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Article
Publication date: 4 December 2017

Muhammad Ali Jinnah Ahmad and Burhanuddin Lukman

This paper aims to examine the implications of compensation on late payment of takāful benefit imposed in the Islamic Financial Services Act 2013 on the takāful industry…

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3078

Abstract

Purpose

This paper aims to examine the implications of compensation on late payment of takāful benefit imposed in the Islamic Financial Services Act 2013 on the takāful industry in Malaysia. It also aims to identify the issues and challenges faced by takāful operators in the implementation of the compensation and propose solutions for the benefits of the takāful industry.

Design/methodology/approach

This research uses the qualitative approach to understand the practices of claims in takāful and to analyze the implication of compensation on late payment of takāful benefit to the takāful industry in Malaysia. Data are collected through survey and interview with various takāful stakeholders.

Findings

Some of the key findings in this research are that the compensation of late payment of takāful benefit has a positive impact to the takāful industry. The research also found some Sharīʿah operational issues in terms of its implementation among takāful operators.

Research limitations/implications

The research focuses on compensation on late payment of takāful benefit claim in death and personal accident only.

Practical implications

The research offers certainty to the takāful industry and an explanation to academic and legal fraternities on the implementation of compensation on late payment of takāful benefit according to Islamic Financial Services Act (IFSA) 2013.

Originality/value

The research provides a valuable contribution to the current practices of takāful operators, identifies some issues and challenges of its implementation and proposes the solution.

Details

ISRA International Journal of Islamic Finance, vol. 9 no. 2
Type: Research Article
ISSN: 0128-1976

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Article
Publication date: 24 August 2012

Waheed Akhter and Tajammal Hussain

The purpose of this paper is to attempt to see the effectiveness of operational and transformational standards raised by joint working group of Islamic Financial Services…

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2944

Abstract

Purpose

The purpose of this paper is to attempt to see the effectiveness of operational and transformational standards raised by joint working group of Islamic Financial Services Board (IFSB) and International Association of Insurance Supervisors (IAIS) as well as respondents' perceptions about Takāful (Islamic insurance) practices in Pakistan.

Design/methodology/approach

A total of two questionnaires were designed for this purpose: one for Takāful operators in Pakistan and other for insurance customers. For the first questionnaire, three Takāful operators were visited at Karachi. For the second questionnaire, a sample of 150 insurance customers was surveyed at Rawalpindi. Descriptive statistics and Chi‐square test was used to analyze the data.

Findings

Reporting standards and internal controls were found to have low level of observance among Takāful operators in Pakistan. The survey of insurance customers revealed that majority of the respondents (91 percent) are unaware of Takāful concept. Education was found to be the single important factor affecting income of the respondents, their perceptions and level of Takāful awareness.

Research limitations/implications

The survey is conducted at one major city of the country based on convenient sampling technique and its results have been generalized for the entire country. However, actual results might differ when a sufficiently large sample is taken from all the main cities of the country.

Practical implications

The study would help the policy makers to focus on strengthening regulatory framework for Takāful. It will also help Takāful operators in understanding public perceptions about Takāful and devising strategies to promote Takāful business to the vast population of Pakistan.

Originality/value

This is the first empirical research conducted on Takāful in Pakistan that analyzes the Takāful practices both from managerial perspective as well as from regulatory perspective.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 5 no. 3
Type: Research Article
ISSN: 1753-8394

Keywords

Content available
Article
Publication date: 4 December 2017

Burhanuddin Lukman and Saba’ Radwan Jamal Elatrash

This paper aims to ascertain the Sharīʿah (Islamic law) stance on the imposition of goods and services tax (GST) on tabarruʿ-based takāful (donation-based Islamic…

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2167

Abstract

Purpose

This paper aims to ascertain the Sharīʿah (Islamic law) stance on the imposition of goods and services tax (GST) on tabarruʿ-based takāful (donation-based Islamic insurance) products in Malaysia. The paper aims to do so by analysing the philosophy, purposes and structure of GST on takāful products and comparing the imposition of GST on tabarruʿ-based takāful with its imposition on conventional insurance while probing into the Sharīʿah texts and opinions of classical and contemporary scholars about taxation in Islam.

Design/methodology/approach

The paper uses a qualitative research methodology. In addition to the literature and text on websites, the information on how GST is applied in practice is also obtained through interviews, discussions and documents from takāful operators. To determine the Sharīʿah position on GST, reference has been made to classical and contemporary Sharīʿah literature, including local and international Sharīʿah advisory bodies’ resolutions and standards.

Findings

This study finds that a strict interpretation of Sharīʿah does not allow for the imposition of GST; however, there is still room for the government to justify it using a broader interpretation of maṣlaḥah (public interest). Takāful has become a need for the society and is subscribed to by all income groups, and not only by the rich. Hence, the government should consider exempting takāful products from GST. The basis of tabarruʿ in takāful does not provide conclusive Sharīʿah evidence for takāful to be exempted from GST.

