Content uploaded by Monther Eldaia
Author content
All content in this area was uploaded by Monther Eldaia on Apr 04, 2020
Content may be subject to copyright.
Content uploaded by Monther Eldaia
Author content
All content in this area was uploaded by Monther Eldaia on Apr 04, 2020
Content may be subject to copyright.
681
Copyright © 2020, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
Chapter 35
DOI: 10.4018/978-1-7998-0218-1.ch035
ABSTRACT
Takaful is an Islamic insurance contract introduced to substitute the conventional insurance which has
been precluded by nearly all Muslim scholars as it encompasses the components of gharar (uncertainty),
maysir (gambling), and riba (usury). Its feasibility is evidenced after numerous Fatwas were issued by
Fiqh academies and Ulama in its support. Takaful is founded on the basis of cooperation and mutual
aid as it is broadly used in the commercial sector. The Takaful business operation is regulated by the
codes of Shari’ah and by other laws. Many models such as the Wakalah model, Mudharabah model,
and the amalgamation of Mudharabah and Wakalah models have been applied in the Takaful corporate
operation. This chapter explicates the existing implications and future prospects of the Takaful industry
in Malaysia. It offers a review on Takaful industry in Malaysia and emphasizes issues and challenges,
opportunities, and recommendations.
Takaful
in Malaysia:
Emergence, Growth, and Prospects
Monther Eldaia
Universiti Sains Islam Malaysia, Malaysia
Mustafa Bin Mohd Hanefah
Universiti Sains Islam Malaysia, Malaysia
Ainulashikin Binti Marzuki
Universiti Sains Islam Malaysia, Malaysia
Saddam Shatnawi
Universiti Sains Islam Malaysia, Malaysia
682
Takaful in Malaysia
INTRODUCTION
Insurance protection is a financial necessity of life because every day people are more susceptible to a
variety of risks and uncertainties in their environments. Death, disability, injury, sickness, or damage of
property because of misfortunes can occur to anybody at any time. It is obvious that insurance cannot
stop these misfortunes from occurrence, but it can offer financial support to minimize the weight of the
losses emanating from such eventualities (Abdul Rahman et al., 2009; Salleh et al., 2018). Insurance
coverage is inevitable because of the multifaceted nature of business dealings and human lifestyles.
Conversely, the existence of forbidden features in the conventional insurance along with non-Shari’ah
compliant nature has motivated Muslim scholars to propose Takaful as a substitute for conventional
insurance. Takaful merchandises are meant to meet the needs of people, including non-Muslims. The
significance and impact of Takaful have attracted the attention of Muslim societies in modern time
(Saleh, 2016). Takaful is viewed as a substitute to orthodox insurance because of its strong base of Is-
lamic codes, which are based upon the concept of unity, mutual support, and harmony. It has become a
swift increasing and developing the industry with the tremendous prospect and has positively advanced
into a broad system which reduces non-Shari’ah compliant characteristics including Riba (interest),
gharar (uncertainty) and maysir (gambling) that exist in the traditional insurance (Salman & Htay,
2013; Nordin, 2018).
Conventional insurance exists shoulder to shoulder in Malaysia with Takaful as its complementary,
which the Islamic financial insurance is built on mutual agreement and Shari’ah code (i.e. Islamic law).
Takaful is principally founded on religious contexts to complement the introduction of Islamic banking,
has in the last decade displayed its potential as an innovative financial system (Thanasegaran, 2008;
Nazarov & Dhiraj, 2019). Thus, this chapter traces the history, background of the Takaful industry in
Malaysia, regulations, guidelines and how related framework Takaful industry is organized in Malaysia
is reviewed. It also explicates how the government and the private sector operate together to safeguard
the success of Takaful in Malaysia. The objectives of this chapter are:
• To describe the concept and history of the Takaful industry in Malaysia.
• To illustrate the Takaful models and product in Malaysia.
• To discuss the challenges facing Takaful industry in Malaysia.
• To predict the future of the Takaful industry in Malaysia.
Takaful Industry Background in Malaysia
Takaful industry plays a key role in plummeting risks and global basic economic growth, predominantly
in the financial sector (Sherif & Azlina Shaairi, 2013; Arifin et al., 2018). Between the mid-1960s and
1970s, about 93% of the global insurance market was retained in the countries in Europe and Northern
America.
The late 1970s oil price shocks along with the subsequent inflationary pressure had a deteriorating
impact on the percentage of global insurance market of these nations which raised up to 56% in 2012
(Swiss Re, 2013). In contrast, during this period the share of emerging Asian economies improved from
3.8% in the 1960s to 30% in 2012. It was anticipated that emerging economies of Asian countries will
enable growth with a rate of 8% which is more than triple of developed countries growth rate of 2.6%
(Swiss Re, 2013).
