Factors Influencing the Choice of Takaful Over Conventional Insurance: The Case of Malaysia
DOI:
https://doi.org/10.31436/jif.v3i2.44Abstract
The present research attempts to study the factors that influence Malaysians to choose Takaful over conventional insurance. The study employs a qualitative research approach, conducting four intensive interviews with customers and Takaful Operators, who were selected from Klang Valley area in Malaysia. The respondents represent prominent Takaful Operators and their customers. The findings from the in-depth interviews led to the following major propositions; that Takaful customers have a clear concept of Takaful and the requirement of Shariah compliance; takaful is necessary for Muslims as a replacement of conventional insurance; takaful customers have awareness on the relationship between insurance and religion in contemporary business; the roles of Takaful agents in explaining the concept of Takaful and its benefits as acts of worship (Ibadah); the obligation by Takaful agents in promoting Takaful products to Muslims as acts of (dak’wah); and the growth of Takaful business remains slow compared to conventional insurance in the Klang valley area in Malaysia. Several implications of the research were further discussed.Downloads
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References
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Abdullah, S. (2012).Risk Management via Takaful from a Perspective of Maqasid of Shariah. International Congress on Interdisciplinary Business and Social Science, 535-541.
Ahmad, M. I., Masood, T., & Khan, M. S. (2010). Problems and Prospects of Islamic Banking: a case Study of Takaful. MPRA, 1-17.
Annuar, H. A. (2004). Al-Wakalah and Customers’Preferences toward It: A Case Study of Two Takaful Companies in Malaysia. The American Journal of Islamic Social Sciences, 28-49.
Arifin, J., Yazid, A. S., &Sulong, Z. (2013).A conceptual model of literature review for family Takaful (Islamic Life Insurance) demand in Malaysia. International Business Research, 6(3), p210., 210.
Aris, N. A., Tapsir, R., &Talib, M. K. A. (2012).Risk and Risk Management of Takaful Industry. Journal of Global Business and Economics, 4 (1).
Awang, I., &Zakaria, S. (2005). The Conception and Response of Muslim Community to Takaful Schemes, A Case Study in Bagan Serai, Perak. Jurnal Fiqh, 2, 1-18.
Ayinde, L. O. (2012). Perception and Adoption of Islamic Insurance in Malaysia: An Empirical Study. World Applied Sciences Journal, 20 (3), 407-415.
Billah, M. M. (2000). Sources of Law Affecting ‘Takaful’ (Islamic Insurance. International Journal of Islamic Financial Services, 2 (4), 1-9.
Billah, M. M. (2002). Regulatory Framework of Family Takaful in the Contemporary Economic Reality. International Journal of Islamic Financial Services, 3 (3), 1-19.
Billah, M. M. (2002). Takaful (Islamic Insurance) Premium: A Suggested Regulatory Framework. Journal of Islamic Banking and Finance, 19 (3), 52-64 .
Fisher, O. C., Taylor, D. (2000). Prospects for the Evolution of Takaful in the 21st Century. Proceedings of the Fifth Harvard University Forum on Islamic Finance: Islamic Finance: Dynamics and Development Cambridge,, pp. 237-254 .
Ghazali, P. L., Mohd, I., Mamat, M., & Ahmad, W. M. A. W. (2011).Mathematical Modelling in Family Takaful. Applied Science, 3381-3388.
Gustina, & Abdullah, N. I. (2012). Analysis of Demand for Family Takaful and Life Insurance: A Comparative Study in Malaysia. Journal of Islamic Economics, Banking and Finance, 67-86.
Hamid, M. A., & Rahman, N. M. N. A. (2011). Commitment and Performance: A Case of Takaful (Islamic Insurance) Representatives in Malaysia. Australian Journal of Basic and Applied Sciences, 5 (10), 777-785.
Hamid, M. A., Osman, J., &Nordin, B. A. A. (2009).Determinants of Corporate Demand for Islamic Insurance in Malaysia. International Journal of Economics and Management, 3 (2), 278-296.
