Alfia Azzuhra, Sunarsih Sunarsih, Azza Ibraisama Ersyada, Taufikur Rohman

REGULATORY CHALLENGES AND SHARIA COMPLIANCE IN THE OPERATIONAL MANAGEMENT OF TAKAFUL COMPANIES

Introduction

Regulatory challenges and sharia compliance in the operational management of takaful companies. Explore regulatory challenges and Sharia compliance in Indonesian takaful companies' operations. This study identifies obstacles and proposes solutions for industry sustainability.

Abstract

The Islamic insurance (takaful) industry in Indonesia holds significant potential, given the country's dominant Muslim population and the growing Islamic financial ecosystem. Nevertheless, the industry's growth continues to face numerous challenges, particularly with regard to regulation and Sharia compliance. This study aims to analyze the implementation of Sharia compliance in takaful company operations and to identify regulatory challenges that affect the sustainability of the industry. The research employs a qualitative-descriptive approach using library research and normative legal analysis. Data were obtained from legislation, DSN-MUI fatwas, OJK regulations, industry reports, and relevant scientific literature. Analysis was conducted through content analysis, comparative analysis, and qualitative-descriptive analysis. The findings reveal that takaful companies in Indonesia have generally implemented Sharia compliance principles through the use of tabarru' and tijarah contracts, the separation of participant and company funds, and oversight by the Sharia Supervisory Board (DPS). However, the effectiveness of compliance still faces obstacles, including a suboptimal role of the DPS, differences in fatwa interpretation, and the lack of standardized Sharia auditing. From a regulatory perspective, the main challenges include the absence of a dedicated Sharia insurance law, fragmentation of regulations between technical and Sharia authorities, low Islamic financial literacy, limited capital, reduced product competitiveness, slow digital transformation, and the industry's readiness to comply with the Islamic Business Unit (UUS) spin-off policy. Therefore, it is necessary to strengthen the regulatory framework, enhance Sharia governance capacity, and accelerate innovation and digitalization in order to improve the competitiveness and sustainability of the takaful industry in Indonesia.

Review

This study, "REGULATORY CHALLENGES AND SHARIA COMPLIANCE IN THE OPERATIONAL MANAGEMENT OF TAKAFUL COMPANIES," addresses a highly pertinent and critical area within the growing Islamic finance landscape of Indonesia. Given Indonesia's large Muslim population and burgeoning Islamic financial ecosystem, the sustained development of its takaful industry is vital. The authors appropriately pinpoint the core impediments to this growth, focusing specifically on the intricate interplay between ensuring robust Sharia compliance in operational management and navigating the existing regulatory environment. The paper's stated aims to analyze current Sharia compliance implementation and identify key regulatory challenges are highly relevant for both academic discourse and industry practice. Employing a qualitative-descriptive approach, the research utilizes a commendable array of sources, including legislation, DSN-MUI fatwas, OJK regulations, industry reports, and scientific literature, underpinned by normative legal analysis. This robust methodological framework lends credibility to its findings. The study reveals that while takaful companies generally adhere to Sharia principles through contracts, fund separation, and DPS oversight, significant impediments remain. These include the suboptimal role of the Sharia Supervisory Board (DPS), divergences in fatwa interpretation, and a notable absence of standardized Sharia auditing. Crucially, the paper extensively identifies multifaceted regulatory challenges such as the lack of a dedicated Sharia insurance law, fragmented regulatory oversight, issues of low Islamic financial literacy, limited capital, product competitiveness, slow digital transformation, and the looming impact of the Islamic Business Unit (UUS) spin-off policy. The paper makes a valuable contribution by comprehensively mapping out both the internal operational compliance issues and the external regulatory hurdles that collectively impede the Indonesian takaful industry's sustainability. The detailed articulation of challenges, from governance weaknesses within the DPS to systemic regulatory fragmentation, provides a solid foundation for policy formulation and strategic planning. The authors' concluding recommendations — to strengthen the regulatory framework, enhance Sharia governance capacity, and accelerate innovation and digitalization — directly address the identified weaknesses and offer practical pathways for improving competitiveness. Overall, this research provides a timely and insightful analysis, offering critical perspectives for regulators, industry practitioners, and scholars interested in the future trajectory of Islamic insurance in Indonesia.

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