2014 Microtakaful Conference Indonesia Conference

Transcription

2014 Microtakaful
Conference Indonesia
24 April 2014 / Jakarta
Conference Report
Hosted by
Conference report edited by
AFC Consultants International, Bonn / Germany
Table of content
1.
Acknowledgements .................................................................................................... 4
2.
Profile of speakers ..................................................................................................... 4
3.
Introduction ...............................................................................................................12
4.
Overview of the Conference Agenda .........................................................................12
5.
Opening Address ......................................................................................................14
6.
Keynote Address.......................................................................................................15
7.
Session 1: Rationale and regulatory basis of microtakaful market development ........15
8.
Session 2: Key findings and recommendations of microtakaful market study in
Indonesia ..................................................................................................................17
9.
Session 3: Response to the market study – industry’s perspective and current
practice .....................................................................................................................21
10.
Session 4: Response to the market study – role of support institutions .....................23
11.
Session 5: Response to the market study – regulators’ perspective ..........................24
12.
Synthesis ..................................................................................................................25
13.
Closing Address ........................................................................................................31
List of Abbreviations
AASI
BCBS
BMT
BMZ
CSR
FISC
GDP
GIZ
IAIS
IFSB
IOSCO
JAMKESMAS
MFI
MIS
MoU
MUI
NBFI
NGO
OJK
PPP
RFPI Asia
SAC
UAE
Asosiasi Asuransi Syariah Indonesia
engl.: Indonesian Shariah Insurance Association
Basel Committee on Banking Supervision
Baittul Maal wa Tamwil
Das Bundesministerium für wirtschaftliche Zusammenarbeit
und Entwicklung
engl.: Federal Ministry for Economic Cooperation and Development
Corporate Social Responsibility
Financial Inclusion Subcommittee
Gross Domestic Product
Deutsche Gesellschaft für Internationale Zusammenarbeit
engl.: German Society for International Cooperation
International Association of Insurance Supervisors
Islamic Financial Services Board
International Organization of Securities Commissions
Jaminan Kesihatan Masyarakat
Microfinance Institution
Management Information System
Memorandum of Understanding
Majlis Ulama Indonesia
engl.: Indonesian Ulema Council
Non-bank financial institutions
Non-governmental organization
Otoritas Jasa Keuangan
engl.: (Indonesian) Financial Services Authority
Private Public Partnership
Regulatory Framework Promotion of Pro-poor Insurance
Markets in Asia
Sharia Advisory Council
United Arab Emirates
1. Acknowledgements
The Microtakaful conference was proud to
unveil the findings of the „Market Assessment on Microtakaful in Indonesia“ commissioned by the GIZ RFPI Asia. We sincerely thank and appreciate the ongoing commitment of OJK in proactively engaging stakeholders in developing the market of inclusive
insurance for the poor and Muslim population
in Indonesia. We equally thank AASI for the
unwavering effort in convincing a broad number of (micro)takaful providers and intermediaries that participated in the market assessment.
Our heartfelt appreciation to Muliaman D.
Hadad and Shaifie Zein, respective chairman
of OJK and AASI, for gracing the conference
and putting across the message that the
highest officials of OJK and AASI are behind
the initiatives of promoting inclusive insurance in Indonesia.
We are thrilled to express our thanks and
appreciation to Mr. Moch Muclasin of OJK
and Ms. Srikandi Utami of AASI who are fully
supportive and who accompanied GIZ-RFPI
2. Profile of speakers
Antonis Malagardis
Program Director, RFPI
Asia
Deutsche Gesellschaft
für Internationale Zusammenarbeit (GIZ) GmbH Opening
Address and Panel Reactor Session 1
Dr. Antonis Malagardis joined GIZ in 2009 as
program manager of the Microinsurance Innovations Program for Social Security
(MIPSS) in the Philippines. In January 2013
he was nominated Program Director of a
BMZ funded regional Program on Regulatory
Framework Promotion of Pro-poor lnsurance
Asia in the content and logistics preparations
which lead to the successful implementation
of the market study and the conference; both
events are considered very important milestones in Indonesia.
Some of the feedback of the conference were
„there was a good mix of resources persons“
and „all were fully engaged and enthusiastic
to share knowledge and experience“. We
deeply thank all the moderators, speakers
and panel of reactions whose names are
prominently identified in the conference
agenda on page 5. Thank you all for your
unselfish contributions in making the 1st Microtakaful Conference Indonesia a big success.
Our sincere appreciation goes also to the
GIZ-RFPI team and the admin staff of GIZ
Jakarta office for the efficient logistical support. And finally a special thank you goes to
Dr. Antonis Malagardis, GIZ-RFPI Program
Director, for his leadership and patience in
making this conference successful with high
quality.
Markets in Asia' (RFPI Asia), which aims to
advice insurance regulators/supervisors in
selected countries in Asia on inclusive insurance, strengthen the capacity development of
their staff and enhance knowledge sharing on
insurance for the low-income persons with
the support of the ADB and the global partnership of 'Access to lnsurance Initiative'
(A2ii) among other institutions. His assignments as advisor in 19 countries covered risk
management, social insurance, pension finance, health finance, public-private partnerships (PPP), microfinance and microinsurance and lately climate finance schemes at
the policy design, supervision and product
development level.
Born in Athens Greece, studied law and economics at the University of Athens and received his PhD in Berlin in the field of Institu4
tional Economics on the topic of 'Sovereign
risk and insolvency of states' (1989).
Dante Oliver Portula
Senior Advisor- Regional
Policy, RFPI Asia Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Mr. Portula has been working closely with the
Department of Finance, the lnsurance Commission and other financial regulators in the
Philippines for more than five years. His support to these government agencies led to the
development of microinsurance regulatory
framework and the microinsurance national
strategy, including the establishment of a
roadmap to financial literacy on microinsurance and alternative dispute resolution
mechanisms for microinsurance. Currently,
Portula collaborates with various Philippine
associations of insurance companies and the
MFls in developing innovative Microinsurance
products and on setting up risk-based capital
framework and microinsurance perforrnance
standards.
As senior advisor in GIZ, with more than 18
years of microfinance experience in countries
in Southeast Asia , Portula also handles policy engagements in Nepal, Indonesia and
Mongolia on inclusive insurance market development with insurance supervisors and
insurance associations . Portula has intensive
experience in public and private stakeholders'
collaboration. His recent training is on Stakeholders' Dialogue from the Collective Leadership Institute (CLI), Germany.
Nick Thornton.
Lead Consultant, Microtakaful Market Study in
lndonesia Speaker
Session 2
Mr. Thomton's expertise is in microfinance
and economic development. Recent work
have brought him to areas surrounding Banda Aceh with the local partner IP2M (Institut
Pelatihan & Pengembangan Masyarakat), or
Institute for Training & Community Development. He managed the local microfinance
program, integration of economic development activities, and developing financial literacy training modules.
Mr. Thornton has completed the lslamic Microfinance Manager course through the AlHuda Center of lslamic Banking & Economics
of Pakistan, and a course on SCA promotion
through the Chalmers Center for Economic
Development.
Mr. Thornton graduated with honors from
Covenant College in Georgia, USA with a
double major in Economics & Community
Development.
Zuriah Abdul Rahman
Microtakaful Expert and
Consultant to RFPI Asia /
AFC Consultants International Presenter Session 2,
Panel Reator Session 5 and
Synthesis
A professor, researcher, author and consultant, Rahman is well educated and experienced in Islamic insurance and risk management both in local and international contexts.
Her appointments include program head for
lnsurance & Risk Management, head for Risk
5
Management Center, and director of the Arshad Ayub Graduale Business School, UiTM.
She also serves in the accreditation panel for
Finance Accreditation Agency in Malaysia.
She has authored and published several
books and Journals such as Takaful: 'The
21st Century lnsurance Innovation', Wealth
Management in Islam.
Ms Abdul Rahman completed her Ph.D. in
Risk Management from Universiti Utara Malaysia/ University of Memphis, USA. She finished her MBA and bachelor's degree in
Business Administration in Insurance from
Bowling Green State University, Ohio, USA.
Moch Muchlasin
HeadDirectorate of Sharia
NBFls, OJK
Moderator Session 2 and
Panel Reactor Session 5
Mach Muchlasin graduated from the Universitas lndonesia with a Bachelor of Economics
degree in Accounting. He studied management and employment relation in School of
lndustrial Relations and Organization Behaviour (IROB) at the University of New South
Wales (UNSW}-Sydney, Australia and completed his Master of Commerce degree in
2004.
He worked in Directorate General of Financial
lnstitutions - Ministry of Finance on various
roles as analyst, examiner and enforcement
officer between 1994 and 2006 prior to the
establishment of Capital Market and Financial
lnstitutions
Supervisory
Agency
(BapepamLK) in 2006. He has been involved
in government guarantee scheme project
(2004-2005) !hat lead to the establishment of
lndonesian Deposit lnsurance Corporation
(IDIC) in 2005.Also,he was
Currently, Muchlasin is the director of Sharia
Non-Bank Financial lnstitutions, lndonesia
Financial Services Authority. He is responsible for coordinating Task Force on Microinsurance Development since 2013 with the
main task to develop and promote microinsurance and microtakaful in lndonesia.
Muliaman D. Hadad
Chairman of Board of
Commissioners OJK
Keynote Address
Muliaman D. Hadad,
PhD, currently serves as
Member of Board of Commissioners - lndonesia Financial Services Authority (OJK) as
well as Chairman of Board of Commissioners.
Previously, he was the Bank Indonesia Deputy Governor in 2006 and was re-elected for
the second term in 2011.
He graduated from Faculty of Economics at
University of Indonesia in and continuing his
Master's degree at John F. Kennedy School
of Government of Harvard University in Massachusetts, USA and earned a Master of
Public Administration degree one year later.
He has a Ph.D. degree in Business and Economics from Monash University in Melbourne,
Australia.
Hadad is active as Head of Indonesian Sharia
Economic Community and is a lecturer at
several universities, and was once in charge
as Head of Alumni Association of Faculty of
Economics in 2007-2010. He is the former
Secretary General of Central Committee for
Indonesian Association of Economists or ISEI
(2003-2006 and 2006-2009)
involved in drafting process of OJK Law in
2006-2011.
6
Muhammad Faried
Head Statistics Department AASI
Moderator Session 3
Faried is the product owner
and head product Underwriter of Sharia Business at PT Asuransi Central Asia since 2004.
From 1997, he held significant post at PT
Asuransi Central Asia. Also, he is the head of
Statistics Department at AASI. Faried completed short course of Asia Future Leadership
at NUS Singapore in 2013.
Mohammad Shaifie Zein
Chief Executive Officer - PT
Reasuransi Nasional lndonesia Chairman, Asosiasi
Asuransi Syariah lndonesia
(AASI)
Opening Address
Zein is the current chairman of Asosiasi
Asuransi Syariah Indonesia (AASI). His wide
range of experience in banking and insurance
include respected posts in PT Binagriya
Upakara General lnsurance and PT Reasuransi Nasional lndonesia as CEO. Furthermore, he is a trainer and speaker in fields of
finance and banking. He has taken eligibility
from lslamic lnsurance Program and Financial
