The Indonesian Shariah Insurance Association (AASI) and insurers are discussing moves to improve the insurance system for umrah pilgrims.
This follows the cancellation of trips to Saudi Arabia by thousands of umrah pilgrims from Indonesia due to a suspension of umrah visa issuance by the Saudi government as it seeks to curb the spread of COVID-19.
The suspension was initially for the period from 26 February to 13 March, but has since been extended. There were over 700 confirmed cases in the kingdom as of 25 March.
The AASI said the Umrah Travel Insurance (ASPU) policy, a standard contract, and the ASPU Plus policy, do not cover the risk of cancellation of an umrah trip as a result of “government intervention in any form, failure to obtain a visa or other visiting document, prohibition, regulation or the enactment of a travel warning from the authorities”.
The discussions being held are to devise arrangements that will be able to provide cover for prospective umrah pilgrims, the association said.
Market potential worth $3.5m a year
The market potential for umrah insurance is estimated to be at least IDR50bn ($3.5m) every year. The estimate is based on calculations by the AASI. The calculations assume a basic premium value of around IDR50,000 per participant, multiplied by the number of umrah pilgrims a year, which stands at around 1m.
The Indonesian Ministry of Religion has said that in 2018, the number of umrah pilgrims from the country was 1.05m.
There are currently 22 takaful operators and shariah business units that offer umrah insurance products, said the AASI.
Meanwhile, uncertainty hovers over visits to Saudi Arabia in connection with the holy fasting month of Ramadan which starts in late April this year. The hajj is to start in late July. M