premiums has grown faster than in 2019 because of an increasingly supportive ecosystem.
“The 2020 (contribution) growth projection is in the range of 10%,” AASI chairperson Ahmad Sya’roni told Investor Daily.
He explained that there are three main influences on premium growth in 2020. The first is economic growth after a conducive political year. Secondly, there is government support in driving the Islamic economy. Thirdly, there is increased public awareness and a number of business actors related to the needs and availability of Islamic insurance products.
He said the takaful market is supported by retail products in line with demand for Islamic insurance.
Based on statistics from the Financial Services Authority (OJK) as of November 2019, family takaful contributions grew by 4.5% to IDR11.98tn ($862m).
However, the takaful sector lags in innovation, and lacks a range of products, said director of Islamic Economy and Halal Industry Development of the National Shariah Finance Committee (KNKS) Afdhal Aliasar. “The appeal that we conveyed when we met with the AASI is for the sector to strengthen innovation, deliver new products, and work on market potential that has been neglected. Takaful operators should not get caught up in only selling unit-linked shariah insurance products,” he said.
He also suggested that takaful operators extend their reach through digitisation. He said the Islamic insurance industry could tap other businesses for growth, such as providing coverage for the delivery of goods bought online. M