Malaysian Islamic insurer plans Indonesian expansion

Malaysia's Great Eastern Takaful will begin offering Islamic insurance products in Indonesia in the third quarter and hopes to launch its business in Singapore next year, its chief executive said on April 18.
The Islamic insurer will start a distribution channel to focus initially on Java and Sumatra as part of a plan to mine opportunities in the world's most populous Muslim nation, its chief executive Mohamad Salihuddin Ahmad said.
"We are the latecomers, so to be able to differentiate ourselves we will need a different strategy," he said in an interview. "Indonesia is such a vast country, we need to have the right network, the right distribution strategy." Great Eastern Takaful is owned by a subsidiary of Singapore's Great Eastern Holdings Limited and Malaysia's armed forces co-operative. Salihuddin said Great Eastern's conventional business in Indonesia has a much smaller agency force than larger players which typically have 60,000-70,000 people.
Great Eastern would initially offer takaful products through an Islamic window in Indonesia and could set up a separate sharia insurance entity in 2012, he said.
It plans to tap Middle Eastern wealth in Singapore from the first quarter of 2012 by contacting customers of OCBC Bank and its subsidiary Bank of Singapore, Salihuddin said. Great Eastern is a subsidiary of OCBC. There are eight Islamic insurers in Malaysia but the takaful penetration rate was only 10.5 percent as at June last year compared with 42.3 percent for conventional insurance, according to central bank data.