Originality/value

This research paves the way for the industry to propose further measures on GST for takāful products such as the exemption of GST on the tabarruʿ amount or imposition of a zero rate of GST on the relevant takāful fees and charges that are currently burdensome to consumers.

Details

ISRA International Journal of Islamic Finance, vol. 9 no. 2
Type: Research Article
ISSN: 0128-1976

Keywords

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Article
Publication date: 10 August 2015

Khalid Al-Amri

The purpose of this paper is to analyze the performance of the Takaful insurance firms in the Gulf Cooperation Council (GCC) countries and do a relative analysis for its…

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2116

Abstract

Purpose

The purpose of this paper is to analyze the performance of the Takaful insurance firms in the Gulf Cooperation Council (GCC) countries and do a relative analysis for its different units.

Design/methodology/approach

This paper analyzes the technical, pure technical, cost and allocative efficiency of Takaful firms in the GCC countries using data envelopment analysis (DEA) methodology.

Findings

The Takaful insurance industry in GCC is highly technical and pure technical efficient. However, it is moderately cost efficient, and there is a large opportunity for improvement. UAE and Qatar score the highest technical efficiency, while Saudi Arabia and UAE are the most cost efficient among the GCC countries.

Originality/value

The primary contribution of this paper is to provide the first DEA analysis of the Takaful industry in the GCC countries. To the best of the author’s knowledge, this is the first study on the Takaful insurance industry that uses different types of efficiency measures, namely technical, pure technical, allocative and cost efficiency, in the GCC countries. This paper also contributes in the literature of the inputs and outputs selection for the Takaful insurance efficiency calculation.

Details

Humanomics, vol. 31 no. 3
Type: Research Article
ISSN: 0828-8666

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Article
Publication date: 16 September 2021

Amer Sarfraz and Asif Khurshid Mian

This study aims to address a leading challenge of confusion about the concept of takāful confronted by existing and potential consumers of the insurance industry. There…

Abstract

Purpose

This study aims to address a leading challenge of confusion about the concept of takāful confronted by existing and potential consumers of the insurance industry. There are multiple sources of confusion, including the lack of consensus among religious scholars to implement a standardized business model of takāful, the lack of knowledge or awareness and the lack of skilled or trained personnel, which prevent existing and potential consumers from adopting takāful products or services. The fundamental concept of takāful is introduced mainly to fulfill the religious, social and economic needs of Muslims. Thus, the choice of takāful activates the religious, cultural, family and tradition values of individuals. Hence, the primary purpose of this study is to determine the impact of tradition value and stimulation value on consumer adoption of takāful services. Further, the scope of this study is extended to establish the mediating role of religiosity and moderating role of confusion on the association between tradition value and consumer adoption of takāful services.

Design/methodology/approach

This study follows quantitative research methods and a cross-sectional approach for data collection. Thus, the sample is collected from 768 respondents belongs to rural and urban areas by using a close-ended questionnaire. The mediation and moderation analysis are performed by using Andrew F. Hayes process Models-4 and −5.

Findings

The result reveals that religiosity mediates and confusion moderates the relationship of tradition value and consumer adoption of takāful. However, the tradition value shows a negative effect on consumer adoption of takāful. Moreover, the confusion negatively moderates the association between tradition value and consumer adoption of takāful. Finally, the stimulation value also reflects a negative effect on consumer adoption of takāful services.

Originality/value

The findings of this study shed novel insights into the existing literature of takāful and basic human values. The outcomes of stimulation values contradict with the findings of Wang et al. (2008). The result of mediation analysis reveals that religiosity plays a vital role in activating the goals of tradition value, which motivates consumers to adopt takāful services. The present study is useful for takāful operators to understand the value priorities of prospect clients belong to rural and urban areas.

Details

Journal of Islamic Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0833

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Article
Publication date: 3 August 2021

Mohsin Abdur Rehman, Sadaf Khan, Ismah Osman, Khurram Aziz and Ghazal Shams

This study aims to test a proposed model based on a combination of the relationship marketing and service quality dimensions as predictors of corporate image and customer…

Abstract

Purpose

This study aims to test a proposed model based on a combination of the relationship marketing and service quality dimensions as predictors of corporate image and customer loyalty via corporate reputation in the Takaful context. More importantly, this study compares the Takaful operators’ services with the perceived service quality and the relationship marketing from the Malaysian and Saudi Arabian customers’ viewpoint.

Design/methodology/approach

A survey-based study was conducted through a questionnaire, and the data was collected from Takaful customers (362 Saudi Arabian and 350 Malaysian customers) through an online survey. Structural equation modelling is used to test the proposed model. Besides, the perception of Takaful customers between Saudi Arabia and Malaysia is compared through a multi-group analysis.

