Spin-Off of Indonesia’s Takaful Firms Sees Slow Progress: Fitch

According to Fitch Ratings (Fitch), the Indonesian Takaful industry would experience challenges in the short to medium term as a result of the requirement that Shariah business units (SBUs) of conventional insurers spin off into separate organisations.

Why it Matters?

Even though the deadline for submitting amended spin-off plans to the regulator is approaching (17th of October 2021), only a few SBUs have separated as required. It is claimed that due to significant capital requirements and operating expenses, most insurance companies are moving slowly and struggling to spin off SBUs in the short term, with the ramifications for profitability and financial viability still unknown. In the long term, however, Fitch notes that increased sector capitalisat...