Indonesia, The Center of World Islamic Law Insurance (2)

What things that can be insuranced based on Islamic perspective?
Theoretically, all insurance objects can be insuranced. But the higher the risks of an insurance object, the higher the grade of grahar (unclear), and the grade of maisir (gamblinhg). That’s why Islamic Law Insurance, especially the insurance of damages, should avoid the insurance objects with high risk, because in that insurance object, the ghahar is big and the gambling also. So, actually all conventional insurance products can be put into the Islamic profession of faith.

Now there are so many players in the industrial of Islamic Law Insurance, both in Indonesia and in the world. How big the potential that can be absorbed by the industrial of Islamic Law Insurance?
In the world nowadays, it’s about 200 Islamic Law Insurances that generally called takaful or Islamic Insurance. Only Indonesia calls by Islamic Law Insurance. Takaful is more available in non moslem countries such as Luxemborg, Singapore, Australia, United Kingdom (England), Srilanka, and America. In the future, it will be a trend of insurance in the world. Just take a look at some countries such as Singapore, Hong Kong. And England with Loyyd. They want to be hub sharia business. They compete to connect with the investor from Middle East by making the Islamic Laws, by making the easier regulation, including the easy way in tax part. Compare with Indonesia that is famous with that double tax. It is funny, isn’it? The only country that put double tax for Islamic Law is Indonesia. And they are proud of it!

From the market, why does the marketshare for Islamic Law Insurance is still small if it is compared to conventional insurance?
Because our government has not concerned with the development of it yet. I didn’t see the defense of government, except as a regulator in supervising. Maybe still waiting the conventional insurance be bankrupt after the crisis like in AIG in America, or wait to be closed because of the negative spread as the biggest Life Insurance in Japan, Kyo Life and Nippon Life few years ago, then moved to Islamic Law Insurance. They forgot that 80% more of the inhabitants in this country is Moslem and need legal insurance. And that is the government’s duty as paid by the people to give the best service needed by the people. So, government must join to support the growth of it. Like Malaysia, the people, all, want to buy insurance product. And so the government, they prior the country projects to Islamic Law Insurance. They make Takaful rule that is called ‘Takaful Act’ before the industrial of Islamic Law Insurance built. In Indonesia, the Islamic Law Insurance is only put into one or two addendums in the Decision of Minister of Finance and the Government Rules. We propose to make Insurance Rules then Islamic Law Banking Rules. But like the government said, Islamic Law Insurance is still small, so it doesn’t’ need it. Our government’s way of thinking is in contrast. The government does not see it as an opportunity. Maybe just wait the conventional insurance close all first.

Before, you had ever told and very obsessed to make Indonesia as the center of Islamic Law Insurance. What things serve as the basis of that idea?
Actually, it was not me who said that, but the opinion of the management of Islamic Law Insurance from abroad in the Insurance Congress in Bali few years ago. They said,”Mister Syakir, in ten years later Indonesia will be the center of Islamic Law Insurance, not Malaysia, not Jeddah.” The people who said that were the CEO of Takaful Jeddah and CEO of Takaful Ikhlash Malaysia. There was also from CEO Singapore. They said by joking, “But if Indonesia is not willing, it’s okay. We are willing to. Singapore becomes the center,”he said. “Then we’ll make many branches of Takaful Singapore in Indonesia.” Isn’t it crazy? It is a challenge for Indonesian people. That’s why, I am obsessed to make Indonesia as the center of the world for Islamic Law Insurance.

What potentials that can encourage Indonesia to be the center of Islamic Law Insurance in the world and what are the challenges?
First, we are the country with the biggest moslem majority in the world. While the Islamic Law concept such as mudharabah (share) or in the village is known by the name maro, matelu. The concept is people, farmers, and the breeders originally from Indonesia. By the adequate regulation, good socialization, attention from the government and local government, this concept will grow fast.
Second, for now, with the grade of the income per-capita available, Indonesian people has just joined insurance for about 12%. It means, the market opportunity is still big in the future.
Third, for now, the insurance premium (conventional and Islamic Law) is big enough but the one who enjoys it is the foreign re-insurance. Because, the insurance capacity and e-insurance in Indonesia is very small, so that the insurance premium of general insurance like oil and gas, maybe up to 60-70% flows to abroad by the re-insurance instruments.
So, my idea if the re-insurance of Islamic Law is united and the financial capital is strengthen by the government, so the part of that 70% capital fly, can be saved in Indonesia.

What problems are faced by the Islamic Law Insurance?
The first problem is the financial capital. Generally, Islamic Law Insurance that is formed in division, the financial capital is small. Imagine what can we do with the beginning financial capital that only Rp 2,5 billions. What promotion with that small financial capital. That what makes it be difficult to compete with the conventional one. There is an insurance company that has the premium up to Rp 1 quintillion, but the divison only wants to give from 5-10 billions. It is not serious. They open Islamic Law division, but only want to handle the available customers, not until go away, so they open branches.

Generally, our people have not understood about insurance well. Even, the perspective they get, put the insurance as not interesting side. How come?
Nowadays, together with the fast flow of information technology and the raise of life needs, the understanding and the needs of people at insurance is getting better. The problem is the ability to spend a few incomes that is sometimes not enough for insurance. I think the negative image of the insurance staff, especially the sales persons are also getting smaller. They start to work as professionals, especially by the entering of international insurance such as Allianz, Prudential, Manulife, and AIG, the service image is getting better. Many local companies can compete professionally with the big ones. The diverge of marketing activities as I mentioned in the book of Marketing Bahlul, actually is not dominated by the industrial of insurance anymore. Those diverge activities, both from moral side and bribe, there are also so many things happened in other business fields.

Indonesia, The Center of World Islamic Law Insurance (1)