Life insurance company Prudential Indonesia expects to tap deeper into the sharia insurance market amid rising demand.
President director Jens Reisch said sharia products were suitable for everyone, because they were not only a religious positioning but also carried a gotong royong (working together) spirit.
“Prudential Indonesia sees high demand for sharia-based insurance,” he said on Wednesday during the webinar “Reimagining the future of Indonesia’s economy”, which is part of The Jakarta Post’s Jakpost Up Close webinar series.
He noted that sharia-compliant insurance was the company’s fastest growing business.
Despite having a mostly Muslim population, Indonesia still lags behind other countries in sharia finance market penetration. Sharia finance, which includes banking and insurance services, accounted for less than 9 percent of the country’s total financial assets in March, Financial Services Authority (OJK) data show. The nonbanking industry, which includes sharia insurance, only accounted for 4.34 percent of total assets.
Total sharia insurance assets amounted to Rp 45.45 trillion (US$3.06 billion) last year, up 8.44 percent annually, according to the Indonesian Sharia Insurance Association (AASI). Sharia life insurance assets, meanwhile, grew 8.74 percent to Rp 37.48 trillion.
Reisch said the country still needed to raise awareness about the importance of life insurance, as only 19 million people in Indonesia had a life insurance policy.
“We need to increase the insurance penetration rate, as we are not progressing at the speed we need to. I personally wish that we will see more people having insurance in the next 25 years,” he added.
One way to trigger demand for insurance was to create partnerships and innovation, especially during the pandemic, which helped increase the public’s awareness of health and financial protection, Reisch said.
He said he also expected the insurance industry to take part in investing in state infrastructure programs, citing that the sector carried around Rp 600 trillion in assets that could be channeled into longer-term projects.
“Prudential itself carries around Rp 30 trillion, and it is important that we channel this money correctly into the sharia economy or invest in infrastructure,” he stated. “As the insurance industry, I think, we need to play a bigger role, because right now we have not maximized our potential to the fullest.”
