SHARIA INSURANCE, AN UNTAPPED PRODUCT WITH POTENTIAL
The majority of Indonesia’s population is Muslim, but products based on Islamic law or sharia have been developed only recently, that is in the past three or four years. Indeed some Muslims consider insurance to be against the laws of God, but others are of the opinion that accidents, misfortune and death are God’s creation. So it is allowed, according to them, to minimize the risk, especially the financial risks that may occur. One’s efforts, like savings, are often not sufficient, so one should turn to sharia insurance instead. In short, taking insurance is not against God’s will, in fact, God advises us to plan for our future and protect it by, among other things, sharia insurance.
In conventional life insurance there are three factors that are considered as sins by the ulema: gharar (funds that are not transparent), maisir (gambling) and riba (interest). The sharia insurance avoids all three forbidden factors. There is not much difference between conventional and sharia insurance procedure-wise. However, the basic difference lies in transaction agreement. In conventional insurance a customer purchases protection, while in sharia insurance a customer agrees to commit himself or herself in a community that is based on paying damages for each other should a catastrophe or accident occur.
This very principle is applied by PT Asuransi Takaful Indonesia (ATI), which was established in 1994. The company is a pioneer in sharia insurance in Indonesia. It is also the largest among the country’s sharia insurance companies in terms of premium revenue. In 2007, its gross revenue increased drastically by 47.7 percent to Rp 352.01 billion (about US$38 million), from Rp 238.39 billion in the previous year. Two subsidiaries of the company have contributed to the 2007 figure, PT Asuransi Takaful Keluarga (ATK), 71 percent, and PT Asuransi Takaful Umum (ATU) with 29 percent.
Saiful Yazan bin Ahmad, the company’s president director, ascribed the growth in the insurance premium partly to the conducive macro-economic condition. “Internally, we also strategically revamped many things. For example, development of innovative products that cater to the market’s needs, enhancing our services, improvement of distribution and creating alternative distribution system, upgrading our human resources. In short, we put our best effort into making our company effective and efficient,” he added. (more…)
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