Planning Standards Board (FPSB).
Zein graduated from Glasgow Caledonian
University, Scotland-UK.
Srikandi Utami, Vicechairperson, AASI Vice
President and Head of
Shariah
PT Sun Life Financial
lndonesia
Moderator Session 3
Utami has worked in the life insurance industry for more than 20 years, with a particular
focus on marketing management. The past
eight years were spent gaining experience in
developing takaful business in several multinational companies .
As Vice President and Head of Shariah at PT
Sun Life Financial Indonesia, Utami is responsible for developing individual and
bancassurance takaful business through the
distribution channels of agency and partner
distribution and build brand takaful image.
She is also responsible for developing and
delivering innovative products for each distribution channel, standard of procedures and
services .
Utami is active in the lndonesia Shariah
lnsurance Association, task force micro insurance Indonesia, lslamic Center Forums of
Indonesia to develop economic and business
to lslamic center communities across Indonesia and in Shariah Economy Society to build
standard of competency of human resources
for Islamic institution. Her education background includes Marketing Management and
professional degrees in insurance and takaful.
7
Kartina Md Ariffin, member of
the Secretariat Technical &
Research
lslamic Financial Services
Board (IFSB)
Speaker Session 1 and Panel
Reactor Session 5
Kartina Md Ariffin has 15 years of experience
in the takaful industry. Currently, she is the
project manager for the IFSB's Working
Group for Guiding Principles for Retakaful
(lslamic Reinsurance) Undertakings as well
as the IFSB's Microtakaful Joint Working
Group with the International Association of
lnsurance Supervisors (IAIS). She is responsible for the development of a takaful prudential framework and facilitated the implementation of the takaful standards and guidance
notes.
Kartina was attached to Malaysia's Etiqa
lnsurance & Takaful (previously known as
Takaful Nasional) and Syarikat Takaful Malaysia Berhad, and gained vast experience in
corporate planning initiatives. She has shared
her wide range experience as speaker in international takaful-related conferences and
seminars. Kartina graduated with a bachelor's
degree in Actuarial Science from University of
Wisconsin, Madison, United States in 1998.
She received her Master in lslamic Finance
(MIF) INCEIF from The Global University of
lslamic Finance in 2013.
Agus Haryadi,
Commissioner, TAKMIN
(network of Mfls distributing
takaful) and ASyKi
(microtakaful broker)
Haryadi, a takaful expert, is a recognized
fellow of lslamic lnsurance Society (FllS), an
associate of Society of Actuaries of lndonesia
(ASAI) and the Ajun Ahli Asuransi lndonesia Jiwa (AAAl-J).
He has vast experience in microtakaful insurance and presently involved in distinguished
posts as microtakaful advisor for PT. AJS
Amanahjiwa Giri Artha, as part of the lslamic
lnsurance Working Group, National Shariah
Board - MUI, as member of Shariah Supervisory Board of BNI Life, Shariah Supervisory
Board of Capitalinc Multifinance, and Shariah
Supervisory Board of Amanah Multifinance.
Haryadi is the current chairman of Tazkia
Cendekia 1 foundation/Sekolah Tinggi
Ekonomi Islam Tazkia. His work is balanced
with further training and workshops, with recent participation to ICMIF DEVELOPMENT
WORKSHOP "Microinsurance", Eureka Conference Centre, in Zeist, Netherlands
He completed his bachelor's degree in Mathematics from the Institute Technology Bandung in 1988.
lbnu Hasyim
Director of Operation and
Actuary PT Avrist
Mr. Hasyim is currently responsible for Actuary, Operation and Product development in Avrist Assurance, lndonesia as part of Board of Directors. He has worked intensively to develop
takaful business in AVRIST with some of
strategies in product development, building
distribution channels and the operational activities.
He has more than 14 years in industry, including some experienced in multinational
actuarial consultant. He has mostly spent the
experienced in life insurance industry. He has
certified as fellowship actuary by Society of
Actuary in lndonesia (PAI). He completed his
Actuarial studies at the University of Indonesia.
8
Zainal Abidin Mohd. Kassim,
FIA, FASM, ASA Senior
Partner
Actuarial Partners Malaysia
Zainal is the Senior Partner at Actuarial Partners Consulting Sdn Bhd. He has been a
consulting actuary with the company since
1982.• His consulting experience spans the
full spectrum of actuarial services including
life and P&C and health insurance consulting,
family and P&C and health takaful consulting,
retirement benefit consulting, social security
consulting and investment consulting.
Zainal' s experience in Takaful started in
1985 when he was appointed as actuary to
the first Takaful Operator in Malaysia. He has
extensive experience in the design and pricing of takaful products, including family, P&C
and health takaful. He has been involved in
strategic analysis and setup of takaful and
retakaful operators in Asia, Africa and Europe. As one of the first of the small number
actuaries working in takaful and retakaful, he
has been on the forefront of the technical
development of various takaful contracts and
has interacted with many Sharia scholars on
the practice of takaful.
He has written many articles and spoken at
numerous conferences globally on his experience with the development of takaful. He is
a Fellow of the Institute of Actuaries of the
UK, Fellow of the Actuarial Society of Malaysia and an Associate of the Society of Actuaries in the USA and is a past president of the
Acturial Society of Malaysia.
lsmi Kushartanto
Executive Director
Economic Shariah Communication Center
Kushartanto is the current
executive director of Economic Shariah
Communication Center - Pusat Komunikasi
Ekonomi Syariah (PKES). PKES has an
lslamic Economic Movement program, the
Gerakan Ekonomi Syariah (Gres!) a national
movement and lslamic economic socialization
icon in Indonesia. Through partnerships, he
develops his own business in the field of Financial Advisory, Green Energy and New
Media.
Kushartanto has 17 years of work experience
in the Bank Ekspor lmpor lndonesia (after a
merger Bank Mandiri). He held significant
posts in credit field plantation, corporate credit, and credit recovery. Furthermore, he
worked in some of the lslamic Bank, Bank
Syariah Mandiri as a director, Bank lnternasional lndonesia (Bll), Perrnata Bank and
Bank (BNI) with the position as head for the
past eleven years.
Kushartanto completed his MBA from the
University of Colorado, Denver, USA in 1993
and graduated from the Faculty of Agriculture, Bogor Agricultural University, Department of Agronomy in 1982.
Abdul Majid - Panelist
Director of Cooperative
BMT UGT Sidogiri Pasuruan
For almost nine years, Mr
Abdul Majid has managed and developed
the Islamic microfinance institutions namely
Cooperative UGT Sidogiri BMT which offers
9
Islamic saving and loan products . His is experienced in the field of Islamic microfinance
in general, but especially in the field of savings and loans.
He has worked as sharia supervisor of
INKOPSYAH (Parent Cooperative Sharia) /
Jakarta from 2008 to 2014, as well as coordinator of Partners Bank Financial Consultant
(KKMB) BI in Malang since 2004.
In 2008 Mr Majid graduated from law faculty
of Al Aqeedah University Jakarta and Economic Education at Islamic University of Malang. Furthermore Mr Majid completed several Islamic finance trainings among others an
Islamic banking training conducted by LPPI
Jakarta.
Ir. Dumoly F Pardede,
Deputy Commissioner,
Non-Bank Financial lnstitutions Supervision lndonesia FSA
Closing Address
Pardede began his career as a government
official in the Directorate of Investment
Funds, Directorate General of Monetary Affairs- Ministry of Finance in 1989. During the
25 years of his career, he held many positions in the Directorate General of Financial
Institutions and in Capital Market and Financial lnstitutions Supervisory Board - Ministry
of Finance, the predecessor of currently Financial Services Authority (OJK).
His various roles span from as examiner,
reviewer power development financial institutions and most recently as head of the bureau.
tal Market Supervisory Agency and Financial
Institution.
He has a Master Business Administration
(MBA) for Finance & Accountancy from
Cleveland State University (CSU).
Aprillina Triyono - Panelist
Technical Director
PT Asuransi Tri Pakarta
Ms Aprillina has been active in
the Indonesian Insurance Industry for more than 30 years. Starting her
career in Tugu Pratama Indonesia Insurance
Company in 1982, she has been responsible
for various classes of insurance business.
She left her position in Tugu Pratama Indonesia as the Head of Reinsurance Division
before she was appointed Director of PT.
Asuransi Dharma Bangsa in 2001.
In 2003, she joined PT. Asuransi Tri Pakarta
which gave her responsibilities to handle
technical matters. The Company then appointed her as Technical Director until present. Together with other members of the
Board of Directors, Ms Aprillina has successfully transformed the company to one of best
insurance companies in Indonesia.
During her career, Mrs. Lina has attended
various either local or international insurance
courses, workshops and seminars. She is
also active in the Indonesian Insurance Association. She was appointed as the keynote
speaker for several workshops and seminar
with various topics.
In addition, he also serves as chairman of the
audit committee in PN Gas and Deposit
lnsurance Agency . He currently serves as
Chief of the Bureau of Pension Funds, Capi10
Joachim Wessling
CEO, PT Asuransi Allianz
Life lndonesia
Joachim Wessling is the current CEO of Allianz Life lndonesia and Country Manager of Allianz lndonesia. His wide
experience in insurance had him held significant posts for Allianz in Germany and Middle
East, and Ukraine, 2007-2010. He also
served as President and CEO for Allianz Fire
and Marine in Japan from 2004 to 2007. During this time, he was listed as member of executive committee of Foreign Non-Life lnsurance Association (FNLIA) Japan and one of
the members of Economist Corporate Network in Japan.
Wessling completed his bachelor's degree in
Business Administration major in Jurisprudence and Finance at Verwaltungs-und
Wirtschafts-Akademie (VWA) in Munich,
Germany.
Harianto Widodo - Panelist
Business Director, PT
Pegadaian
Mr Widodo is has been
Business Director of PT
Pegadaian since May 2013.
He can look back on almost 20 years of professional experience. Among others he
worked General Manager for Treasury Kantor Pusat Perum Pegadaian.
In 1992 he graduated from Universitas Airlangga with a degree in Economics.
11
3. Introduction
In many Islamic countries, significant portions
of the population live in poverty and lack access to financial services, such as insurance,
that can help prevent the further worsening of
their economic situations and living conditions. In such countries as Indonesia, the
creation of an appropriate market for insurance that is compliant with Islamic laws and
that will cater to the low-income sector – a
microtakaful market- is a need that is slowly
gaining attention and priority. But while initial
efforts have led to the development and offer
of some microtakaful products, the pace of
development needs speed and the approach
needs concerted collaboration between the
government and the industry. The current
situation needs to be understood to inform
the future progress and to pave the way for
the formal establishment of the microtakaful
market. As one of the steps to improve that
understanding GIZ (through the RFPI Asia
program), OJK, AASI invited insurance regulators, Islamic finance standard setting body,
insurance providers and takaful operators,
finance intermediaries, insurance support
institutions such as actuaries and academia,
development organizations and international
(micro)takaful and microinsurance experts to
the 2014 Microtakaful Conference Indonesia,
that took place on 24 of April 2014 in Jakarta.
Around 170 people participated in the event.
4. Overview of the Conference
Agenda
The conference should give the possibility to
discuss the microtakaful market assessment
in Indonesia commissioned and funded by
GIZ in the first quarter of 2014. In order to
gather input and opinions from the different
stakeholders five consecutive sessions have
been planned, followed by the synthesis and
the Closing address. The conference started
with an Opening Address and a Keynote
Speech. The detailed agenda for the conference is as follows:
12
Time
8:00 AM
9:00 AM
Activity
Registration
Opening Address:

Shaifie Zein, Chairman, AASI

Antonis Malagardis, Program Director, GIZ RFPI Asia
Keynote address:
9:45 AM
10:05 AM
10:45 AM

Muliaman D. Hadad, Chairman of Board of Commissioners, OJK
Session 1: Rationale and regulatory basis of microtakaful market development
Speaker: Kartina Md Ariffin, member of the Secretariat, Technical & Research, Islamic Financial Services Board
(IFSB)
Panel of reactors:



Dumoly F Pardede, Deputy Commissioner for NBFI, OJK
Zuriah Rahman, Takaful expert and consultant to GIZ-RFPI Asia/AFC
Antonis Malagardis, Program Director, GIZ RFPI Asia
Moderator: Dante Portula, Senior Advisor, GIZ RFPI Asia
Session 2: Key findings and recommendations of microtakaful market study in Indonesia
Presenters:

Nick Thornton, Lead consultant, Microtakaful market study in Indonesia

Moderator: Moch Muchlasin, Head, Directorate of Sharia NBFIs, OJK
Session 3: Response to the market study – industry’s perspective and current practice
Panel of reactors:
11:30 AM





12:30 PM
1:30 PM
2:30 PM
Joachim Wessling, CEO, PT Asuransi Allianz Life Indonesia (takaful window)
Aprillina Triyono, Technical Director, PT Asuransi Tri Pakarta (takaful window)
Agus Haryadi, Commissioner, TAKMIN (network of MFIs distributing takaful) and for ASyKi (microtakaful broker)
Abdul Majid, BMT Sidogiri (an Islamic cooperative)
Harianto Widodo, Business Director, PT. Pegadaian (Persero)
Moderator: Srikandi Utami, Vice-chairperson, AASI
Lunch Break
Session 4: Response to the market study – role of support institutions
Panel of reactors:

Ibnu Hasyim, Director of Operation and Actuary, PT Avrist

Ismi Kushartanto, Executive Director, Economic Shariah Communication Center

Zainal Kassim, Actuarial Partners Malaysia
Moderator: Muhammad Faried, Head Statistics Department, AASI
Session 5: Response to the market study – regulators’ perspective
Panel of reactors:

Moch Muchlasin, Head, Directorate of Sharia NBFIs, OJK

Kartina Md Ariffin, member of the Secretariat, Technical & Research, Islamic Financial Services
Board (IFSB)

Moderator: Antonis Malagardis, Program Director, GIZ RFPI Asia
Synthesis:
3:30 PM

Closing address:

4:00 PM
Moch Muchlasin, Head, Directorate of Sharia NBFIs, OJK
Coffee, networking
13
5. Opening Address
The opening of the 2014 microtakaful conference was officiated by the honorable Mr
Shaifie Zein, Chairman of AASI, who gave
insights into the status of takaful and microtakaful in Indonesia.
Currently the takaful market is still dominated
by individual insurance companies and the
lack of capacity of the industry is still comparatively high. Although the market penetration
of 5 percent of the insurance market, representing 1 % of the GDP, is quite low, Indonesia has a huge potential for a strong market
growth due to its large and mostly Muslim
population. Looking to other developing and
emerging countries some promising and
comprehensive examples and success stories can be found and allow to look forward
for a comparable positive development in
Indonesia.
In the Indonesian context, microinsurance,
respectively microtakaful, is still mostly seen
as a corporate social responsibility (CSR)
activity by most of insurance companies,
hence a mind shift in this respect is necessary, combined with measures to increase
the persisting low level of awareness among
the low and middle income population, the
primary target group of microtakaful products.
A consequence, AASI, OJK and GIZ RFPI
Asia initiated in 2013 a cooperation to enhance the development of the microtakaful
market in Indonesia. One outcome of this
cooperation is the microtakaful market assessment commissioned by GIZ in early 2014
which will be discussed in the framework of
that conference. The market assessment, as
well as the conference will give the opportunity to share best practices for microtakaful.
As final remark Mr Zein expressed his gratitude to OJK for the good cooperation established by the tripartite agreement.
Dr Antonis Malagardis, Program Director of
the GIZ RFPI ASIA, takes the opportunity to
explain GIZ’s role in the cooperation with
AASI and OJK. The implementing agency of
the German Ministry of Economic Cooperation and Development (BMZ for its German
acronym) GIZ has the mandate to enhance
and broaden inclusive insurance. Therefore
the GIZ RFPI Asia is currently supporting 6
countries: Indonesia, Thailand, Philippines,
Nepal. Vietnam and Mongolia in establishing
policy frameworks and regulations for microinsurance. In Indonesia the newly established
Grand Design provides a comprehensive
regulatory framework and strategy for microinsurance, furthermore a nationwide financial
literacy campaign has been launched to improve the population’s awareness for financial
products, in this respect it has also to be
highlighted that all market players play important roles, and the task is not limited only
to the regulator.
GIZ follows an approach directed to different
implementation levels. On the macro level,
GIZ cooperates closely with regulators, e.g.
as mentioned earlier, for the development of
the Grand Design in Indonesia. On the meso
level the cooperation focuses primarily on
training institutions and associations. The
activities dedicated to the third level, the micro level, focus on the clients’ awareness and
appropriate products and distribution channels.
An important role will and should be played
by private public partnerships (PPP) to
achieve a sound and broad development of
the microinsurance market. This development
should happen under the dogma of affordability, accessibility and awareness / trust of the
products and aimed towards the relevant
stakeholders and players. Currently the microinsurance market is still dominated with a
share of around 60% by credit-life insurance
products, often even without the awareness
of the beneficiaries. Nevertheless there
is a high need
for
microinsurance
against loss of
property, for
health issues
and so called
crop
insurance. Hence a
very
crucial
aspect is the
usage of adequate distribution channels to
keep the price low and to reach effectively
and efficiently the target customers.
14
Additionally to achieve an inclusive microtakaful the stakeholders should clearly
differentiate the meanings and intention between financial education and marketing as
well as between advocacy and policy making.
For the proper measurement of such
achievements impact assessments have to
be conducted. It should always be taken into
account that such measures will need some
time to have a visible and measurable effect
and in consequence it is necessary to conduct long-term impact assessments.
ble, hence efforts have to be done to improve
the database building and the implementation
of Management Information Systems (MIS).
The product price shall eventually reflect the
considerable risks and cover the cost of expected claims, but ensure the availability and
affordability among the low income customers.
Mr Malagardis emphasizes that Indonesia will
have in this respect a double responsibility to
create a national microinsurance market and
specifically an experience for microtakaful.
6. Keynote Address
The keynote address by the honourable Mr
Muliaman D. Hadad, Chairman of Board of
Commissioners from OJK, highlights the factors for a sustainable growth of the microtakaful market.
Although the market for takaful is emerging, it
still remains quite small, growth comes predominantly from an increasing demand
among the low and middle income population. Thus microtakaful can substantially contribute to the sustainable growth of the market
by broadening access to such services. It
should be taken into account that especially
among that segment of population, religion
and culture play a crucial role and they consequently need to be served and approached
differently. To achieve that and to ensure a
sustainable growth, several factors need to
be identified. Among the most important factors is the sharia compliance of the offered
products. Potential beneficiaries should be
aware and be informed that the offered products fulfill all the relevant features to be considered sharia compliant. The overall product
design shall be demand-driven and be characterized by its relative simplicity; this will
lead to a high acceptance among the target
population and their willingness to consume
microtakaful which finally leads to economies
of scales, including a more efficient delivery
of the microtakaful services. For a proper
product design and pricing the availability of
appropriate and sufficient data is indispensa-
On the other side, consumer protection and
awareness raising can overcome the still prevailing lack of confidence in the market. But
also the unrestricted availability for nonmuslim persons should be addressed in this
context. Appropriate measures need to be
implemented nationwide.
Another factor, that can also be seen as
unique selling point in comparison to conventional insurance, are the full transparency and
accountability of (micro-) takaful products.
Nevertheless it is important for microtakaful
providers to ensure quick and straightforward
claim services and practices, to maintain and
increase the trust and demand among the
targeted population. As Indonesia still has a
large share of rural population depending on
agriculture and the country’s vulnerability to
natural disasters, takaful products should be
designed to cope and manage better such
risks.
All this efforts can only be achieved jointly
with a strong involvement by all stakeholders.
7. Session 1: Rationale and
regulatory basis of microtakaful
market development
Ms Kartina Md Ariffin, member of the Secretariat of Islamic Financial Services Board
15
(IFSB), presents the key aspects necessary
to establish a regulatory framework for microtakaful starting with an introduction of the
role of IFSB.
IFSB was inaugurated in 2002 and serves as
an international standard-setting body of regulatory and supervisory agencies for the Islamic financial services industry. The IFSB
principles should be seen as complementing
to standards set by Basel Committee on
Banking Supervision, (BCBS), International
Organization of Securities Commissions
(IOSCO), and International Association of
Insurance Supervisors (IAIS). The IFSB
standards are followed by more than 180
national regulatory authorities and public or
private entities. Besides the design of standards, IFSB also provided technical support to







Inclusivity
Grouping for efficiency
Simple processes
Consumer awareness
Limited (available) data (to be overcome)
Appropriate contribution collection
Suitable distribution channels
The relevant stakeholders are among others
the low income / poor population, regulators,
sharia scholars the government etc.
Nevertheless an essential point to clarify is
the adequate definition of microtakaful; questions to be discussed are among others:



Does it primarily target the rural
population?
Does it serve people below a specific
income level?
Is it a standardized product?
In order to further elaborate such definitions
and to get a deeper insight in practices, the
joint working group will sent out a questionnaire to regulators, takaful providers etc. The
result are intended to be published mid2015.
the different institutions.
Following the presentation by Kartina Md
Ariffin, the panelists have the possibility to
elaborate on the regulatory issues; guided by
questions from Dante Portula, GIZ RFPI
Asia.
Main aspects covered by IFSB in regards to
Takaful are:




Corporate Governance
Financial and Prudential Regulation
Transparency, Reporting and Market
Conduct
Supervisory Review Process
Recently the IFSB established a working
group dedicated to the issue of retakaful and
a joint working group with the IAIS Financial
Inclusion Subcommittee. That joint working
group conducts a global survey on the status
of microtakaful, looking on the microtakaful
regulation already adopted to collect best
practices for regulatory frameworks.
The IFSB sees the following key characteristics/ necessities as essential for a welldesigned microtakaful product:
One question directed to Dumoly F Pardede,
Deputy Commissioner for NBFI/ OJK, focuses on the need for OJK to develop regulations and products for the Islamic community
especially for the poor sectors. The comprehensive answer was that OJK, has existed
16
just over 2 years, and he believes in the potential of market growth especially for microtakaful and also a need for establishing a
stable and reliable regulatory framework.
Another question was put forward to GIZ’s
commitment to spend resources for the microtakaful market development. Mr Antonis
Malagardis highlights that GIZ’s considers
inclusive insurance, including microtakaful, a
highly important topic and is therefore committed strongly to achieve this. This commitment has to be seen in relation to Germany’s
involvement in the G20 activities to enhance
the global financial inclusion. One of the 9
aspects of financial inclusion is the promotion
of inclusive insurance. In order to align the
activities GIZ has signed an MoU with the
Islamic Development Bank of working together in the field of Islamic finance and also cooperates closely with IFSB and IAIS through
the attendance of meetings of the Financial
Inclusion Subcommittee (FISC).
In regards to lessons and experience Indonesia can learn from other countries more advanced in the area of microtakaful. Ms Zuriah
Abdul Rahman, AFC Consultants International, stresses the importance of education
for all stakeholders including regulators and
takaful providers.
ment is based on the extensive meetings and
discussions with different stakeholders, with a
certain focus to the customers (e.g. in total
Nick Thornton conducted over one dozen of
Focus Group Discussion) in the first quarter
of 2014.
The findings of the market assessment can
be summarized in 12 key messages.
1) Great need for awareness: The target population is not aware of the
concepts of takaful or shariah compliant insurance.
2) Context matters: To reach the customers effectively and also increase
the level of awareness among them, it
is necessary to address them in their
regional/ local languages.
3) Appropriate distribution channels
and networks: For an efficient distribution it is necessary to identify appropriate distribution channels, possible channels are among others the
post offices and Islamic cooperatives.
4) Shared surplus is helpful: Depending on the type of takaful model used,
there is a prospect for profit sharing
between the contributor and the operator.
Furthermore the takaful providers should not
only stick to financial performance but include
non-financial performance indicators to assess the quality of their business activities.
Also the companies should revise their corporate governance principles and their product
should be profitable. Directing to the regulators Ms Abdul Rahman sees the need to establish a regulatory framework for the distribution channels of microtakaful and a special
need for a recognizable logo stating the halal
/ sharia compliance of the microtakaful product.
5) Preference for traditional distribution channels and payment methods: The majority of the population
prefers traditional methods against
modern methods like mobile payments and use of cellphones.
8. Session 2: Key findings and
recommendations of microtakaful
market study in Indonesia
7) There is ability and willingness to
pay: Low income people are able to
make regular contributions, often
higher amounts than previously
thought.
This second session of the day was held
jointly by Mr Nick Thornton, independent
consultant and Ms Zuriah Abdul Rahman,
AFC Consultants International, both responsible for the market assessment for microtakaful in Indonesia. The market assess-
6) Risk priorities have not changed:
The top risks against which the low
income population primarily wants to
protect are illness, education (not being able to afford education of their
children), death (life insurance).
8) Flexibility in contribution collection: It is important for takaful providers to offer to their customers certain
flexibilities in the contribution collec17
tion; this can decrease the barriers to
microtakaful services and potential
lapse of the policy.
9) Bundling could increase coverage:
A possibility to increase coverage of
microtakaful is the bundling with other
(Islamic) financial services.
10) Complementarity
for
national
health insurance: Although Indonesia has established a national health
insurance the target population has a
preference to receive an add-on coverage with a health microtakaful.
money paid to takaful operator is a contribution rather than a premium. This contribution
can be seen as voluntary alms, in the form of
sadaqa, to the “brothers and sisters” being a
member of the takaful scheme. Contributing
the form of sadaqa makes it easier for the
potential clients to understand why they will
not get back anything/or only a profit share if
they have not been exposed to a certain risk
11) Ta‘awuni: This concept of mutual assistance makes also the difference
with conventional insurance and
should be highlighted when targeting
the target population.
12) Differentiate takaful from conventional insurance: Also other unique
features have to be communicated to
the target population especially on the
Sharia compliance.
Nick Thornton stressed the importance of
partnerships among takaful providers and
MFIs, cooperatives for a broad outreach of
microtakaful. The MFIs and cooperatives will
have to play a double role, first of all as distributors but also as institutions that contribute actively to takaful literacy and awareness
raising among the target population. Such
activities can support the existing willingness
to implement microtakaful into concrete activities, as many potential customers prefer takaful against conventional insurance if the price
is adequate.
and have not made any claim.
Zuriah Abdul Rahman, AFC Consultants
International, starts her presentation with a
comprehensive explanation of the basic concepts of takaful. In her opinion the successful
promotion of takaful also depends on the
clear description of the characteristics of
takaful and the differences from conventional
insurance.
Ms Abdul Rahman provided additional general overview on takaful products being offered in different Islamic countries. Being
from Malaysia, she gives deeper insights of
that national takaful market. Having a small
market share for takaful, Malaysia does not
have a very huge potential for microtakaful,
because of the income distribution among the
Malaysian population, with relatively less
people living under the poverty line.
The key concept of takaful is risk sharing, not
risk transfer as with using conventional insurance. When raising awareness it is essential
to explain to potential customers that takaful
is based on mutual help and solidarity, as
well as shared responsibility. The amount of
Referring to the findings of the market studies, Ms Abdul Rahman highlights that Indonesia has already a well-established infrastructure of potential distribution channels
(e.g. rural banks, cooperatives), building a
good foundation for achieving a high outreach. Potentials on the medium term perspective lie in the cooperation with post offices and money transfer agents and commercial banks. In the long term perspective concepts of bancatakaful and of employer deduction should also be initiated.
Other countries offering microtakaful products
are Sudan (as pioneer country, where the first
takaful product was offered roughly 35 years
18
ago), Lebanon and Sri Lanka, the United Arab Emirates among others.
Also in countries where National Health
Scheme are established, health takaful products are frequently used as add-on to such
securities as those often cover only the basic
treatments and do not cover sufficiently the
costs and services in case of serious illness.
Having a closer look on the regulation on
takaful in other countries, Ms Abdul Rahman
confirms that in even more developed takaful
markets there is ongoing need to establish
accurate regulation and standards for microtakaful. Even in Sudan, being a pioneer in
respect to takaful, risk exposure and available
data are inadequate. A further concern is the
inadequate level of knowledge/or high disparities in the knowledge level among different players (e.g. operators, regulators) even
in countries like Malaysia, Lebanon or Sudan.
The following table gives an overview on the
comparison among different countries where
microtakaful products are offered:
19
Country
Regulation
Capital requirement
Transaction
Costs
Risk Exposure &
Risk Data
Skilled &
Qualified
Personnel
MALAYSIA
Insurance Act
19 & IFSA
2013
RM100 million (US30.5
million)
High
Inadequate
Low - high
UAE
Resolution 4,
Takaful Insurance 2010
N/A
High
Inadequate
Low - high
SRI LANKA
Unfavorable to
Takaful - investment
High
High
Inadequate
Low
LEBANON
N/A
N/A
High
Inadequate
Low
SUDAN
ISA
US1.1 million
High
Inadequate
Low - high
INDONESIA
Insurance Act
N/A
High
Inadequate
Low
20
Ms Zuriah appeal for more education among
all stakeholders (from regulators to customers) in a different manner for a positive and
sustainable takaful experience in Indonesia.
9. Session 3: Response to the market
study – industry’s perspective and
current practice
This session gives the insurance industry the
opportunity to react to the market study and
its findings. Ms Srikandi Utami, AASI; invited
the representatives of different takaful operators (full-fledged / takaful window) to introduce their institutions and to explain to what
extend these findings are reflected in their
daily business activities. As first speaker Mr
Joachim Wessling, PT Asuransi Allianz Life
Indonesia, explains the company’s experience operating as a takaful provider with a
takaful window. The company has been working for six years in the field of takaful and
clearly follows a business approach with the
goal to generate profits. Nevertheless Allianz
as a global insurance company is also concerned about the reputation in the different
markets. Therefore a clear statement was
given that the profit goals stay at reasonable
and sustainable level. Allianz considers up to
4 percent of profit margin as a fair share and
has currently a profit margin of around 3 percent.
Following the business approach means for
Allianz as well to attain the best skilled employees in the field of takaful and is consequently willing to pay to takaful experts in
their company equal salaries in comparison
to other employees having comparable responsibilities and skills in other divisions.
To reach its customers Allianz is working with
more than 90 MFIs, the share of takaful is
around 40%. Mr Wessling sees a specific
challenge in the adequate training of the distributors and sellers, as well-trained agents
and distributors also contribute to the transparency of the market.
Ms Aprilina Triyono, PT Asuransi Tri Pakarta, confirms this opinion expressed by Mr
Wessling, that one of the biggest challenges
is the training and education of employees
and agents.
PT Asuransi Tri Pakarta operates under a
takaful window and has opened 30 branch
offices and 52 offices in small cities. The
company offers microtakaful products such
as, Personal Accident, Fire and Motor takaful.
Almost 20 percent of income was generated
from microtakaful segment.
Mr Agus Haryadi, Commissioner TAKMIN
(network of MFIs distributing microtakaful
products) and for ASyKi (microtakaful broker),
mentioned that the TAKMIN group had
signed an MoU with the NGO PERAMU in
1993 and later established the ASyKi to monitor the activities of its members. TAKMIN was
established as a cooperative combining several Islamic institutions and each individual
member holds a 10 percent share from the
cooperative. In 2005 PERAMU entered into a
partnership with MFIs and IFIs to offer microtakaful products. One of the products offered was Mikro Sakinah, a credit life product
with an option to add additional lives (e.g.
spouse of borrower), and another unique
product called the Tabungan Qurban, a Sacrifice Savings Plan for the BMT to provide the
sacrificial goat or cow to the family of the
saver in the event that the participant dies.
This plan was well received because the
members do not feel the pinch due to the
direct deduction from the monthly dues. In
2012 TAKMIN has another partner in the form
of BMT Sidogiri to act as an Assurance Broker for microtakaful and licensed by OJK.
From this arrangement, the entity managed to
reap Rp150 million contributions per month
with the support of more than 100,000 members. BMT members admitted to the importance of asuransi, hence the very encouraging performance of the business.
21
Question from the audience:
“How does the TAKMIN group tackle the issue of approaching the market given their
vast outreach?”
Answer from Mr Haryadi
The establishment of ASyKi has greatly facilitated the role of TAKMIN as a leading NGO
taking the market’s interest at heart. Because
TAKMIN is such a large organization and the
market is equally large, hence the promotion
and education of microtakaful has been undertaken by ASyKi and this resulted in more
microtakaful customers taken in by the product and concept it serves which is in line with
Islam, after its establishment.
Mr. Abdul Majid, representing BMT Sidogiri
and ASyKi (takaful broker), which is an entity
operating as a cooperative using the ta’awuni
concept, that is mutual sharing of benefits
and losses. It comprises of 14,000 small
business owners, and more than 400,000
credit and savings members.
Mr. Abdul Majid explained that members, due
to their low education level had a misconception that the life is worth only Rp2-5 million
(that is the sums assured). He also stressed
that members are keen on coverage for education to their family members and also to
cover natural disasters that occur quite frequently in Indonesia. Asuransi Shariah as it is
widely known among its members faced
competition from other distribution channel,
hence, he appeals for price to be kept as low
as possible for the sake of retention.
and the pricing increased accordingly with the
increased in benefits.
“The majority of the cooperative members are
Muslims, while most are small income earners, how does BMT Sidogiri retain its microtakaful customers and their membership to
the cooperative?”
Answer from Mr. Abdul Majid:
“The concept used is very simple, in microtakaful, the promotion is via infaq or donation, whether you live or die during the course
of the policy either way you will be rewarded,
on this earth or in the hereafter. So there is
nothing to lose. Members are taken in due to
the simple explanation and the alignment with
their religious beliefs. Most of the members
quipped that they are happy to be a cooperative member, besides getting the benefits of
microtakaful, they do not feel the pinch when
it comes to contributing to the microtakaful
fund because it is deducted from members’
subscription. On top of that each member
gets a 10 percent share of the cooperative
and its profits.”
The next speaker, Mr. Harianto, from Pergadaian (Pawnshops) mentioned that their distribution channel has started microtakaful
offerings after an MoU was signed recently
with the members of the AASI; 10 percent of
their business is Shariah compliant. The profile of their customers are:



60% - householders and professionals
80% - women
70% - possess higher education
Their target market is suitable for microtakaful
products, and according to him, it is easy to
market and the customers understand the
benefits of microtakaful products quite well.
On top of that it is distinguishable from insurance, while delivery is made simple, handling
collection of contribution is easy to maintain a
low cost structure. Most of their microtakaful
products are bundled with the financing that
is offered.
In 2012 they launched the Program Asuransi
which includes financing with microtakaful
For the future IT systems will be needed
which match with IT systems in pawnshops to
support product selling.
22
study – role of support institutions
After lunch, that allowed the participants to
exchange their opinion and knowledge on the
topic of microtakaful, besides also to get in
contact with each other and to initiate new
cooperation opportunities, representatives
from the supporting institutions have the possibility to comment on the market study and
to express their opinion about the status of
microtakaful in Indonesia.
Mr Muhammad Faried, gave an introduction
to the different panelists and asked Mr Zainal
Kassim to start elaborating on the role of
support institutions.
Mr Zainal Kassim, Actuarial Partners Malaysia, outlines some of the most crucial challenges in providing takaful services. First of
all he sees the necessary message to be
transmitted in regards to takaful is the dogma
of solidarity to the potential customers.
Looking to product design of a takaful product, the contribution of a microtakaful client
has a risk and savings component. Essential
for the adequate management, especially of
the savings component is the existence of
sukuk (bond) markets (shariah compliant investment markets). But also the adequate
estimation of the risk component bears some
challenges as takaful customers usually expect the takaful product to be cheaper than a
comparable conventional insurance product.
Another challenge can be seen in the administration costs of a takaful fund, especially in
the case of a microtakaful fund. Usually administration costs per client / claim do not
vary heavily between the costumers contrib-
uting the multiple amount for a takaful product
and microtakaful customers, but obviously the
share of administration costs is much higher
in the microtakaful contribution compared to a
takaful contribution.
In general Mr Zainal sees a huge protection
gap for takaful but also insurance in general.
Giving as an example Australia where around
98% of the population is aware of the benefits
(and risks) of insurance, but only around 50%
are insured adequately. Closing such protection gaps requires also addressing the right
person. For instance in Saudi Arabia, most of
the women are responsible for the household
budgeting and are in consequence primarily
addressed by takaful providers for taking the
decision to insure against risks the entire
family could face.
Mr Zainal suggestions for the future development of microtakaful are among others is
to make the microtakaful membership compulsory. In this way adverse selection can be
avoided, the massive clustering of “bad” risks,
as primarily those with a relatively high risk
decide to be member in a takaful if the system remains voluntary. In a compulsory system the risk can be better pooled and is diversified.
In general Mr Zainal advocates for a “back to
the basics” approach of providing microtakaful. First of all he recommends using already
existing cooperatives to create takafuls. In
that manner no conflict with sharia compli-
ance can arise, as takaful is just an Islamic
cooperative insurance. By applying this approach distribution costs can significantly be
reduced. The compulsory takaful product
should be simple and cover risks against
23
death and disability. In Mr Zainal opinion this
can lead as well to lower regulatory costs.
In his concluding remarks Mr Zainal says that
the takaful providers should stop
giving guarantees
for claim payments, and refinancing a takaful
fund with a qard
loan, if there is
insufficient funding. More promising concepts are
the retakaful and
wakala concept.
Mr Ismi Kushartanto, Economic
Shariah Committee Center, a government
promotional agency, elaborated on the role of
the center, partly to educate the public, explaining the role of the regulator, socialization
of the mass through its involvement in takaful
in GRES! activity.
The center also has a dedicated website and
TV program emphasizing on muamalat (business transaction the Islamic way). They have
recently published a book, organized a bazaar and a Shariah Economic Writing Competition. Another important function was the
awareness program of the standard logo
(GRES!) used in the culture and system
adopted by the center. The center also works
with 14 associations including the Majlis Ulamak Indonesia (MUI), AASI, BMT and others.
They have also created the Program Sejuta,
created for those who are characteristically
non-creditworthy and for financial inclusivity.
These individuals are grouped and trained to
be financially literate. They also created a
number of self-help programs such as Susu
Ibu (the importance of breast feeding), for the
coffee growers to increase their savings and
for the Red Group (those below the poverty
line) to be eligible for emergency programs
under the Zakat Institutions. The Yellow
Group, those that had crossed the poverty
line, but still dependent on financial support is
encouraged to be independent through various self-help activities. The next target
groups is the Green Group who has crossed
the poverty while the Blue Group comprises
those living under more or less proper economic conditions, and are ready to move forward. These are the masses of whom their
financial and physical welfare need to be preserved against all risks.
Most of their events are partnered and developed with BMTs and several microtakaful
channels to enable acceleration of the BMT
growth, opening lines of communication and
banking services.
GRES! Logo, can be seen as a standard and
accepted by the microtakaful industry and is
in compliance with the MUI.
Mr Ibnu Hashim from PT Avrist, a life insurance company was established in 1975. They
have a 7,000 strong agent support and more
than 500 employees. The company’s Shariah
asset growth is increasing and 40 percent of
their individual customers are Non-muslims.
Microtakaful contributed 5 percent to their
total profit. The Micro Tabbarru’ fund contributed a great deal to their business and it provided small loans for women amounting to Rp
800,000 with a premium contribution of Rp
3,000. They have in total 19,000 members
(contributors).
study – regulators’ perspective
During this Session especially the Head, Directorate of Sharia NBFIs of OJK, Mr Moch
Muchlasin, had the chance to express his
opinion and outlook in regards to the market
study. Asked on the main challenges to be
envisaged, he says that the first step would
be to accept and learn from the findings. By
improving the regulatory standards the consumer protection can be enhanced. An improved regulatory framework will nevertheless allow the continuation of useful informal
24
self-insurance schemes. A comprehensive
and working regulatory framework can only
be established when a frequent exchange
with the different stakeholders and the market
is maintained. In his opinion “learning by doing” seems to be the
best
approach
to
develop a functioning
regulatory framework.
The need for support,
not only from GIZ; in
product design, pricing
and awareness raising
/ and consumer protection.
give a summary on behalf of Ms Kartina
MdArrifin, from IFSB, as she had to leave
unfortunately before she could participate
personally in that session. To get a better
overview IFSB will conduct an all embracing
worldwide survey on microtakaful, covering
the aspects of definition of microtakaful, governance, prudential regulation, market conduct and supervision.
How long will it take for OJK or the Shariah
Board to approve a microtakaful product?
Can the time taken be reduced?
Answer from MrMoch Muchlasin:
Is OJK going to take the lenient approach to
the microtakaful industry given that the provider and the distribution channel is all set to
go?
Answer from Mr Moch Muchlasin:
Every regulator has an important role to play
and their position is more critical because it
has to promote the industry while at the same
time protect the consumer. Leniency will not
guarantee that the industry and the market
will prosper. It however has to strike a balance between being too leni-ent and too
strict. This can be achieved by learning from
others.
With speed comes a price, because without
careful consideration of many factors, Shariah risk may occur and as a result a nonShariah compliant product is offered to the
market. Therefore the Shariah council has to
deliberate and take many aspects of religious
edicts to determine whether a microtakaful
product can be released to the market.
12. Synthesis
In the last session Ms Zuriah Abdul Rahman, AFC Consultants International, gave a
synthesis on the topics discussed sessions
hold during the day:
Session 1: Rationale and regulatory basis
of microtakaful market development.
Ms Zuriah Abdul Rahman emphasizes that
awareness raising and education of all the
stakeholders is the key for a sound microtakaful market. This can be achieved for
example with close cooperation with the Economic Shariah Communication Center,
through the GRES!, that executes awareness
raising campaign also via mass media. Also
mosques and mushallahs, as well as zakat
centers, can play a very important role in the
promotion of microtakaful. They can provide
the necessary infrastructure and usually are
also close to the targeted population. “Time is
crucial”, as Indonesia is currently still at a
premature stage, the market has to grow and
the regulation has to improve in a long way.
Mr Antonis Malgardis, having the task as
session moderator, takes the opportunity to
Some of the basic issues facing microtakaful
is unique as attested by the IFSB representative, especially on the definition of microtakaful itself, and rules relating to Corporate Governance, Financial and Prudential Regulation,
Transparency, Reporting and Market Conduct
and Supervisory Review Process.
However, with the existence of various laws
and rules on takaful found in many countries
it will be easier to adopt and adapt the current
practice to suit the Indonesian scenario. What
has been practiced now as elaborated in the
Grand Design for Microinsurance is suitable
for reference for microtakaful except for the
issues mentioned above. The current partnerships of the industry with various distribution channel and community self-help should
25
proceed and given the encouragement while
at the same time to work on improving the
regulatory framework.
These established partnerships have shown
to save cost, products are designed to suit
the target market,
typically the cooperative members, must be
easy to understand, affordable
in terms of pricing, simple in
procedures and
fast in claims
settlement. With
the
desirable
features, it is envisaged that retention level will
remain high. Additionally, corporate governance and Supervisory Review Process needed to be strengthened with the inclusion of the Sharia Requirements especially on the establishment of
Sharia Advisory Council (SAC) under the
purview of OJK and the Sharia Committee of
each microtakaful provider. With the existence of the SAC, issues relating to transparency, solvency requirements, risk management and Shariah compliancy will be adequately addressed.
On the Reporting and Market Conduct, the
key issue to be addressed is Consumer Protection due to their vulnerability and this could
be tackled by educating the public on microtakaful through various media and channels which could reach the rural and urban
population. The existing Economic Shariah
Communication Center, Masjid (mosques),
Zakat Centers, IFIs and MFIs are focal points
where microtakaful providers could reach out
to the target market. On the other hand, microtakaful providers also need to be aware of
the various measures undertaken by various
regulatory authorities around the world in
addressing, solvency standards, underwriting
guidelines, reserves and minimum paid up
capital to ensure they remain a financially
viable entity.
On the topic of inclusivity, to date, no regulation has provided a definition of who should
be the target market for microtakaful due to
the diversity and diverse characteristics of its
consumers. What is known however, they are
the selected poor, included are the low income; group is preferred to individuals, the
underwriting process needs to take into account their demographic profile however, this
may be hindered by lack of appropriate database to look into their financial capacity to
make regular contributions.
Session 2: Key Findings and recommendations of microtakaful market study in
Indonesia
The market survey concluded that 12 factors
are critical in addressing this sector. They
are:








Awareness, since the majority of the
respondents could not differentiate
between sharia compliant products
and conventional insurance.
Context matters, because low level of
education and very little exposure to
financial literacy programs makes
them less knowledgeable on microtakaful, therefore it is best that
promotional materials, intermediaries
and the cooperatives or existing
community based structure be used
and supported with the language that
is understood by them.
Existing distribution channels have
created demand for microtakaful
though various financial support programs, both MFIs and IFIs need to be
strengthened and regulated.
Image on microtakaful is positive as
attested by members of MFIs and this
need to be enhanced.
Preferred choice for delivery and
payment (contribution) are rural and
agriculture
banks,
cooperatives,
agents and post office.
Risk priorities are those pertaining to
health, education, family (life) and
basic general takaful such as motor
(motorcycles).
Allocation of part of their earnings for
microtakaful seemed real, because
majority could spare more than the
desired amount for coverage.
Flexibility is greatly emphasized due
to their unpredictable income, hence,
26




must take into account cyclical nature
of jobs, informal workers, and the
like.
Bundling of microtakaful products
with other financial products seemed
the best way to offer microtakaful to
the poor, because the majority of respondents are already subscription
members of cooperatives and received various types of financing for
various needs.
Complementary product, microtakaful
is considered an add-on to existing
coverage National Health Insurance
Scheme, the Jaminan Kesihatan
Masyarakat (JAMKESMAS) providing
basic medication and outpatient
treatment.
Ta’awuni (cooperative) is a powerful
concept creating and binding relationship between Muslim communities. The existence of mutual help,
brotherhood and solidarity falls in line
with the teaching of Islam.
Perception of National Health Insurance Scheme and insurance is negative, so a Shariah compliant product
bodes well with the consumers.
In comparison with other countries, except for
inadequate regulatory framework, Indonesia
fared equally well with other microtakaful
markets such as, in Malaysia, Sri Lanka,
Lebanon, and UAE. With a large poor population of more than 114 million poor, Indonesia
could create a critical mass at a faster rate
than the other countries. However, 3 critical
factors need to be enhanced, they are, education, training of Sharia and technical experts, a well-established regulatory framework.
Session 3: Response to the market study
– industry’s perspective and current practice
Views and comments made by various industry experts found microtakaful business having a huge potential in Indonesia. Based on
the various initiatives and partnerships to
strengthen and to create delivery channels,
the microtakaful providers, the cooperatives,
the microtakaful broker and pawnshop owners have reported positive income from their
respective microtakaful business. Profits
ranged from 3-5 percent depending on who is
their target market and what products are
offered. The common sought product is the
bundled credit life and microtakaful. Microtakaful is sought by Muslims due to the
Sharia compliancy and their trust in the product, although it is not exclusively for Muslims
as microtakaful is also open to non-Muslim
population as well.
– role of support institutions
Despite microtakaful being different in concept from microinsurance requiring a different
approach in its promotion and marketing, the
product design takes into account both the
risk cost and savings component plus the
other costs (administrative and so forth), similar to insurance. Product pricing requires actuarial calculation to ensure sustainability of
the fund. Underwriting should also be less
complex and desirably be a compulsory
scheme to weed out adverse selection or
moral hazard. In the microtakaful market
there should be less competition on pricing
but more on service. Adequacy of pricing will
help build and develop a fund big enough to
ensure viability of the business.
The government agency entrusted to disseminate information, financial and takaful literacy
and financial inclusivity of the poor into the
takaful market is the Economic Shariah
Communication Center. It has both physical
and visual images that help to support the
industry and augurs well for the business.
GRES! and the logo of Asuransi Mikro Shariah provide confidence to the public and to a
certain extent consumer protection is assured
by the regulators.
27
– regulators’ perspective
Indonesian regulators are open to new ideas,
concepts, practices and standards in order to
achieve the objectives of financial and takaful
inclusion for the poor and low income. In this
regards, international standards and practices
are highly regarded. Learning from other
countries’, adopting and adapting to the Indonesian market takes precedence in order to
avoid making mistakes.
In the words of the regulator, something to
this effect, “let it be known that we have done
something for the poor, lest we will be question by the Almighty that no effort was made
to improve their lot.”
In summarizing the outcome of the conference based on the market assessment and
input from the various organizations, the following were accomplished:
Objective 1 of conference was present the
key findings and recommendations of the
microtakaful study and draw the commitment
of regulators and the industry to support the
advocacy on mi-crotakaful market development.

Direct selling

Working Group (TAKMIN)
Non-traditional:

Retail outlets (scratch off vouchers activated by cell phone)

Telecommunication Companies

School Groups

Post Offices
3. Microtakaful Network Highlights
TAKMIN – has 43 MFIs in Jakarta & West
Java
Sidogiri Group and BT Sidogiri–branches in
10 provinces, Java, Kalimantan, Sumatra and
Bali - outreach 500,000 people
Allianz – insures 2 million people nationwide
through distribution partners
4. Microtakaful Products
Plan
Cost/Contribution Affordable
Life & Personal
Accident (PA)
IDR 15,000 to
25,000/year
Life, PA, Disability, Accidents and
related healthcare
account
IDR 175,000/year with
savings IDR 100,000
Dengue Fever
IDR 59,000/year
Motorcycle
IDR 200,000/year
Supply-Side
1. Findings from the market assessment indicated that there are both formal and informal
microtakaful providers:
Formal:

Full-fledged takaful providers: 5

Takaful windows: 40

New takaful providers: 8 (to launch
new products in 2 years)
Informal:

– IMFIs and Cooperatives
2. Distribution channels featured both traditional and non-traditional:
5. Microtakaful Structure or Model
Traditional:
MOU between Insurance and Takaful Industry and distribution channels resulting in:
Partner-Agent Model

Brokers and agents

Banks

Dual role of MFIs and IMFIs

MFIs and IMFIs

Dual role of Zakat Funds

Cooperatives (BMT, BTM)

Industry cooperation
28

Company cooperation (general
insurance & takaful window)

Understanding – mixed up between insurance and takaful (is like a
savings product)

Perception – it is important, helpful,
expensive, claims difficult, complicated and some had negative experience
with Islamic finance products.
Regulatory Environment Issues:
AAJI requests to OJK include the following
and deemed to be
Challenges to Regulators:

Less stringent solvency requirements

Speed up product registration

Prefer conventional

Standardized regulations to
avoid difficulties in regional differences in interpretation of in-surance
and microtakaful regulations

Prefer takaful if price is right, if
slightly higher, or if more expensive or
prefer takaful only

Phasing out takaful windows providers?

