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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 different…

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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

Keywords

Article
Publication date: 4 July 2023

Oussama Saoula, Muhammad Farrukh Abid, Munawar Javed Ahmad, Amjad Shamim, Ataul Karim Patwary and Maha Mohammed Yusr

It is widely evident that trust and commitment are important pillars for strengthening the relationship between financial service firms and their customers. However, it has not…

Abstract

Purpose

It is widely evident that trust and commitment are important pillars for strengthening the relationship between financial service firms and their customers. However, it has not been explored how the service quality, perceived cost and role of agents are important for financial service firms. To overcome this gap, this study aims to investigate the role of service quality, perceived cost and the role of agents as the commitment–trust factors in the financial insurance service (Takaful) in Malaysia, enhancing customer satisfaction.

Design/methodology/approach

The study follows a quantitative design in which primary data was collected using a survey instrument. The measurement instrument was adapted from the previous research, and data were collected from 264 customers of the Takaful financial service organizations in Malaysia. The data were analyzed using variance-based structural equational modeling in Smart-PLS software.

Findings

This research has revealed several useful insights that demonstrate a significant impact on service quality, perceived cost and the agents’ role in forging close relationships with their customers. Corporate image has a moderating role in relationships and has significantly impacted takaful insurance companies. The results imply that regardless of the corporate image of the financial service organizations, customers are concerned about the prices and the quality of the agents’ services.

Research limitations/implications

In this study, only the predictors such as service quality, perceived costs and agents’ roles as trust–commitment factors were examined to determine customer satisfaction. Other investigations are highly recommended, such as value co-creation in takaful, takaful customer experience and takaful trust. This study offers insights to takaful insurance companies on how to keep up a positive corporate image, which will boost their trust–commitment factors and ultimately increase customer satisfaction.

Originality/value

By presenting commitment–trust factors and company image in an identifiable framework, the current study has expanded the discussion on takaful financial insurance services. The methodology is developed and rigorously tested to gauge customer satisfaction in takaful financial service organizations’ context.

Details

Journal of Islamic Marketing, vol. 15 no. 2
Type: Research Article
ISSN: 1759-0833

Keywords

Article
Publication date: 2 January 2018

Meerna Mroueh and André de Waal

Islamic finance is an interesting field of research, as it represents an alternative to conventional finance for Muslims. It is a way of conducting finance based on the principles…

Abstract

Purpose

Islamic finance is an interesting field of research, as it represents an alternative to conventional finance for Muslims. It is a way of conducting finance based on the principles of Islam and prohibition of interest. Islamic finance can be divided into two areas: Islamic banking and Islamic insurance (Takaful). This paper aims to describe a research study on the applicability of the high-performance organization (HPO) framework on Takaful insurance companies and whether it can improve their performance in a sustainable way.

Design/methodology/approach

The factors and characteristics of the HPO framework are theoretically matched with the characteristics of the Takaful industry for evaluating whether these reinforce or weaken each other. The outcome of this matching process gives an indication of whether it is easier or more difficult for Takaful insurance companies, compared with conventional companies, to apply the HPO framework and transform themselves into HPOs.

Findings

It can be theoretically expected that, out of 35 HPO characteristics, 10 will be easier to strengthen in Takaful organizations compared with conventional organizations and 9 will be more difficult, and for 16 characteristics, there will be no difference. These results suggest that, most likely, it does not make a difference whether UAE Takaful organizations or conventional organizations implement the HPO framework, they will probably need roughly the same amount of effort to make a successful transition.

Research limitations/implications

In a follow-up study, the HPO framework will be applied at several Takaful insurance companies to evaluate the operation of the framework in practice.

Originality value

To date, no studies of the HPO framework and HPOs have been conducted at Takaful insurance companies in the UAE. Thus, by theoretically matching the HPO framework with Takaful organizations, the study fills a gap in the management literature regarding high-performance improvement techniques for Takaful organizations.

Details

Journal of Islamic Accounting and Business Research, vol. 9 no. 1
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 2 February 2015

Sheila Nu Nu Htay, Nur Shazwani Sadzali and Hanudin Amin

This research aims to examine the viability of micro-health takaful in Malaysia. Current practices in the takaful industry in Malaysia reveal that takaful operators (TOs) are keen…

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Abstract

Purpose

This research aims to examine the viability of micro-health takaful in Malaysia. Current practices in the takaful industry in Malaysia reveal that takaful operators (TOs) are keen on offering products that are affordable for middle- to high-income people. However, the concept of takaful is based on mutual help, and, hence, it is believed that TOs should offer products affordable by the poor and lower income people.

