Enhancing Islamic Economic Growth through Strategic Development of Islamic Insurance in Indonesia

Abstract

Indonesia's Islamic insurance (Takaful) sector grapples with issues such as low financial knowledge and a substantial gap in market share compared to regular insurance. Despite a sizeable Muslim population, Islamic insurance holds a mere 5.7% of the market, while conventional insurance dominates at 94.3%. This study delves into potential solutions to these challenges and aims to bolster the role of Islamic insurance in Indonesia's economic development. A qualitative descriptive analysis was conducted, gathering insights through interviews with experts, regulators, and academics, as well as focus groups and document reviews. The findings highlight that public awareness and limited product options are significant barriers. The Pentahelix model, which underscores collaboration among academia, industry, government, community, and media, emerges as a robust strategy for enhancing financial knowledge, expanding product choices, and strengthening regulatory support. The proposed measures, including targeted literacy programs, innovative product development, and supportive policies, are crucial and must be implemented urgently. This research offers valuable insights, indicating that the Pentahelix model could be a game-changer in enhancing the role of Islamic insurance in Indonesia's sustainable and inclusive economic growth.