Promoting inter-institutional synergy is one key to accelerating the transformation and strengthening the competitiveness of the Shariah insurance industry in Indonesia, according to a report released last week by IFG Progress, the think tank of Indonesia Financial Group (IFG), a state-owned financial holding company.
The report, titled "Economic Bulletin – Special Issue FGD Asuransi Syariah 2025 – Opportunities and Challenges of Shariah Insurance in Indonesia", said, “Coordination between OJK, KNEKS, BPJPH, and DSN–MUI needs to be directed toward building a more integrated ecosystem, from the regulatory aspects and product standardisation to the supervision of Shariah principles.”
OJK is the Financial Services Authority; KNEKS is the National Committee for Shariah Economy and Finance, BPJPH is the government agency, Halal Product Assurance Organising Body; and DSN-MUI is the National Shariah Council – Indonesian Ulama Council.
Increasing inter-institutional synergy is one policy recommendation made during a focus group discussion on 25 October 2025 involving industry players, associations, academics, and Islamic community organisations. Other recommendations are:
-
Strengthening literacy, communication, and social trust
"Literacy and educational initiatives should focus on targeted, segmented, and value-oriented approaches. Communication strategies must highlight positive narratives and success stories of Shariah insurance participants, delivered through multichannel communication," said the report.
-
Product differentiation and added value in Shariah insurance.
"To break the perception that Shariah insurance products are mere copy-and-paste versions of conventional products, takaful offerings must have unique value-based and characteristic-driven differentiation. Marketing strategies must also be more targeted and contextual," the report also said.
Market share
The recommendations were made because the market share of the family and general takaful branches remains small relative to the conventional insurance market, even though the takaful market shows an upward trend.
The market share of Shariah life insurance contributions is equivalent to only about 16% of total conventional life insurance premiums, according to the report. The market share of general takaful is around 9% of the total premiums of conventional general insurance.
This indicates significant room for growth, especially given that the majority of Indonesia’s population is Muslim, said the report. In 2024, the number of Muslims in Indonesia reached 245m, or 87.20% of the total population.
Challenges and opportunities
The report said that the main challenges for Shariah insurance in Indonesia include limited product differentiation from conventional products, minimal capitalisation, and regulatory pressures such as oversight by several authorities (OJK and DSN–MUI), which increase governance complexity and compliance expenses. In addition, low public literacy remains a major obstacle to expanding penetration and demand for Shariah products.
Opportunities for developing Shariah insurance lie in collaboration and integration with the halal ecosystem, strengthening strategic partnerships with Shariah financial institutions and community organisations, and penetrating the young Muslim family segment.