transformation pandemic era: innovation and digital
TRANSCRIPT
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Optimizing Sharia Insurance in Post Pandemic Era: Innovation and Digital
Transformation
Prof. Bambang Brodjonegoro
CLoser Look to Sharia Insurance
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Sharia Insurance is an insurance based on sharia principles with regard to mutual assistance (ta’awuni) and mutual protection (takaful) between the participants through a collection of fund (Dana Tabarru’) managed under sharia principles to deal with certain risks.
According to OJK, as of December 2020, the total of full pledge sharia insurance operated in Indonesia are 13, include life sharia insurance (7), general sharia insurance (5), reinsurance sharia (1).
Sharia Insurance increased in market share by 1,21%, from 3,32% in September 2019 into 4,53% in 2020 (OJK, 2020). The asset management become the most important aspect in economy that still full with uncertainty due to COVID-19 pandemic.
Opportunity and Challenges inSharia Industry in Indonesia
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Increasing in the proportion of muslim millenials (50-60 million) that realize the importance of sharia investment.
Increasing the demand of moslem in 10 big cities in Indonesia, whereas on average, 73% of the people is interested on having shariah insurance (Karim Consulting, 2021).
In the next three years, the potential of sharia life insurance is predicted to increase by Rp 9,6 Trillion - Rp. 10 Trillion. 81% is coming from moslem and 19% is coming from non-moslem (Lembaga Survei Kadence, 2020).
The sharia industry get the domino effect from other syariah services such Public Housing Savings (TAPERA), JAMSOSTEK and the merger of islamic banks (BSI).
Increasing in digitalization in sharia finance can be the momentum of sharia insurance industry to sell more efficient and effective product to the market.
The potential for sharia insurance also comes from Sukuk as well as government project that is paid with sharia instrument.
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Sharia Financial Industry in Indonesia
Market share sharia finance
In 2020, sharia banking performance showed positive
growth amid COVID-19 pandemic so the market share increase to
6,48% As of December 2020, the total asset of sharia finance
(not include sharia bond) was Rp 1,801 Trillion
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Biggest contributors IKNB sectors:1. Sharia insurance2. Sharia Credit
Guarantee Indonesia (JAMKRINDO)
3. Sharia Financing Institutions
Total Aset: Rp113,15 trillionMarket Share: 4,38%
Sharia Insurance
Sharia PensionFund
ShariaFunding
Sharia Credit
Guarantee
13● 7 Sharia life
insurance● 5 Sharia
General Insurance
● 1 Sharia reinsurance
Total Aset
43,02 TTotal Aset
22,85 TTotal Aset
7,06 T
4● 3 Sharia
Employer Pension Fund
● 1 Sharia Financial Institution Pension Fund
9● 5 Shariah
Financing● 4 Shariah
Venture Capital
10Fintech Sharia
Total Aset
39,66 TTotal Aset
59 M
The Development of Non Bank Sharia Financial Industry (IKNB)
5● 2 Sharia
Guarantee● 3 Sharia
Pawnshop
Fintech Sharia
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The Effect of COVID-19 on Global Insurance Industry
On average, the loss of
global insurance industry
is 35%, from the market
capitalization after the
pandemic hit
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Source: Data Statistik OJK
The significant decrease happened on the result of investment, along with the downgrade of capital market in 2020.
Sharia lifeinsurance
Sharia generalinsurance
Shariareinsurance
Dec-19 Des-20 Dec-19 Des-20 Dec-19 Des-20
Asset37.487 36.317 5.903 6.014 2.063 2.109
Bruto Contribution13.922 14.845 1.825 1.617 957 882
Bruto Claim9.176 11.441 726 641 703 840
Investment34.327 31.677 4.031 4.106 1.488 1.556
Result of Investment1.849 288 243 259 101 109
The Effect of COVID-19 on Sharia Insurance Industry in Indonesia
(in Rp billion)
In general, sharia insurance industry record growth contribution along 2020, in the middle of economic pressure due to COVID-19 pandemic. Other indicators such as asset and investment occurred a deceleration.
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Challenges Sharia Industryduring COVID - 19 Pandemic
Pricing/ Underwriting
Customer Support Operations
Claim Operations Loss estimation/ Actuarial reserving
Marketing
Legal
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● The extension of the delivery of the periodic report● Fit and proper test through video conference.
● Asset quality and funding restructuration
● The calculation of pension fund program ● The implementation of life cycle fund for the pension fund
● The calculation of solvency rate
Valid as of March 30, 2020
Notes:
● The implementation of countercyclical policy needs pay attention on the principle carefulness,
management risk and good corporate governance.
● For Non Banking Financial Institution that adopted sharia, the countercyclical policy has to be
based on sharia principle.Source: OJK, 2020
Countercyclical Policy of The Effect of COVID-19 Pandemic on Non Bank Financial Institutions (LJKNB) (According to POJK No. 14 Year 2020)
Financial Industry
Financial Institutions
Pension Fund
Insurance (Including Sharia)
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Mitigating The Impact Of Covid-19 Pandemic Non Bank Financial Service (Including Sharia Industry)
Existing Way Forward
Countercyclical policy for Non
Bank Financial Institutions
(LJKNB) for sharia industry
Adjusting premi calculation (loss
estimation). Giving discretion on
the delay of premi payment
Strengthening internal policy
that focuses on solvency,
solvability, and cashflow
Strengthening
Digital System
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Increasing the education and sharia insurance literacy to religious and non religious community
Spread the awareness of sharia insurance through pop culture media.
Increasing of the sharia reinsurance capacity
This is very important because all the insurance company and insurance business (life and
general) unit will manage its risk through sharia insurance.
Advancing digitalization on sharia insurance product (Insuretech)
To provide access to sharia insurance service, which are more efficient and accurate. For example,
through digital application to open sharia insurance polis, sharia insurance tele consultation, the use
of artificial intelligence, dan other digital service.
Advices for The Development of Sharia Insurance in The Future