683
Takaful in Malaysia
However, Malaysia Takaful industry grew radically in 2010 with total assets of 6.8 million RM (Ma-
laysian Takaful Association, 2010). In 2017, the total assets of Takaful were peg at 29.3 billion RM (Ma-
laysian Takaful Association, 2017). This is expected to grow by 18% in 2019 (Husin, & Rahman, 2019).
There is a belief among the Muslim majority that conventional insurance is forbidden with regards to
legality because of the existence of numerous forbids, for instance, Riba (interest), Maysir (gambling),
and Gharar (uncertainty). Consequently, there is a need for a substitute form of insurance that meet the
demands and needs of Muslims who want to do financial transactions that are harmonious with Islamic
Shari’ah (El-Gamal, 2001; Akhter, 2010).
In June 15, 1972, the life insurance was first declared when the Fatwa Committee of the National
Council for Islamic Religious Affairs Malaysia issued a religious fatwa declaring that this form of life
insurance is haram (proscribed) as it opposes Islamic Shari’ah and rules. In 1975, this verdict was af-
firmed by a similar decree released by the Council of Islamic Fiqh Scholars that conventional insurance
is prohibited and unacceptable based on Islamic law.
The major purpose for establishing the Islamic insurance scheme in Malaysia was to adhere to Islamic
code and to regress from the three prohibited components (Riba, Maysir, and Gharar) based on Islamic
law and rules. The key objective was to develop and innovate an Islamic alternative to conventional
insurance, which is preferred by Muslims in Malaysia.
Malaysian Takaful industry created in 1984 was expounded based on the master plan of Central Bank
of Malaysia in three phases (Bank Negara Malaysia, 2005). The first phase (1982-1992) was when the
infrastructure of the Takaful industry in Malaysia was set up. The second phase (1993-2000) was when
the regional cooperation between the operators of Takaful was reinforced. The third and final stage
(2001-current) financial Sector Master plan (FSMP) to reinforce the legal, Shari’ah and regulatory frame-
work and improve the capability of the operators of Takaful. Takaful industry in Malaysia has become
a vital prime hub in the Malaysian economy to support Malaysia as a global Islamic financial center.
The Governor of BNM is the Director-General of Takaful, explained that the purpose of establishing
the Takaful industry in Malaysia is to form progressive world-class Takaful operators that are capable
to positively place themselves as frontrunners in the area of Takaful and thus positioning the growth of
Malaysia as the global Islamic business center (Bank Negara Malaysia, 2005, p. 9). Consistent with the
goal of strengthening Malaysia as an Islamic financial center, competition in the Takaful market has
been increasing in the last decades, with the addition of three novel Takaful companies in 2006. There
are eleven Takaful companies in the Malaysian market. Despite the intense competition between these
two types of insurance, the performance and achievement of the Takaful industry in Malaysia have made
it a strong competitor to traditional insurance. (Sherif & Shaairi, 2013).
Presently, the Takaful industry in the Malaysian market confronts substantial rivalry from the traditional
insurance industry in many fields. The absence of a secondary market, the organizational infrastructure of
Islamic law and the lack of research on the main issues of Takaful, hindered the development of Islamic
products in Takaful effectively. The Islamic insurance companies also face the lack of Islamic products
that comply with Shari’ah. With the increasing number of companies in the Takaful market, there is a
need to create many products to compete in the market, and the industry still needs more research to
develop Takaful product in Malaysia. There are many studies such as (Johnes et al., 2009) recommend-
ing an increase in research in evaluating the performance of Takaful companies using financial ratios
so that Takaful companies are evaluated compared to traditional insurance companies (Abdou, Ali, &
Lister, 2014).
684
Takaful in Malaysia
THE SIGNIFICANCES AND MOTIVATIONS OF THIS CHAPTER
Malaysia and the Gulf Cooperation Council (GCC) countries are considered as the foremost fundamental
actors in the global Takaful market as they have served as prolific grounds for the growth of the Takaful
industry. This indicates the degree to which both Malaysia and the Arab Gulf Nations become the fertile
bases for the extension of the Takaful industry(Abu Hussin, et al., 2014). Malaysia remains the leader
in the Takaful industry about regulations, which is the first market in the globe to execute a risk-based
capital (RBC) structure for Takaful. There is also a condition for corporations to disclose their Wakalah
fees in its sales representatives for openness (Ismail, Jaffer, Unwin, & Jamil, 2017).
Malaysia remains the largest Takaful with 62% market share within South East Asia, subsequently
Indonesia with 33% in 2015 (Ismail et al., 2017). The structure of Takaful and its performance are im-
portant in view of the current financial framework (Ismail, 2013; Karbhari et al., 2018). As a result of a
considerable number of firms’ failure such as Lehman Brothers, Citibank, and Freddie Mac, AIG, and
Fannie May has triggered further worries on the economic stability of the Takaful industry in Malaysia
(IFSB, 2016, 2017). Without the involvement of this system, it will not be possible to establish the Taka-
ful industry, because the industry requires professionals with experiences to be able to be successful.