Findings

The results from the Malaysian context reveal that positive perceptions of service quality PAKSERV dimensions (personalization, reliability and tangibility) and positive perceptions of relationship marketing dimensions (Islamic ethical behaviour and structural bonds) have a significant influence on the corporate image. Alternatively, in the Saudi Arabian context, results have shown that the positive perceptions of service quality PAKSERV dimensions (assurance and reliability) of service quality and the positive perceptions of the relationship marketing dimensions (Islamic ethical behaviour, structural bonds and financial bonds) have a significant influence on the corporate image. The differences in both countries’ results can also enhance the corporate image on corporate reputation, merely in Malaysia. By contrast, corporate reputation is deemed a significant predictor of customer loyalty, represented as valid for both contexts.

Research limitations/implications

The proposed research model tested in Takaful Malaysian and Saudi Arabian can be replicated in other contexts – in terms of country and industry. Moreover, the current study reveals the crucial role of corporate image in forming corporate reputation. Future research could be focussed on the importance of other emotional or affective variables that may be involved in determining corporate reputation. Finally, future studies can be carried with another cultural perspective to have more diversified socio-economic implications.

Practical implications

It is suggested that Takaful operators from both Malaysia and Saudi Arabia need to put maximum effort towards customer loyalty by bringing both the dimensions of service quality and the relationship marketing in compliance with the principles of Islamic business transaction. The findings of the specific dimensions of service quality and relationship marketing will contribute to customers’ perceptions of corporate image and reputation in the Takaful industry.

Originality/value

The present study tested a blended facet of customer’s overall experience through service quality (PAKSERV) and customer service provider connectivity (relationship marketing) to predict the corporate image of the highly growing financial marketplace (Takaful). Contextually, this study contributes to delineating the factors (corporate reputation) affecting customer loyalty rather than a customer satisfaction tradition. Significantly, Saudi Arabia and Malaysia were chosen for this study, as they are currently the two fast-growing markets for Islamic financial services, especially with regards to the Takaful products and offerings.

Content available
Article
Publication date: 29 July 2021

Mohd Azizi Ibrahim, Alias Mat Nor and Raja Rizal Iskandar Raja Hisham

This research aims to investigate the factors that can influence Bumiputera contractors' acceptance of the Contractor's All Risks (CAR) takaful (Islamic insurance) product…

Abstract

Purpose

This research aims to investigate the factors that can influence Bumiputera contractors' acceptance of the Contractor's All Risks (CAR) takaful (Islamic insurance) product using the theory of reasoned action (TRA).

Design/methodology/approach

Using the method of quantitative surveys, 414 questionnaires were collected from targeted Bumiputera contractors in Malaysia (grade G1 to grade G7), except in Sabah and Sarawak, that are registered with the Construction Industry Development Board (CIDB) and are also members of Persatuan Kontraktor Melayu Malaysia (PKMM). The data was analysed using the partial least squares structural equation modelling (PLS-SEM) technique.

Findings

The findings from the PLS-SEM analysis show that attitude, subjective norm, religiosity and awareness have a positive relationship with Bumiputera contractors' acceptance of the CAR takaful product. Religiosity appeared to be the most significant factor influencing Bumiputera contractors' acceptance of the CAR takaful product.

Research limitations/implications

The respondents in this study only comprised Bumiputera contractors in Peninsular Malaysia, excluding those from Sabah and Sarawak. Therefore, it is not possible to generalise the findings to a broader population.

Practical implications

Takaful operators and their sales and marketing departments need to act proactively in promoting the benefits of investing in CAR takaful that follows Sharīʾah (Islamic law) rules and principles. They should create mechanisms to market CAR takaful better, thus accelerating its acceptance rate among contractors.

Originality/value

The paper uses the proposed extended TRA model, which includes the variables of religiosity and awareness in the TRA model. These variables were successfully integrated in the model, and the findings show that they have significantly contributed to the acceptance of the CAR takaful product among Bumiputera contractors.

Details

ISRA International Journal of Islamic Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0128-1976

Keywords

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Article
Publication date: 8 July 2021

Ismah Osman, Mohsin Abdur Rehman, Sajid Mohy Ul Din, Ghazal Shams and Khurram Aziz

This study aims to examine a proposed model based on a combination of relationship marketing and service quality dimensions as a significant predictor of corporate image…

Abstract

Purpose

This study aims to examine a proposed model based on a combination of relationship marketing and service quality dimensions as a significant predictor of corporate image. More importantly, it attempts to identify whether corporate reputation mediates the relationship between and customer loyalty and corporate image in the takāful (Islamic insurance) context, from the viewpoint of Saudi Arabian customers.

