Allianz Syariah flexes Sharia insurance for all Indonesians

The low level of Sharia financial literacy and inclusion has driven companies to implement both short-term and long-term measures.

The surge in the Halal lifestyle trend has significantly propelled the emergence of the Sharia industry in various sectors. According to the Global Islamic Economy Index, the positive trends of the Sharia ecosystem in Indonesia was ranked 4^th in 2021.

The Financial Sharia Development Report from the Financial Services Authority (OJK) stated that the Sharia economy continued significant growth in 2022. The total assets of the Sharia non-bank financial industry reached IDR146.12 trillion (US$9,3b), with growth of assets at 20.88%.

Sharia life insurance accounted for 5.62% of the market share, indicating significant market potential.

In line with the vast opportunities available, Allianz Indonesia launched Allianz Syariah, as a separate entity in November 2023, offering inclusive products in accordance with local values.

According to Achmad K. Permana, President Director of Allianz Syariah Indonesia, their company will strive to highlight the concept of mutual assistance in Sharia insurance, which is closely related to the culture ingrained in Indonesia for generations.

“With these familiar values, our hope is that we can more easily provide a good and accurate understanding of our products to the Indonesian society, both Muslims and non-Muslims,” Permana told Insurance Asia.

Aligning with Sharia principles

Permana has called attention to notable differences between Sharia insurance and conventional insurance, citing the former as emphasising inclusive and universal values, making it expected to be acceptable to all segments of society.

In conventional insurance, for example, when someone experiences a calamity, they will receive benefits according to the premiums they have paid. But in Sharia insurance, Permana said that when a customer pays premium (contribution), it is assured that those contribution payments will be used to help other customers, even other people who need through the wakaf (charitable) feature in its shariah life insurance products.

“Our commitment is to provide Sharia-based insurance products that meet the protection needs of customers. Although we dynamically adapt to the diverse needs of society, we will always prioritise Sharia principles in every product development," he said.

These principles will follow the guidance of Sharia Supervisory Board and regulator, namely the OJK. All innovations undertaken by the company will also be based on the concept of ta’awun (mutual assistance), tawhid (making into one), and the concept of protection among insurance participants, said Permana.

“These concepts are also in line with the five core values ​​we adopt in every aspect of our business processes, namely Universal, Trustworthy, Security, Fairness, and Collaborative,” he said.

Short-term and long-term steps

In maximising the significant opportunities of the Sharia industry, Allianz Syariah will implement both short-term and long-term strategies.

Firstly, it will organise various financial literacy activities to raise public awareness about the importance of having insurance protection for their future plans.

According to the 2022 National Survey of Financial Literacy and Inclusion by OJK, the national average literacy and financial inclusion rates for Sharia finance in 2022 were 9.14% and 12.12%, respectively. Allianz Syariah sees this as an opportunity to play a role in financial literacy programmes.

One of the activities the company has already undertaken is a roadshow to several cities in Indonesia through the “Insuring 10,000 Indonesian Citizens Movement.” The movement started when Allianz Syariah officially full-fledged, and one of these movements was providing free sharia insurance protection to 1,005 employees of the Bogor City Environmental Agency, West Java.

“Our target is to introduce Sharia insurance to people in various regions, communities, and professions, and to give those who do not have insurance the opportunity to directly experience the benefits provided by Sharia insurance,” explained Permana.

Furthermore, Allianz Syariah continuously improves the quality of its agents as a solution to the low literacy and inclusion rates in Sharia insurance. This is because the company realises that agents play a crucial role in providing the right understanding to customers regarding the appropriate insurance products.

“We often provide comprehensive training to facilitate agents so that they can provide adequate and accurate education to customers,” said Permana.

Read more: Allianz Indonesia taps millennial agents and digitalisation to reach more customers

In the long term, Allianz Syariah will endeavour to increase its market share of Sharia insurance in Indonesia through the launch of products that are not limited to health insurance but also cater to user needs and continue to innovate by providing technology-based services and digitisation.

“We will rely on digitalisation processes to maximise the introduction of Sharia insurance concepts, especially among millennials and Generation Z, who are more literate in digital adaptation, both in terms of sales channels and social media usage,” said Permana.

Through these digital channels, Allianz Syariah will strive for better and more accurate understanding of Sharia insurance products and features so that the acceptance of Sharia products can become faster and more massive.

This year, Allianz Syariah is targeting positive business growth with company strategies supporting the increase in Sharia financial literacy and inclusion. Permana said this includes “facilitating life and health insurance solutions through agency and bank channels and continually simplifying customer service through digital innovation.”