Design/methodology/approach

To achieve this objective, the interest of the poor to participate in this product is examined by sending the questionnaire. In addition, TOs were approached to understand why micro-health takaful products have not been offered as yet. The regulator was also interviewed to gauge whether the government is supportive of this scheme.

Findings

From the survey, it was noted that the poor people are interested to participate in such a scheme. However, most of them are only willing to contribute about RM5 per month, while some of the respondents, especially, zakat recipients are unable to afford to pay at all. The zakat authority when interviewed stated they were unable to contribute on behalf of the zakat recipients. To a certain extent, zakat authority is required to obtain an approval from the National Fatwa Council with regard to that issue. The regulator views that the micro takaful is still in an experimental stage. From the perspective of TOs, it might be viable if the product is offered as part of the corporate social responsibility, rather than by individual operators. Therefore, it could be summed up that micro-health takaful will be viable if and only if TOs collectively offer it as a part of their corporate social responsibility, and it must be subsidized by the zakat or waqf authorities.

Research limitations/implications

Particularly, this study only considers a limited geography in Malaysia to understand the viability of micro-health. On the same note, the current focus of the study is on micro-health takaful in which it has not tapped other potential micro takaful products.

Originality/value

This study is a pioneering effort in understanding the viability of the micro health takaful in Malaysia.

Details

Qualitative Research in Financial Markets, vol. 7 no. 1
Type: Research Article
ISSN: 1755-4179

Keywords

Article
Publication date: 2 December 2019

Hafiz Ali Hassan

The concept of Takaful has a long history. It is linked with the era of Prophet Muhammad 1,400 years ago. The globalization and development of socio-economic systems have made…

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Abstract

Purpose

The concept of Takaful has a long history. It is linked with the era of Prophet Muhammad 1,400 years ago. The globalization and development of socio-economic systems have made business activities more complex in response to emerging human needs and requirements. Similarly, Takaful insurance has fully commercialized and become an important indicator of the international financial market. The purpose of this study is to understand the Takaful mechanism and progression of its procedures to date since its inception.

Design/methodology/approach

This study seeks to examine the origin, evolution and historical developments of Takaful mechanism, operations, models and governing framework with extant literature review from previous studies and current practices.

Findings

The modern Takaful insurance first began in Sudan back in 1979. The Takaful operations must abide by the Sharia laws and work under the supervision of the Sharia Supervisory Board. Since its evolution, Sharia scholars have introduced various Takaful models that are going to be explained in this study. Moreover, several Islamic organizations, including the “Islamic Financial Services Board” and the “Accounting and Auditing Organization for Islamic Financial Institutions,” have provided guidelines and supervision to develop and strengthen the Takaful industry further. The study acknowledges Takaful as a growing insurance industry with huge potential and promising future in both Pakistan and the international market.

Practical implications

During the analysis, various deficiencies and loopholes were identified, which are responsible for the unmatched growth of conventional insurance. They can be eliminated with the joint efforts of industrial players, Sharia scholars and Takaful insurance companies. Hence, Islamic scholars and academic researchers are encouraged to develop and modify the current practices of Takaful mechanism according to current market demands and consumer approach. The research efforts will help Takaful operators to develop more innovative Takaful products adhering Sharia compliance. Consequently, it will help to access more consumer market and further enhances the Takaful growth.

Originality/value

This study is an effort to provide a basic understanding of the mechanism of Takaful models. The study helps to comprehend how Takaful models have evolved and been modified over the course of time. Moreover, it provides a base for further development and improvement in current practices of Takaful models, which will result in increased progress for the Takaful industry.

Details

Journal of Islamic Marketing, vol. 11 no. 6
Type: Research Article
ISSN: 1759-0833

Keywords

Article
Publication date: 5 October 2015

Hairul Suhaimi Nahar

The purposes of this paper are threefold. First, it aims to argue normatively how Shari’ah precepts governing Takaful operations are translated into (rightfully) different…

3048

Abstract

Purpose

The purposes of this paper are threefold. First, it aims to argue normatively how Shari’ah precepts governing Takaful operations are translated into (rightfully) different accounting and reporting of Takaful operators. Second, it provides a critical review of the available and applicable accounting and reporting standards and guidelines related to Takaful in the Malaysian context. The third objective which constitutes the empirical piece of this paper centred on the basic numerical evidence obtained from the survey of final-year accounting students with regards to their ability in identifying the basic (dis)similarities in accounting and reporting between Takaful and insurance based on the published financial statements.

Design/methodology/approach

A mixed-mode research approach was adopted covering archival document reviews and focused group survey.

