Indonesia’s Takaful Industry Growth Supported by Government and Economic Recovery: Fitch Ratings

Indonesia’s emerging Takaful sector is gaining market share with high long-term growth potential, according to Fitch Ratings (Fitch). In 2021, Fitch anticipates improvement in Takaful contribution growth and investment yield, in parallel with the expected recovery in the Indonesian economy at 6.6% for 2021. This is to be driven by rising government support under the Islamic Economic Masterplan 2019-2024, as well as accelerated digitalisation.

Why it matters?

Indonesia’s Islamic finance ecosystem is still developing, with Shariah finance market share at only 9.6% in the first half of 2020. This limits the number of customers that seek Takaful products. Limited Sukuk issuance is also a constraint on Takaful’s investment options. The gr...