Diversification of Islamic Financial Insturments
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3.2.5. TAKAFUL (ISLAMIC INSURANCE) IN INDONESIA
Industry Development
The establishment of takaful company in Indonesia started in 1994, with the establishment of
PT. Syarikat Takaful Indonesia as the Holding Company and 2 Takaful companies namely PT.
Asuransi Takaful Keluarga (life insurance) in 25 Agustus 1994 dan PT. Asuransi Takaful Umum
(general insurance) in 2nd June 1995.
In 2008, the government of Indonesia issued the first regulation on Takaful practices
(Peraturan Pemerintah No. 39 Tahun 2008). The regulation provides opportunities for
conventional insurance and re-insurance companies to open Islamic windows in Takaful
businesses with a detail requirement on capital, structure of organisation, and Shariah
supervision of Islamic Takaful unit.
At the end of 2015, in aggregate there were 8 (eight) full-fledged Takaful operators in
Indonesia, and 42 conventional insurance firms that offered Islamic Takaful units for life and
general Takaful. There is no re-Takaful company in Indonesia, and all re-Takaful businesses
are in the re-Takaful unit of conventional re-insurance companies. With three such re-Takaful
units, the total number of Takaful companies in Indonesia is now 53 (in 2011: 43 units).
Table 28: Takaful Operator in Indonesia
Takaful Operator 2011 2012 2013 2014 2015
Life Takaful (full fledged) 3 3 3 3 5
Life Takaful Windows 17 17 17 18 19
General Takaful (full fledged) 2 2 2 2 3
General Takaful (Windows Unit) 18 20 24 23 23
Re-Takaful windows unit 3 3 3 3 3
TOTAL 43 45 49 49 53
Source: OJK Monthly Statistic of Takaful Industry (2016)
The growth of Takaful industry in Indonesia is very promising. At the end of 2015, the total
gross contribution of Takaful industry was about IDR 10.489 billion. Even though the growth
of Takaful industry is impressive, the market share of the industry was relatively low - about
7.01% of the total Indonesian insurance industry in 2015.
The Takaful market in Indonesia is dominated by life insurance, which was about 80% of total
Takaful contribution in 2015. It is expected that the market share of Takaful industry will be
increasing in the future in line with the growth. As illustrated in the following graph, the
growth in Life Takaful was increasing from 4.3% in 2011 to 9.4% in 2015 while the growth in
General Takaful market share increased slowly from 2.4% in 2011 to 2.6% in 2014, and 3% in
2015.