Findings

Findings are arguably informative and relevant to diverse stakeholders. First, the missing jigsaw puzzle representing accounting and reporting in the Takaful literature is uncovered by extending the explanations of Takaful-insurance conceptual and operational differences to that of accounting and reporting. The essence primarily lies on the different operational set-up attributed to the elements of gharar, maisir and riba. Second, the comparative analysis of accounting and reporting rules indicates that AAOIFI standards are less detailed in terms of accounting treatment over certain areas of Takaful operations (e.g. Re-Takaful), but these are more holistic, focused and specific in some other relatively important reporting areas reflecting the unique nature of Takaful operations. Third, findings based on the Malaysian Takaful accounting and reporting guideline suggest that accounting and reporting between Takaful and insurance are perceived to be a coin having monographic characteristics on both sides.

Originality/value

The research explicitly extends and highlights the impact of Shari’ah precepts governing Takaful’s operational nature on its accounting and reporting. It also provides empirical evidence on the nature of Malaysian-based Takaful accounting and reporting guidelines which mirror its insurance counterpart.

Details

Journal of Financial Reporting and Accounting, vol. 13 no. 2
Type: Research Article
ISSN: 1985-2517

Keywords

Open Access
Article
Publication date: 4 December 2017

Hamim Syahrum Ahmad Mokhtar, Izwayu Abdul Aziz and Noraziyah Md Hilal

This study on corporate demand for general takāful (Islamic insurance) aims to identify potential growth areas and areas for improvement in takāful business practices in Malaysia.

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Abstract

Purpose

This study on corporate demand for general takāful (Islamic insurance) aims to identify potential growth areas and areas for improvement in takāful business practices in Malaysia.

Design/methodology/approach

A survey on corporates’ protection needs, takāful/insurance coverage obtained and awareness on takāful/insurance was conducted for this paper.

Findings

The findings from the survey are as follows: There is potential for takāful operators to further penetrate the corporate sector, as the majority of respondents indicated willingness to spend on takāful/insurance. Emphasis on takāful value propositions apart from its Sharīʿah compliance status is needed to attract corporates, as respondents were found to be indifferent on Sharīʿah compliance status of their protection. Strong market presence, expanded product offerings and efficient services were key determinants to attract takāful subscription. Respondents’ heavy reliance on intermediaries warrants strong collaboration with intermediaries to widen market outreach. The small and medium enterprises segment appeared promising, as it is found to be underserved despite having higher propensity to obtain takāful/insurance coverage compared to the overall respondents.

Research limitations/implications

This study is limited to Malaysia’s experience. The findings are indicative (though they may not be conclusive) of the target segment as well as the takāful industry as a whole.

Originality/value

The insights on respondents’ considerations when obtaining takāful/insurance coverage and the correlation of these factors with respondents’ characteristics can assist takāful/insurance providers in structuring products and business strategies to better serve this market segment. The paper may also aid discussions among researchers and regulators on areas for further development of the industry.

Details

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

Keywords

Article
Publication date: 12 April 2013

Mohamed Sherif and Nor Azlina Shaairi

The purpose of this paper is to identify the driving forces that influence family Takaful demand in Malaysia. The paper examines various identified and available economics and…

10894

Abstract

Purpose

The purpose of this paper is to identify the driving forces that influence family Takaful demand in Malaysia. The paper examines various identified and available economics and socio‐demographic variables.

Design/methodology/approach

Using ordinary least square (OLS) and generalised method of moments (GMM) techniques, the paper investigates the significance of the identified economic and socio‐demographic factors in determining the consumption of family Takaful. The paper first examines a full model that combines all variables; second, a model that controls for product market factors; and finally, a model that controls for socio‐demographic factors. Following Anderson and Nevin, Haberman, Lenten and Rulli and Josa the paper further separates all models into linear and log‐linear demand functions.

Findings

The paper demonstrates that income, Islamic banking development, education, dependency ratio and Muslim population factors are positively related to Takaful demand. On the other hand, inflation, real interest rate, financial development and life expectancy appear to be the significant factors that adversely influence the total family Takaful consumption.

Research limitations/implications

The major limitation of this paper is the small sample size. Therefore, future studies may expand the variables omitted in this study due to unavailability of data, which may be influential in explaining the family Takaful demand in Malaysia. Possible influential variables may include government social security expenditure, price of Takaful and level of competition within the Takaful and insurance industry. Research should also be conducted on the impact of the legal system and government policies on the demand for family Takaful in the country. Finally, the study focuses solely on the determinants of demand for family Takaful. Nevertheless, the supply‐side of the equation should not be neglected and should be incorporated in future studies.