Hamid, M. A., Rahman, N. M. A., Ya’amob, N. I., &Yakob, R. (2010). Performance Determination Model of Human Capital Development for Takaful Industry in Malaysia. The Journal of Knowledge Economy & Knowledge Management, V FALL .
Htay, S. N. N., &Zaharin, H. R. (2011).Critical analysis on the choice of Takaful (Islamic insurance) operating models in Malaysia.Global Economics, Finance and Management Conference, 9-10 June 2011, Intercontinental Toronto Centre, Toronto, Canada.(Unpublished), (hlm. 1-17). Toronto.
Hussain, M. M., & Pasha, A. T. (2011). Conceptual and Operational Differences between General Takaful and Conventional Insurance . Australian Journal of Business and Management Research, 1 (8), 23-28.
Ismail, N., Alhabshi, S. O., &Bacha, O. (2011). Organizational form and efficiency: the coexistence of family takaful and life insurance in malaysia. Journal of Global Business and Economics, 3 (1), 122-137.
Kadir, M. R. A. (2011). Our Strategy towards Developing a Progressive Takaful Industry, keynote speaker at the official launch of AIA AFG Takaful Bhd, Kuala Lumpur, 28 January 2011.Retrieved from http://www.bnm.gov.my/index.php?ch=9&pg=15&ac=395, 25 February 2011.
Kasim, N. A. A. (2012). Disclosure of Shariah compliance by Malaysian takaful companies. Journal of Islamic Accounting and Business Research, 3 (1), 20-38.
Lambak, S. (2013).ShariahJuristical Effect of Gharar in Predetermining Takaful Contribution. International Journal of Education and Research, Vol. 1 (2), 1-12.
Masud, H. (2011). Takaful: An Innovative Approach to Insurance and Islamic Finance. U. Pa. J. Int‟l L., 32 (4), 1131-1164.
Matsawali, M. S., Abdullah, M. F., Ping, Y. C., Abidin, S. Y., Zaini, M. M., & Ali, H. M. (2012). A Study on Takaful and Conventional Insurance Preferences: The Case of Brunei. International Journal of Business and Social Science, 3 (22), 163-176.
Noor, A. M., & Abdullah, M. A. (2009).Takaful (Islamic Insurance) Benefit: Ownership and Distribution Issues in Malaysia. Journal of Islamic Economics, Banking and Finance, 5 (3), 35-48.
Qureshi, A. A. (2011). Analyzing the Sharia'ah Compliant Issues Currently Faced by Islamic Insurance. Interdisciplinary Journal of Contemporary Research in Business, 3(5), 279-295.
Rahim, F., & Amin, H. (2011). Determinants of Islamic Insurance Acceptance: An Empirical Analysis. International Journal of Business and Society, 12 (2), 37 - 54.
Rahman, A. A., Ali, N. A., Seman, A. C., & Ahmad, W. M. W. (2008). Comparative Study Between Auto Takaful and Auto Insurance Purchasing Behaviour Among Malaysian Undergraduates. Shariah Journal, 16(1), 75-88.
Rahman, Z. A. (2009). Takaful: Potential Demand and Growth. J.KAU: Islamic Econ., 22 (1), 53-70.
Rahman, Z. A., &Daud, N. M. (2010).Adverse Selection and Its Consequences on Medical and Health Insurance and Takaful in Malaysia. Humanomics, 26 (4), 264-283.
Razak, M. I. M., Yusof, R. I. M. M., & Ali, W. E. J. M. (2013).Acceptance Determinants towards Takaful Products in Malaysia. International Journal of Humanities and Social Science, 243-252.
Redzuan, H., Rahman, Z. A., &Aidid, S. S. S. H. (2009). Economic Determinants of Family Takaful Consumption: Evidence From Malaysia. International Review of Business Research Papers, 5 (5), 193-211.
