Islamic Micro Takaful in Indonesia is ready to Thrive
In many Muslim countries, the majority of people still live in poverty and lack access to financial services, include insurance, which can help them to prevent their worsening economic conditions. In some countries such as Indonesia, creating insurance products in accordance with Islamic principles and can touch the lower middle income people is a necessity that slowly started to gain attention and priority.
Awareness for micro insurance, in general, and Islamic micro insurance in particular is still very low. This will affect SME’s decision to buy Takaful products, although the affordable premiums and significant benefit are the main determinant of preference between conventional insurance and Islamic insurance.
In order to integrate equation viewpoint of Islamic micro insurance between BMT and insurance companies, Islamic Economic Society (MES) actively held business matching in a number of areas in the country, which was attended by dozens of BMT. Among the business matching agenda in a number of areas which began in 2013 until April 2014 MES already held 3 Business Matching in 3 regions, there are Malang (28/10/2013), Batam (15/04/2014), and Padang (23/04/2014).
Islamic Micro Insurance Business Matching Event is a series of roadshow events by MES Takaful Seminar 2014 in six cities across Indonesia. “Islamic Micro Insurance Business Matching in Padang is the second held in 2014 after last week held in Batam and still will be held again in four cities. They are Banjarmasin, Palangkaraya, Medan and Cirebon,” added Herry Aslam, Executive Program Officer of Islamic Economic Society (MES) in Jakarta.
Through these efforts, MES hopes to lead Indonesian BMT opinion that Islamic micro insurance is very important as one of the risk mitigation strategy for business customers. By doing so, it is expected to rise awareness or consciousness of the perpetrators of Islamic microfinance in the country to risk management. During this Business Matching agenda, dozens of BMT were given an insight into the importance of risk mitigation through insurance customers and they are ready to use the Islamic micro insurance. A total of 20 BMT in Malang, 4 BMT in Batam and 41 BMT in in Padang began to increase awareness for the use of Islamic micro insurance instruments.
Many BMT in Padang, West Sumatera even explore the possibility of cooperation in micro takaful product as it has been initiated by the MES West Sumatra Regional Board. Rais, Executive Secretary of the MES West Sumatra Regional Board explained “Business Matching was attended by 41 managers and administrators from BMT invited. From 41 BMT who attended this event, all agreed to use micro insurance product, because it is considered very useful for us as managers and customers, especially for BMT. ” He further explained “Islamic micro insurance is a new thing for the managers of BMT in Padang City, this forum has become a chance for BMT managers in Padang, especially for the protection of customers which previously have been unthinkable”.
Ramadhani, a senior practitioner in BMT Padang Pauh district expressed her enthusiasm for the use of Islamic micro insurance as a means of protecting their customers from the risk of non performing financing.
“Communication between BMT and Islamic insurance company in Business Matching like this is needed. The BMT in the future will use Islamic micro-insurance products to protect financing problems becaus which have failed to pay due to death or businesses risk such as fire, ” he explained. With the development of Islamic Microfinance Institutions all over Indonesia, MES will seriously explore the possibility of cooperation between Islamic insurance company that provides micro insurance products to the entire of BMT in the country through a road show to various regions. This move, is expected to bring together the needs between the two parties in one forum.
“MES will continue hold the Business Matching Sharia Microfinance Institutions (BMT) perpetrators in 2014 in various regions in Indonesia. They are Banjarmasin, Palangkaraya, Medan and Cirebon and it is welcome for Islamic insurance companies that want to cooperate.” Said Ari Permana, deputy Executive Director of the Executive Committee of Islamic banking. “The development of Islamic micro finance institutions in West Sumatra is quite good in terms of the increase in assets, and financing. For the future it should be developed to provide protection to customers in the form of Islamic micro insurance. In addition, the Islamic microfinance industry in West Sumatra also get support from the local government, especially from elected mayor of Padang, who is the one of BMT founding father in West Sumatra, “said Reza Sadat, Secretary General MES West Sumatra Regional Board.
Source: Islamic MicroFinance News. Date: August 10, 2016