Originality/value

It is obvious that there are very few studies that focus on the Malaysian market and indeed, none of them gives attention to the factors that influence demand for family Takaful. In this regard, this study contributes in filling the gaps in the scope and coverage of studies in similar area. While this study is expected to provide more understanding and awareness on the concept of Takaful and the factors that influence its demand, the authors hope that it would encourage more studies on various issues on the Takaful industry so as to help researchers to understand more aspects of this new emerging business.

Details

Journal of Islamic Accounting and Business Research, vol. 4 no. 1
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 23 June 2020

Syed Ahmed Salman and Rusni Hassan

The purpose of this study is to examine the perception and acceptability of insurance policyholders to introduce takāful in India. The primary focus of this research is insurance…

Abstract

Purpose

The purpose of this study is to examine the perception and acceptability of insurance policyholders to introduce takāful in India. The primary focus of this research is insurance policyholders because they currently have insurance policies and it is believed that they are familiar with the concept of insurance, compared to the people who do not have any insurance policy.

Design/methodology/approach

New product diffusion theory is used in developing the hypothesis and a questionnaire. In this research, the population is unknown, and hence, the non-probability sample is used. Quota sampling and snowball sampling methods are used in this survey, with a sample size of 909 respondents, including Muslim and non-Muslim policyholders. The external factors that motivate potential policyholders to participate in takāful are the independent variable here; while the respondents’ actual willingness to participate in takāful is the dependent variable. Regression analysis is performed to analyse the data.

Findings

Based on 909 respondents, it is found that the factors such as cost vs benefits, marketing and promotion and social and religion play a significant role in a consumers’ decision-making at 1% significant level overall. The attribute of agents can influence the consumers at a 10% significant level overall. However, other factors, namely, accessibility, availability and service quality, product features and reputation of the company cannot pursue the consumers in India.

Research limitations/implications

The questionnaires are distributed in 10 cities from nine states out of 28 states in India. Thus, it covers only one-third of the states. Future research can expand the respondents from other states that have not been researched.

Practical implications

India is opening to foreign investments in the Indian insurance industry, and thus, the findings are useful for industrial players, investors, policymakers for the development of takāful in India.

Originality/value

Limited research has been done in previous studies and this research is the pinnacle within-depth survey regarding takāful in India.

Details

Journal of Islamic Accounting and Business Research, vol. 11 no. 9
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 8 October 2018

Syed Ahmed Salman, Hafiz Majdi Ab. Rashid and Sheila Nu Nu Htay

Insurance is a modern risk-management tool. Although the idea is novel, its practice is not free of interest, uncertainty and elements of gambling. Takaful has been introduced as…

Abstract

Purpose

Insurance is a modern risk-management tool. Although the idea is novel, its practice is not free of interest, uncertainty and elements of gambling. Takaful has been introduced as an alternative to modern insurance. India has an established insurance industry, and although the country has the second largest Muslim population in the world, takaful has not been introduced there. Moreover, no research has examined how internal forces affect policy-holders to buy new insurance products such as takaful in India. This study aims to examine whether internal factors influence individual insurance policy-holders to open up to takaful. As internal factors reflect the innovative nature of policy-holders, this paper seeks to determine whether there is significant difference in the innovative nature of two independent sample groups (e.g. between Muslims and non-Muslims) in participating in takaful.

Design/methodology/approach

New product adoption theory is used in developing the hypotheses and a questionnaire. Snowball sampling method is used in this survey, with a sample size of 909 respondents, including Muslim and non-Muslim policy-holders. The internal forces that encourage potential policy-holders to participate in takaful is the independent variable here, while the respondents’ actual willingness to participate in takaful is the dependent variable. Religion and level of education are used as control variables, and regression and T-tests are performed to analyze the data.

Findings

Results show that the internal factors have significant impact at 1 per cent on the acceptance of takaful by policy-holders. There is also a significant difference in the innovative nature between Muslims and non-Muslims. Mean values from the T-test show that Muslims are more innovative than non-Muslims in India, offering a good sign for India to start offering takaful, as Muslims could be the core customer base.

Research limitations/implications

This study focuses on internal factors influencing individual policy-holders’ willingness to participate in takaful. The findings can be the starting point for future research exploring the influence of external factors on such willingness to participate with potential benefits to local authorities, investors, insurance companies and the public in India.

Originality/value

This study provides crucial information about the demand side of takaful in India. The innovative nature of Indian policy-holders signals positive potential for operators to offer takaful in India and to concerned regulatory bodies to expedite its introduction to the market.

Details

Journal of Islamic Accounting and Business Research, vol. 9 no. 5
Type: Research Article
ISSN: 1759-0817

Keywords

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