lack of differentiation in its products' features has the sharia insurance industry lagging behind its conventional counterparts, an insurer has said.
FWD Life Indonesia chief of product proposition and sharia Ade Bungsu said that many sharia insurance products were just mirroring conventional products without adding any value.
Moreover, despite being dominated by Muslims, Indonesian customers cared more about features and investment returns.
"Our market is floating, if conventional [insurance] performs and provides better than sharia, they will go to conventional. A 'mirrored' product will just put you in a 'red ocean'," he said at a FWD Life Indonesia sharia product launch in Jakarta on Friday.
(Read also: Manulife Indonesia to spin off sharia business unit, increase market share)
Ade added that sharia products could stand to utilize "social features" to differentiate itself from other products. As Muslims are obliged to make donations in the form of zakat, waqf and sadaqa, Ade said, Muslims want to see if a product can automatically manage social disbursement.
Based on the Financial Services Authority's (OJK) latest data, the insurance industry, both conventional and sharia-based, saw its premium income increase by 16.92 percent year-on-year (yoy) to Rp 141.75 trillion (US$10.48 billion) from January to September. However, with sharia insurance new premium income increased only 15.8 percent yoy to Rp 8.8 trillion in the same period.
The business size of sharia insurance was also small, comprising only 6.2 percent of the total industry. (jun)
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