The Syariah Insurance Industry or often known as Takaful Insurance has been around for more than 10 years in Indonesia but there are not enough legal instruments, law or regulations to support it. This standardization is important to insurance companies so there would be no hesitation in their operations and no confusion among stakeholders of the Syariah Industry in running the industry.
In our case here in Indonesia, insurance associations like the Association of Indonesia Syariah (AASI) have agreed to scheme up standardization as contribution from the Association to the Government whereby the Syariah insurance industry may run healthily and profitably. Information from the Deputy Chairman of the Association of Indonesia Syariah (AASI), Technical and Standardization Division Yudhi Pratama, had it that standardization proposal had been submitted to the regulator. He claimed to have forwarded standardization proposal to the Board of Stockmarket Control and Financial Board (Bapepam-LK) some days ago. “The proposal has been forwarded in early January 2011” Yudhi Pratama said.
To realize and activate this standardization process, meeting between the association and Bapepam-LK as regulator of industry need to be more frequently held to synchronize perception between regulator and players of the insurance industry.
The standardization is applicable to four products automotive insurance, fire insurance or property personal accident insurance and heavy equipment insurance.
There are four points in this insurance which will be included in the rules of standardization, i.e.
1. the concept of risk sharing
2. Elaboration of terminology of definitions in Syariah
3. Clausule on agreement
4. the Clausule of dispute
5. the Clausule of haram
Furthermore in terms of insurance-policy standardization, AASI in the process of discussing a number of model of management and insurance funding and premium of customers of the tabaruq fund which underscores Syariah principles and additional agreements in the application of the principles of funding insurance.
Some practitioners of Syariah insurance were of opinion that standardization of Syariah insurance was extremely important in managing rights and responsibilities for stakeholders and customers alike, and even more important for regulators as benchmark to appraise whether an insurance compay follows the applicable standard or not. The standard could be a regulating instrument in controlling and nurturing. One of the observers of Syariah insurance Hadry Harahap stated that today each company were making insurance police police rules, agreements or others merely on the basis of company rules which were not formal and standardized. He believed that this standardization would be beneficial not only to the customers but also to the companies themselves as well as the regulators.
To the customers, it would mean legal assurance and convenience because life insurance or general insurance are truly Syariah based whilst for companies, it would make it easy for them to market their products to the regulators, standardization could serve as indicator for reference in giving guidance, nurturing and control.
As known, there are always Syariah insurance system that differ from conventional insurance such as treatment on tabarruq (collected) fund, for collective interest of policy holders. In conventional insurance, this tabarruq fund is non existent, this is not to mention other differences between to the two which may not be known by holders of the new Syariah insurance.
Comprehension of product types and insurance rules is most important so there would soon be no different perceptions which end up in disputes which disadvantage all parties.
Anywhere at all in the world of modern industry, standardization is of utmost importance. Although it has been applied for long in Indonesia, standardization, although too late, need to be supported by the Government and by the Syariah industry. Publication and illumination of the philosophy and characteristics of the Syariah insurance, and the difference between Syariah insurance and conventional insurance become imperative so the development of Syariah insurance industry will not be obstacled just because of different public perceptions.
Perceptions of the Syariah insurance among stakeholders or related parties such as operators of Syariah insurance, regulators, insurance policy holders and the public must be synchronized so as not to hold back development of Syariah insurance in the future. The Syariah insurance industry in Indonesia could learn from Syariah industry in Malaysia which is ten years older by experience in this business line.