Saad, N. M. (2012). An Analysis on the Efficiency of Takaful and Insurance Companies in Malaysia: A non-Parametric Approach. ev. Integr. Bus. Econ. Res., 1 (1), 33-56.
Salleh, F., &Kamaruddin, A. R. (2011).The Effects of Personality Factors on Sales Performance of Takaful (Islamic Insurance) Agents in Malaysia. International Journal of Business and Social Science, Vol. 2 (No. 5), 259-265.
Salleh, M. C. M., Abdullah, N. I., Razali, S. S., & Wok, S. (2012). Takaful Agents’ Roles in Accordance with the Quran and Sunnah. GJAT, 2 (2), 41-45.
Salleh, M. C. M., Abdullah, N. I, and Razali, S.S. (2013). Measuring Takaful Agent’s Understanding towards the Objective and Concepts of Takaful. Journal of Islamic Finance, 2 (1), 20-30.
Schatzman, L., & Strauss, A. L. (1973). Field Research: Strategies for a natural sociology, Englewood Cliffs, N.J.: Prentice-Hall.
Sekaran, U. (2003). Research methods for business, 4th ed. John Wiley & Sons, Inc.: USA.
Sherif, M., &Shaairi, N. A. (2013).Determinants of demand on family Takaful in Malaysia. Journal of Islamic Accounting and Business Research, 4 (1), 26-50.
Siala, H. (2012). Religious influences on consumers’ high-involvement purchasing decisions. Emerald Group Publishing Limited [ISSN 0887-6045] [DOI 10.1108/JSM-02-2012-0046], 579-589.
Swartz, N. P., &Coetzer, P. (2010). Takaful: An Islamic insurance instrument. Journal of Development and Agricultural Economics, 2 (10), 333-339.
Yakob, R., Yusop, Z., Radam, A., & Ismail, N. (2012).Camel Rating Approach to Assess the Insurance Operators Financial Strength. Jurnal Ekonomi Malaysia, 46 (2), 3-15.
Yazid, A. S., Hussin, J. A. M. R., &Daud, W. N. W. (2012). Determinants of Family Takaful (Islamic Life Insurance) Demand: A Conceptual Framework for a Malaysian Study. International Journal of Business and Management, 7 (6), 115-127.
Zainuddin, S., & Noh, I. N. M. (2013). An overview of the emergence of Takaful: An Islamic type of insurance policy. International Journal of Business and Economics Research, 2 (5), 112-115.
Abdullah, S. (2012).Risk Management via Takaful from a Perspective of Maqasid of Shariah. International Congress on Interdisciplinary Business and Social Science, 535-541.
Ahmad, M. I., Masood, T., & Khan, M. S. (2010). Problems and Prospects of Islamic Banking: a case Study of Takaful. MPRA, 1-17.
Annuar, H. A. (2004). Al-Wakalah and Customers’Preferences toward It: A Case Study of Two Takaful Companies in Malaysia. The American Journal of Islamic Social Sciences, 28-49.
Arifin, J., Yazid, A. S., &Sulong, Z. (2013).A conceptual model of literature review for family Takaful (Islamic Life Insurance) demand in Malaysia. International Business Research, 6(3), p210., 210.
Aris, N. A., Tapsir, R., &Talib, M. K. A. (2012).Risk and Risk Management of Takaful Industry. Journal of Global Business and Economics, 4 (1).
Awang, I., &Zakaria, S. (2005). The Conception and Response of Muslim Community to Takaful Schemes, A Case Study in Bagan Serai, Perak. Jurnal Fiqh, 2, 1-18.
Ayinde, L. O. (2012). Perception and Adoption of Islamic Insurance in Malaysia: An Empirical Study. World Applied Sciences Journal, 20 (3), 407-415.
Billah, M. M. (2000). Sources of Law Affecting ‘Takaful’ (Islamic Insurance. International Journal of Islamic Financial Services, 2 (4), 1-9.
Billah, M. M. (2002). Regulatory Framework of Family Takaful in the Contemporary Economic Reality. International Journal of Islamic Financial Services, 3 (3), 1-19.
