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gateway to islamic finance interview - Institute of Islamic Banking ...

NEWHORIZON Rajab–Ramadan 1429

TAKAFUL FOCUS

something, but I don’t think it will be out

soon. It will be two to three years down

the road.’

If the Indonesian regulators are to act on

these discussions and bring in laws relating

to takaful, then Ahmad believes they don’t

have far to look for the way it should be

done. ‘If you are talking about takaful,

Malaysia is the role model. The government

gave full support for all Islamic finance,

takaful, as well as banking and capital

markets. It has invested a lot of money to

ensure that Malaysia becomes the financial

hub in the region, and hopefully globally.’

It’s not just the support that the government

gives the industry that Ahmad is impressed

by; it is also the regulatory structure.

‘Malaysia should be the role model for the

regulatory framework, and how the

takaful operators market and develop

the products.’

Malaysia does indeed have a strong and

vibrant takaful industry. As a market, it is

proof of what Islamic finance can achieve

with the right levels of support from

regulators. This is not lost on Ahmad. He

believes it is not only the Indonesian market

that should look to the country for

guidance. ‘I know Dubai tries to emulate

Malaysia, I don’t want to say which one is

the best, but at this point in time, perhaps

Malaysia can be the role model globally.’

Despite a slow start, takaful in Indonesia is

beginning to make progress. Currently the

best way takaful providers have found to

get their products to market is through

pairing up with banks to offer

‘bancatakaful’. This, claims Ahmad, is one

of the lowest cost distribution channels for

insurance companies. It also provides

benefits for both parties through crossselling.

‘My company works very closely

with all the Shari’ah banks,’ says Ahmad,

‘we have some joint development products

for Islamic banking and takaful.’

Currently, the product that Ahmad sees the

highest demand for is investment-linked

takaful. This, he claims, accounted for

around 30-35 per cent of his company’s

revenue in 2007. And with demand still

high this year, he expects this product to

continue being a big seller into next year.

He can also see a distinct demand for health

and medical takaful.

Getting takaful products into the market

through the Islamic banks is a good start,

but Ahmad knows that more still needs to

be done. ‘Insurance, especially at the

infancy stage, depends a lot on the

insurance agents. If you see all the

successful insurance companies, one of the

critical success factors is the number of

intermediaries or agents. The more they

have, usually the higher their business

growth.’ It is because of this that he believes

his company can’t run away from recruiting

as many agents as possible. ‘In order to

boost our market share, we need to recruit

as many qualified agents as we can.’

Of course recruiting more agents should

only be the first stage for growing the

business. What Ahmad sees as one of the

‘critical success factors’ is staff

development. ‘We have to make sure the

development of agents is very effective in

terms of training and product knowledge.’

Linked to this, Ahmad also champions

good customer services as a way to build

the business. ‘You let your customer go

through a pleasant experience with an area

to provide the services.’ This concept is true

not only for the issuing of policies, but also

when it comes to claims as well.

For Ahmad, the key to achieving this is

having a good IT infrastructure in place.

‘We have to ensure the IT is the latest and

the fastest so that we can issue the policies

in the shortest period of time. We also have

to ensure that the policy holder doesn’t

have any bad experiences when it comes to

turnaround time for claims being made.’

One thing is clear – Indonesia has a huge

potential market to be tapped into. With

87 per cent of the population being Muslim

takaful should be the insurance product of

choice in the country. This is something

Ahmad is keenly aware of, ‘I see a huge

potential for Indonesia. The domestic need

for Islamic insurance is huge. I foresee that

if you have the right ingredients, the

regulatory and human capital, Indonesia

can maybe overtake the big players in

other countries.’

The only way that the country can achieve

this and become a dominant force in Islamic

finance, is for the government to take

action. It needs to take a long hard look at

the regulatory challenges that the takaful

providers are facing, and tackle these

through producing a dedicated takaful act.

With proper top level support, and

increased public awareness, there is no

reason why this country could not move

into the group of leading players in

Islamic finance. The market is there, it

just needs to be given the opportunity

to flourish.

I foresee that if you have the right ingredients, the

regulatory and human capital, Indonesia can

maybe overtake the big players in other countries.

www.newhorizon-islamicbanking.com IIBI 15

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