Contemporary Legal Problems of Sharia Insurance Regulation in Indonesia

Abstract

Objective: This study aims to examine the evolving structure of the insurance industry in Indonesia, particularly its transition from traditional insurance to dual insurance systems, highlighting the presence of the Sharia insurance sector within the national legislative framework.
 
 Theoretical framework: In the realm of Islamic economic studies, fundamental principles such as justice, mutual assistance, the avoidance of oppression, prohibition of riba (interest), and the elimination of gharar elements are central. Sharia-compliant insurance institutions are expected to adhere to these principles while also developing an independent, integrated, and professionally managed insurance framework that aligns with Islamic Shariah. To ensure compliance, each insurance company must establish a Shariah Supervisory Board (Dewan Pengurus Syariah).
 
 Method: This research adopts a normative legal research approach, analyzing primary, secondary, and tertiary legal resources sourced from academic papers and libraries to address the legal challenges of establishing Sharia insurance under existing positive legislation.
 
 Results and conclusion: The findings of this study include First, there is no specific law that governs Sharia insurance, there are no implementation rules for Law No. 40/2014, which governs Sharia insurance, and there is no regulation regarding the typical Sharia policy. These current legal issues make it difficult to set up Sharia insurance under positive law. Second, the specialized arrangement in a Law (lex specialis) of Law No. 40 of 2014 is the optimum Sharia insurance arrangement model following the favorable legal prospects.
 
 Originality/value: This research contributes to the understanding of the legal challenges and intricacies of Sharia insurance regulation in the context of Indonesia's insurance industry transformation. It provides valuable insights into the intersection of Islamic economic principles and contemporary insurance practices, offering a basis for further exploration and policy development in this critical area.