Billah, M. M. (2002). Takaful (Islamic Insurance) Premium: A Suggested Regulatory Framework. Journal of Islamic Banking and Finance, 19 (3), 52-64 .
Fisher, O. C., Taylor, D. (2000). Prospects for the Evolution of Takaful in the 21st Century. Proceedings of the Fifth Harvard University Forum on Islamic Finance: Islamic Finance: Dynamics and Development Cambridge,, pp. 237-254 .
Ghazali, P. L., Mohd, I., Mamat, M., & Ahmad, W. M. A. W. (2011).Mathematical Modelling in Family Takaful. Applied Science, 3381-3388.
Gustina, & Abdullah, N. I. (2012). Analysis of Demand for Family Takaful and Life Insurance: A Comparative Study in Malaysia. Journal of Islamic Economics, Banking and Finance, 67-86.
Hamid, M. A., & Rahman, N. M. N. A. (2011). Commitment and Performance: A Case of Takaful (Islamic Insurance) Representatives in Malaysia. Australian Journal of Basic and Applied Sciences, 5 (10), 777-785.
Hamid, M. A., Osman, J., &Nordin, B. A. A. (2009).Determinants of Corporate Demand for Islamic Insurance in Malaysia. International Journal of Economics and Management, 3 (2), 278-296.
Hamid, M. A., Rahman, N. M. A., Ya’amob, N. I., &Yakob, R. (2010). Performance Determination Model of Human Capital Development for Takaful Industry in Malaysia. The Journal of Knowledge Economy & Knowledge Management, V FALL .
Htay, S. N. N., &Zaharin, H. R. (2011).Critical analysis on the choice of Takaful (Islamic insurance) operating models in Malaysia.Global Economics, Finance and Management Conference, 9-10 June 2011, Intercontinental Toronto Centre, Toronto, Canada.(Unpublished), (hlm. 1-17). Toronto.
Hussain, M. M., & Pasha, A. T. (2011). Conceptual and Operational Differences between General Takaful and Conventional Insurance . Australian Journal of Business and Management Research, 1 (8), 23-28.
Ismail, N., Alhabshi, S. O., &Bacha, O. (2011). Organizational form and efficiency: the coexistence of family takaful and life insurance in malaysia. Journal of Global Business and Economics, 3 (1), 122-137.
Kadir, M. R. A. (2011). Our Strategy towards Developing a Progressive Takaful Industry, keynote speaker at the official launch of AIA AFG Takaful Bhd, Kuala Lumpur, 28 January 2011.Retrieved from http://www.bnm.gov.my/index.php?ch=9&pg=15&ac=395, 25 February 2011.
Kasim, N. A. A. (2012). Disclosure of Shariah compliance by Malaysian takaful companies. Journal of Islamic Accounting and Business Research, 3 (1), 20-38.
Lambak, S. (2013).ShariahJuristical Effect of Gharar in Predetermining Takaful Contribution. International Journal of Education and Research, Vol. 1 (2), 1-12.
Masud, H. (2011). Takaful: An Innovative Approach to Insurance and Islamic Finance. U. Pa. J. Int‟l L., 32 (4), 1131-1164.
Matsawali, M. S., Abdullah, M. F., Ping, Y. C., Abidin, S. Y., Zaini, M. M., & Ali, H. M. (2012). A Study on Takaful and Conventional Insurance Preferences: The Case of Brunei. International Journal of Business and Social Science, 3 (22), 163-176.
Noor, A. M., & Abdullah, M. A. (2009).Takaful (Islamic Insurance) Benefit: Ownership and Distribution Issues in Malaysia. Journal of Islamic Economics, Banking and Finance, 5 (3), 35-48.
Qureshi, A. A. (2011). Analyzing the Sharia'ah Compliant Issues Currently Faced by Islamic Insurance. Interdisciplinary Journal of Contemporary Research in Business, 3(5), 279-295.
