IO – Sharia insurance growth rate in Indonesia will remain high during the COVID-19 Pandemic. International financial services association Million Dollar Round Table (MDRT) forecasts that Sharia insurance potential in Indonesia for the next three years could reach 9.6 trillion Rupiah, with 19 percent of the growth coming from non-Muslim customers.
This was delivered during an address by Indonesian MDRT member Budiono Prasetyo during the MDRT Virtual Event 2020, held from 3-8 August 2020.
MDRT held a global conference to discuss developments in the financial industry amid the COVID-19 pandemic. The conference intended to help MDRT members improve their knowledge and capabilities to provide financial services and advice to clients in this uncertain period.
“The popularity of Indonesian sharia financial products is increasing rapidly, even among non-Muslim investors,” Budiono explained. He added that as more information about these products is becoming available, and the results are becoming apparent, this popularity can only grow stronger.
“Sharia insurance is attractive because it’s generally safer, being supervised directly by the Sharia Supervisory Board, and with competitive returns,” Budiono explained.
Budiono explained that many non-Muslim customers initially hesitated and questioned the benefits and safety of Islamic products. “It can be shown that in Sharia mortgage products, the installments tend to be flat and do not fluctuate as in conventional KPR products. In Islamic banking it is also attractive because there are no administrative fees, ATM fees, and usury. This is what is very attractive for customers to invest in Sharia products,” he said.
Budiono also explained that there was some initial pushback from non-Muslim customers who question the safety and return of Sharia products. “However, we point out that Sharia products are more secure. For instance, Sharia mortgages have flat rates, unlike conventional mortgages. Sharia banking is also generally free of additional fees,” he concluded.