The Islamic insurance industry in Indonesia will be tested in various fundamental aspects as it enters 2026, according to the Head of the Islamic Reinsurance Research and Development Division of the Indonesian Islamic Insurance Association (AASI), Ms Tati Febriyanti.
These aspects include capital resilience, governance quality, risk management depth, and the ability to build and maintain public trust.
On a bright note, she said that growth opportunities in the Shariah insurance industry are still considered wide open. However, these opportunities can only be optimally tapped by actors with adequate capital and the courage to initiate an early spin-off process of their takaful operations.
Although 2025 was the 31st year of the introduction of Shariah insurance in the country, the sector is not yet fully mature, reported MediaInsurance, quoting Ms Tati, who spoke at an industry event in December 2025.
She said that throughout 2025, the Shariah insurance industry operated under stressful conditions. Global uncertainty, increasing climate risks, geopolitical pressures, and regulatory transformation were external factors that affected the financial services industry, including Shariah insurance.
She outlined several internal and external issues that Islamic insurers in Indonesia contended with in 2025, and continue to face.
Internally, the first issue is the doubling of minimum equity requirements. For full-fledged Islamic insurance companies, the minimum equity requirement has increased to IDR100bn ($5.96m) from IDR50bn while for Islamic reinsurance companies, it increased to IDR200bn from IDR100bn.
The second is a shortage of human resources in key areas like actuarial services, risk management, and compliance. The third issue, of considerable concern particularly in the Islamic life insurance sector, is the limited availability of Islamic investment instruments.
Externally, one challenge is the low level of Islamic financial literacy in the community. Furthermore, the spin-off of Islamic business units requires stronger ecosystem support, including adequate incentives.
An equally important issue is the suboptimal utilisation of Islamic insurance products by Islamic financial institutions as risk protection instruments. This means that the potential for synergy within the national Islamic financial ecosystem is not fully tapped.