Strength and Opportunities within the
environment:



Regulator is active in creating
environment conducive to microtakaful
DSN-MUI active in creating
fatwas encouraging takaful development
Shariah risks reduced due to
consultancy and interactions between
takaful indus-try/practitioners and
DSN-MUI
Responses to takaful varies:
Risk Priorities



Unpredictable income (almost
always)

Vulnerable to economic shocks

Marred identity

Powerlessness

Many and varied segments
(21+ types of occupations)
Business capital/business continuity

Personal Accident

Family – death, living expenses, retirement

Property loss – motorcycle, fire
to business assets

Loss of livestock
Ability to Pay

Average of all individuals:
IDR63,065 – IDR79,984 (depending
on region)

Average per month IDR26,474

Average per year IDR 4,167 to
IDR50,000
Demographic Profile of target market
Low income (but not always)
Education

Demand Side

Illness
Payment Preferences – Frequency:
Farmers: per 4 months
Fish delivery: per 3 months
Grameen MFIs: per week
Dairy Farmers: per 15 days
Microenterprise owners: per day or monthly
Levels of Awareness, Understanding &
Perception on Microtakaful:

Microtakaful Product Demanded

Awareness – high
Family (life) Takaful – benefits IDR10
million for death with income stream

Education – 5 years or less
plan
29

Health products – despite the
introduction of the National Health
Scheme, JKN, insist on surgery and
hospitalization
scholars and ex-perts in Shariah are
very few and many are not actually be
conversant with the takaful business.

To apply the same leniency to
microinsurance similarly to microtakaful in terms of solvency requirement,
product registration (as also recommended by the actuary, Zainal Kassim).

The reporting to only one regulatory body as opposed to two as per
Decree No. 53/PMK010/2012 on insurance, will ease the administrative
job of AASI.

Partner-Agent Model, already
well-established in the microtakaful
market should be en-hanced and formalized, either through the microtakaful regulations or through the existing
regula-tions pertaining to the said entities (if cooperative, then it is the cooperative laws overseeing and binding
on the business, banking laws etc.).

From the market survey, Post
Offices was found to be the best distribution channel due to its wide outreach and trust in the organization by
the poor population. Logistically Post
Offices are considered a halal entity
and should be agreeable to MUI and
DSN request of dealing with Shariah
compliant organizations only.

Pawnshop as another potential
distribution channel as indicated by
the Pawnshop repre-sentative during
the conference is again testimony to a
positive outlook on microtakaful
through this retail financial outlet also
called Ar-Rahnu.

Retail outlets and Minimarkets,
such as Indomaret could also serve
as a microtakaful distri-bution outlet
given its closeness to the customers
and being scattered in many parts of
the prov-inces. With OJK assurances,
these outlets could also apply for a
halal logo to the religious authori-ties
to assure the public that even if there
are non-halal products sold in the out-
Appeal to Microtakaful Product – Benefits

Surplus sharing

Explanation and marketing
through religious principles

Ta’awun (cooperative) concept
is highly valued and highly understood
The Initial Steps to Address the Above
Findings:
Regulators:

Indonesia’s scattered provinces result
in differences in interpretation of the
law where regional authorities rule,
hence a standard regulatory framework taking into account the majority
of the differences in the provinces
need to be designed.

In the words of the OJK official, learning and adapting from the matured
markets may pre-vent Indonesia from
repeating mistakes made by other
countries. This is especially true involving Shariah risk, i.e. the type of
business model and structure to be
adopted that aligns well with OJK’s
philosophy, MUI and DSN religious
decree and leanings as well as the
culture of the target market.


OJK also needs to be cautious
of MUI’s encouragement of Muslims
to support Shariah compliant companies/programs/banks, as this recommendation may drive out competition
leaving very little options to the market
to choose from. In the long run, microtakaful windows of insurance companies also need to be phased out.
The regulatory framework recommended by the IFSB secretariat is
to incorporate into the current conventional or takaful regulation the Shariah
Board or also known as the Shariah
Advisory Council which may take a
while to be established since Islamic
30
let, the microtakaful products are permissible.


Management costs and expenses of takaful providers can be reduced significantly if the distribution
channels are given the marketing,
training and awareness creation tasks
since they are the front liners and in
direct contact with the potential customers. Addi-tionally, contribution collection and claims processing (if
claims procedure is made sim-ple),
the same personnel can also be entrusted with these roles.

These distribution channels
have ready database of the customers
for the takaful pro-viders to tap on and
to concentrate on their marketing efforts.

Both the demand and supply
side of the market is ready and further
push into the mar-ket must come from
the regulators.
To provide a platform for regulators,
insurance providers, international experts and support institu-tions to exchange ideas, analyse policy and
market challenges and discuss opportunities and out-look.
Initiatives from the industry-distribution
channel cooperation:





Testimony from 3 business organizations on the successful offering of microtakaful products, namely, Allianz,
PT Asuransi Tri Pakarta and PT Avrist
is sufficient to convince the AASI and
the industry as well as OJK that the
microtakaful market is worth an investment.
Despite several barriers in terms of infrastructure and other socio-cultural
issues faced by the low income market segment, Indonesia is poised and
be able to enter to into this phase of
the Islamic finance sector due to several factors that works to its advantage:
The 114 million low income and poor
population is a ready market and critical mass can be reached within a
short span of time in which the microtakaful fund can be built to guarantee financial stability.
The numerous network and existing
distribution channels, particular the
banks, the co-operatives, the pawnshops, the post offices scattered
throughout the Indonesian provinces
are legitimate entities and a mere inclusivity of these market outlet
through regu-latory measures will enable immediate availability of the market and its outreach.
The market segment, during the survey has indicated their positive response towards the microtakaful
products in comparison to the conventional ones due to its halal or permissible status.
With the above topics analyzed, it is concluded that, OJK and AASI and the distribution
channels are already working in unison to
enable microtakaful be promoted and offered
to the low in-come and poor in Indonesia.
13. Closing Address
Mr Moch Muchlassin, OJK, closes the first
microtakaful conference in Indonesia, with the
statement that OJK is convinced of the need
for and benefits of financial inclusion. They
know that creating financial inclusion is not
easy to achieve. Especially as Indonesia
shows a different setting compared to other
countries, the Indonesian takaful is unique
and thus a different solution has also to be
worked out.
In the last Financial Sector Assessment conducted by the World Bank two basic recommendations expressed were to broaden access to finance for the Muslim population and
also the low income population. And OJK
wants to implement this recommendations in
a sustainable manner, but takaful and microtakaful remain to be challenging, as until
today only a limited experience, best practices and lessons learned from other countries
can be referred to.
31
To what extent OJK would be willing to take
the role of providing assistance to the microtakaful industry in promoting the products
to the public?
However OJK is willing to accept this challenge and thinks that all stakeholders will as
well, as in his own words “We are doing it for
the underprivileged people.”With this encouraging words he closes the microtakaful conference.
Answer from Mr Moch Muchlassin:
•
The aspiration and objective of organizing this conference is to analyze and disseminate the information received from the
market survey to the relevant players which
indirectly becomes the responsibility of OJK.
•
From the result of the market study, a
regulatory framework will be drafted and tabled soon to the authorities. This framework
is set up to enhance the performance of the
industry whilst at the same time to protect the
consuming public, in its effort of financial and
takaful inclusivity for the underprivileged population of Indonesia.
•
The enabling environment requires
legitimacy of its activities, therefore regulations will en-sure this is done and this will
affect all the distribution and delivery channels.
•
The market survey was commissioned
by OJK with the help from GIZ was to determine the product preference of the target
market. This has already been identified and
will be formulated soon for the industry to
follow
•
Other factors to be taken into consideration will be to smoothen and facilitate the
industry’s activities through legislation by
learning and emulating from neighbouring
countries as well as those that have established their laws pertaining to this unserved
market.
32

2014 Microtakaful Conference Indonesia Conference

Transcription

Similar documents

TakafulmyHealth Protector

Trakindo Internal Magazine Antarkita – Within Us

brochure - Takaful IKHLAS

Indonesia Life Insurance newsletter

Information of ＩＭＤＩＡ Auditor Change

EID MUBARAK!

here - Insurance Info

FN_NST_31Mar2014

consulate general of republic of indonesia