Rahim, F., & Amin, H. (2011). Determinants of Islamic Insurance Acceptance: An Empirical Analysis. International Journal of Business and Society, 12 (2), 37 - 54.
Rahman, A. A., Ali, N. A., Seman, A. C., & Ahmad, W. M. W. (2008). Comparative Study Between Auto Takaful and Auto Insurance Purchasing Behaviour Among Malaysian Undergraduates. Shariah Journal, 16(1), 75-88.
Rahman, Z. A. (2009). Takaful: Potential Demand and Growth. J.KAU: Islamic Econ., 22 (1), 53-70.
Rahman, Z. A., &Daud, N. M. (2010).Adverse Selection and Its Consequences on Medical and Health Insurance and Takaful in Malaysia. Humanomics, 26 (4), 264-283.
Razak, M. I. M., Yusof, R. I. M. M., & Ali, W. E. J. M. (2013).Acceptance Determinants towards Takaful Products in Malaysia. International Journal of Humanities and Social Science, 243-252.
Redzuan, H., Rahman, Z. A., &Aidid, S. S. S. H. (2009). Economic Determinants of Family Takaful Consumption: Evidence From Malaysia. International Review of Business Research Papers, 5 (5), 193-211.
Saad, N. M. (2012). An Analysis on the Efficiency of Takaful and Insurance Companies in Malaysia: A non-Parametric Approach. ev. Integr. Bus. Econ. Res., 1 (1), 33-56.
Salleh, F., &Kamaruddin, A. R. (2011).The Effects of Personality Factors on Sales Performance of Takaful (Islamic Insurance) Agents in Malaysia. International Journal of Business and Social Science, Vol. 2 (No. 5), 259-265.
Salleh, M. C. M., Abdullah, N. I., Razali, S. S., & Wok, S. (2012). Takaful Agents’ Roles in Accordance with the Quran and Sunnah. GJAT, 2 (2), 41-45.
Salleh, M. C. M., Abdullah, N. I, and Razali, S.S. (2013). Measuring Takaful Agent’s Understanding towards the Objective and Concepts of Takaful. Journal of Islamic Finance, 2 (1), 20-30.
Schatzman, L., & Strauss, A. L. (1973). Field Research: Strategies for a natural sociology, Englewood Cliffs, N.J.: Prentice-Hall.
Sekaran, U. (2003). Research methods for business, 4th ed. John Wiley & Sons, Inc.: USA.
Sherif, M., &Shaairi, N. A. (2013).Determinants of demand on family Takaful in Malaysia. Journal of Islamic Accounting and Business Research, 4 (1), 26-50.
Siala, H. (2012). Religious influences on consumers’ high-involvement purchasing decisions. Emerald Group Publishing Limited [ISSN 0887-6045] [DOI 10.1108/JSM-02-2012-0046], 579-589.
Swartz, N. P., &Coetzer, P. (2010). Takaful: An Islamic insurance instrument. Journal of Development and Agricultural Economics, 2 (10), 333-339.
Yakob, R., Yusop, Z., Radam, A., & Ismail, N. (2012).Camel Rating Approach to Assess the Insurance Operators Financial Strength. Jurnal Ekonomi Malaysia, 46 (2), 3-15.
Yazid, A. S., Hussin, J. A. M. R., &Daud, W. N. W. (2012). Determinants of Family Takaful (Islamic Life Insurance) Demand: A Conceptual Framework for a Malaysian Study. International Journal of Business and Management, 7 (6), 115-127.
Zainuddin, S., & Noh, I. N. M. (2013). An overview of the emergence of Takaful: An Islamic type of insurance policy. International Journal of Business and Economics Research, 2 (5), 112-115.
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Published
2014-11-30
How to Cite
Kamil, N. M., & Mat Nor, N. (2014). Factors Influencing the Choice of Takaful Over Conventional Insurance: The Case of Malaysia. Journal of Islamic Finance, 3(2), 1–14. https://doi.org/10.31436/jif.v3i2.44
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