The Jakarta Post
More and more customers are paying attention to the conformity of insurance products to sharia rules as they want to ensure that the products they buy are halal, or in accordance with Islamic laws.
A recent survey carried out by private life insurer Allianz Life Indonesia in Jakarta, Bandung in West Java, Padang in West Sumatra and Samarinda in East Kalimantan showed a high demand for halal insurance products.
'As many as 97 percent of around 300 respondents agreed that halal investments were important,' said Allianz Indonesia's head of market management Karin Zulkarnaen during a press briefing in Central Jakarta on Monday.
'Furthermore, 93 percent of the respondents told us that they felt comfortable with sharia products because they provided transparent investments and profit-sharing schemes in addition to the management, which is according to Islamic principles,' she continued, adding that 87 percent of respondents had no problem to buy sharia products and 88 percent said it was important to apply religious values, including in financial management.
Karin added that with a Muslim population of approximately 87 percent of Indonesia's total 252 million, the biggest number of Muslims in one country on the globe, the country provided a large market for sharia insurance.
The Financial Services Authority (OJK) in its first quarter of 2015 report shared Karin's thought, noting that the sharia finance industry had a significant potential to develop.
According to the report, the sharia finance industry currently shares a relatively small market compared to the conventional finance industry. Out of Indonesia's total finance industry, 4.7 percent of the market is filled by sharia banking, 4.7 percent by sharia mutual funds, 3.6 percent by the sharia non-banking finance industry (IKNB) and 3.1 percent by sharia bonds value (sukuk).
During the period of January to March this year, sharia IKNB booked an assets value of Rp 44.2 trillion (US$3.28 billion), mainly contributed by sharia insurance's assets of 53.8 percent. Although the sharia IKNB's assets value was down by 5.7 percent year-on-year (yoy), the sharia insurance industry saw a 6.4 percent increase in assets value yoy to Rp 23.80 trillion from Rp 18.41 trillion.
The OJK also noted in its report that the investment value of the sharia insurance industry rose by 6.9 percent from Rp 15.61 trillion booked on the same period last year to Rp 20.81 trillion.
Specifically in the sharia life insurance business, the OJK noted a skyrocketing rise in contribution (premium) amounts from the Rp 1.41 trillion pocketed last year to Rp 2.12 trillion, or 50.35 percent higher yoy. The sharia life insurance industry also booked increases in its assets and investment value by 35.21 percent and 37.53 percent to Rp 19.39 trillion and Rp 17.70 trillion, respectively.
Allianz Life Indonesia director Alan Darmawan said that his company provided a broad market to further grew its sharia insurance segment.
'Currently, sharia insurance contributes 9 percent from the Rp 27 trillion booked in total assets under management (AUM) and financial institution pension fund (DPLK) value of Allianz Life Indonesia as of June this year,' he said.
The subsidiary of German-based insurance giant Allianz launched on Monday its latest sharia life insurance product that also functioned as a haj planning fund, namely Allianz Tasbih, expecting to penetrate a new market and grow its current 125,000 sharia product customers. (prm)
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