Design/methodology/approach

An online survey was conducted through an adopted questionnaire from 362 family takāful policyholders from Saudi Arabia. Also, structural equation modelling was used to test the proposed model on the direct relationships of the related constructs, as well as the establishment of corporate reputation as a mediator concerning its relationship between corporate image and customer loyalty.

Findings

This study discovered that only two dimensions of service quality (i.e. reliability and assurance) and three aspects of relationship marketing (i.e. Islamic ethical behaviour, financial and structural bonds) have a significant impact on the corporate image of the takāful providers. This study further concluded that corporate reputation mediates the relationship between corporate image and customer loyalty.

Research limitations/implications

This study has presented and tested the perceived service quality using the PAKSERV model in the takāful (Islamic insurance) industry, particularly in the Saudi Arabian context. This research identified the dimensions of PAKSERV (i.e. reliability and assurance) that influence the corporate image and simultaneously, the aspects of relationship marketing (i.e. Islamic ethical behaviour, financial and structural bonds) are also connected to the corporate image. Corporate reputation acts as a mediator between the relationship of corporate image and customer loyalty. This study, nevertheless, only focused in the takāful industry alone, and these findings could also be tested for its validity to different services in other potential studies because of the diversity of the service industry.

Originality/value

The findings of this study highlight the specific components of PAKSERV measures in influencing the corporate image. Furthermore, relationship marketing addressing Islamic ethical behaviour, as well as the three facets of bonding – structural, financial and social bonds are also incorporated and connected to corporate image. Hence, this study will increase the understanding of the impact of service quality concerning the PAKSERV model and relationship marketing on corporate image, reputation and customer loyalty of the takāful operators in Saudi Arabia.

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Article
Publication date: 16 July 2021

Hafizuddin-Syah Bangaan Abdullah, Rubayah Yakob, Sajiah Yakob and Nuratikah Syafiqah Sharif

Participation in micro-family takāful plans amongst low-income earners remains low despite the various initiatives promoted by the Malaysian Government. Therefore, this…

Abstract

Purpose

Participation in micro-family takāful plans amongst low-income earners remains low despite the various initiatives promoted by the Malaysian Government. Therefore, this study aims to conduct an in-depth examination on the indicators of having micro-takaful tafakul in Malaysia.

Design/methodology/approach

Questionnaires were distributed to respondents residing in Selangor, the state with the highest recorded percentage of low-income earners in Malaysia. Regression analysis was conducted in this study. Demographic characteristics and knowledge were treated as the independent variables, whereas the tendency of having a micro-family takāful plan was considered the dependent variable.

Findings

Gender and knowledge on the benefits of micro-family takāful plans have significant and positive effects on the tendency of having a micro-family takāful plan. Married and employed women are more likely to own a micro-family takāful plan compared with their male counterparts.

Research limitations/implications

This study contributes to the growing literature on the research of micro-takāful determinants in Malaysia.

Practical implications

Industry players and regulators need to tailor the operating and marketing strategies of micro-family takāful plans based on the gender and knowledge of potential participants. The industry may also improve the features of takāful plans to ensure that they are even more attractive and comprehensive.

Originality/value

This study offers a much deeper analysis compared with past research owing to the identified dimensions of a demographic factor that can influence the tendency of having micro-family takāful plans. Besides, this study offers a comprehensive measurement of the knowledge on micro-family takāful plans by considering all aspects (i.e. concept, importance and benefit) of these plans. Moreover, this study examines the influence of each element of knowledge on the tendency of having a micro-family takāful plans, a topic that was rarely studied in the past.

Details

Journal of Islamic Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0833

Keywords

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Book part
Publication date: 25 August 2014

Nesrine Bouzaher, Okba Necira and Sabrina Kerdoudi

The purpose of this chapter is to provide a description of the integration of Takaful in the domestic market, based on experiences in regional markets, focusing on the…

Abstract

Objective

The purpose of this chapter is to provide a description of the integration of Takaful in the domestic market, based on experiences in regional markets, focusing on the explanation of factors that could enhance the position of Takaful in certain areas.

Methodology

The chapter describes the evolution of Takaful insurance in international and regional markets, and explains the articulation of this product in these markets. The chapter also provides an analysis of the Algerian market characteristics related to the Takaful product.

Value

This work will be based on an analytical research of emerging markets and their success factors; then it will be necessary to provide an overview of the product containing Takaful; and finally we will try to follow the experience of the national insurance market with the new product, supplied by the Salama Company, and determine the potential of Algeria in this area.

Findings/Prospects

This work offers an opportunity to understand the mechanisms needed to activate the local market and opens the prospects for effective integration of Islamic financial products gradually, in order to prepare for changes that would provide more financial products suited to the requirements of social development in the Algerian economy.

Details

The Developing Role of Islamic Banking and Finance: From Local to Global Perspectives
Type: Book
ISBN: 978-1-78350-817-4

Keywords

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