Determinants of Financial Performance in Islamic Life Insurance Companies: Evidence from Indonesia Nur Kholis(a), Yunika Hidayah(a), dan Rakhmawati (a,b*)
(a) Department of Islamic Economics, Universitas Islam Indonesia (UII), Yogyakarta, Indonesia
(b) PhD Student in Islamic Economy & Halal Industri, Universitas Gadjah Mada, Yogyakarta, Indonesia
rakhmawati[at]uii.ac.id
Abstract
This study investigates the internal determinants of financial performance among Islamic life insurance companies in Indonesia. The financial performance is measured by Return on Assets (ROA). Using panel data from 24 Islamic life insurers between 2018 and 2022, the study employs panel regression analysis, the random effect approach. The results indicate that the size of the board of directors has a significant positive impact on financial performance, while leverage exhibits a strong negative effect, suggesting that excessive reliance on debt hampers performance. In contrast, variables such as the board of commissioners, the sharia supervisory board, firm size, and age do not show significant relationships with performance, implying that compliance structures and institutional maturity alone do not guarantee superior outcomes. These findings emphasize the importance of governance quality and prudent financial management in enhancing the performance of Islamic life insurance firms. The study contributes to the growing literature on Islamic finance by integrating governance and financial metrics within an emerging market context, offering actionable insights for managers, policymakers, and regulators seeking to strengthen institutional sustainability and competitiveness in the Islamic insurance sector.
Keywords: takaful, return on asset, corporate governance, sharia supervisory board
