Despite expectation of growth in 2023, Indonesia’s takaful sector is facing some long-term challenges due to limited demand.
This is the conclusion of a report published by credit rating agency Fitch.
The agency’s Indonesia Takaful Dashboard: 2023 forecasts that the sector will grow by 5-10% this year, supported by the developing Islamic finance market.
However, a lack of awareness and demand from investors is likely to present long-term challenges for takaful products in Indonesia.
Market share of Indonesia’s insurance sector increased slightly in 2022, up from 8% to 9% in the last 12 months, while Indonesia maintained its position as the fifth largest takaful market globally.
But a lack of financial literacy in sharia products, the distribution channel gap, small capital base of the sector and limited product range will make further growth challenging, according to Fitch.
© 2023 funds global asia