Figure 1.
685
Takaful in Malaysia
Thus, the selection, screening, and election of all various structures and committees strongly depend
on their competencies, characteristics, qualifications, experiences, and skills in Shari’ah jurisdictions
(Heradhyaksa & Markom, 2018; Waris et al., 2018).
Despite Malaysia being a largely Muslim country with Shari’ah codes of practice in place, the Takaful
sector is hitherto making a significant influence compared to the traditional insurance system (Nordin,
2018). This can be because of the uninspired setback in financial performance witnessed around the
world particularly the Islamic Financial Institutions of Islamic countries in addition to weak Corporate
Governance structures in the Takaful industry.
This issue is still very fresh in Malaysia nowadays (Alhabshi, 2017). Takaful corporates encompass
smaller part of the overall insurance companies in Malaysia, based on financial performance; they rep-
resent 8.2% of the collective gross contributions of the insurance industry (Salleh et al., 2018; Samad &
Shafii, 2018). This suggests that the Takaful sector required many events to be in place to overcome the
conventional insurance industry in Malaysia (Akhter et al., 2017). Several Takaful operators currently
have an average growth rate of only 20% per annum (Daud et al., 2018; Mustafa & Rahman, 2018). The
industry has enormous potential to be a focus due to its contribution to the Malaysia GDP (Laldin &
Furqani, 2018; Nordin, 2018).
The Takaful industry in Malaysia is presently in front with a gigantic competition from conventional
insurance in several regions because numerous conventional gainful investment prospects are not al-
lowable under the divine Islamic laws. Conversely, it is possible to overcome this issue by increasing
research to produce substitute investment prospects that are harmonious with Islamic Shari’ah. Accord-
ingly, the Takaful industry still requires more studies in order to improve the Malaysian market (Mondaq
News, 04 July 2011). Moreover, it is vital to compare conventional insurance and Takaful with respect
to financial ratios (Abdou et al., 2014).
Concept of Takaful
Takaful or Islamic insurance system are originated from the ancient Arab tribes, The concept is well
known and used among Ansar of Medina and Muhajirin of Mecca for centuries, as a result of Hijra of
the Prophet Muhammad (May peace be upon him) over 1400 years ago (Anwar, 2008). Takaful is de-
rived from the concepts of the “Aqilah and Diyah”, in which a member of a tribe is aided to fulfill the
liability that resulted in the unanticipated, for instance, compensation for a person killed was originated
diyah (Manjoo, 2007; Nazarov & Dhiraj, 2019). Subsequently, this concept was protracted to include
various aspects of individual life, maritime trade, and to help any individual or group that has faced a
disaster or loss of maritime work. Takaful is originated from its Arabic root ‘Kafalah’, which literally
means ‘to aid one another’, or ‘mutual guarantee’ all products or transactions must completely conform
to “Islamic law” (Jaffer et al., 2010).
The practice of insurance was first founded in the early second epoch of the Islamic era in Asia,
during the time when Muslim Arabs began to enlarge their trade to India, the Malay Archipelago, and
other Asian countries (Sadeghi, 2010). Owing to the long distance involved, the dangers inherent in the
journey, and the losses arising from mishaps and misfortunes or robberies, the Muslim Arab traders got
together and mutually agreed to contribute to a fund that would be used to recompense anybody in the
assembly who suffered losses (Thanasegaran, 2008; Abu-Hussin et al., 2014).
Takaful is described based on Malaysia Code as
686
Takaful in Malaysia
A scheme based on brotherhood, solidarity, and mutual assistance which provide for mutual financial aid
and assistance to the participants in case of need whereby the participants mutually agree to contribute
for that purpose. (Takaful Act, 1984)
This description characterizes the Islamic standard of Takaful whereby an assembly of members
consents to equally promise each other against a specific loss or harm. Likewise, the Islamic Financial
Services Act 2013 (IFSB), in its published guidelines entitled ‘Guiding Principles on Governance for
Takaful Undertakings’, describes Takaful as follows: “Takaful is the Islamic counterpart of conventional
insurance, and exists in both Family (and “Life”) and General forms” (Bank Negara Malaysia, 2013)
As Islamic protection, consistence with Shari’ah standards and standards is the foundation; as it is
without a doubt the particular trademark that reflects the Islamic character of Takaful business (Bank
Negara Malaysia, 2010). Takaful has encountered unparalleled development particularly in the course
of the most recent decade. Global Takaful extended generously between the period 2004 and 2007
from a commitment of 2.1 billion US dollar to 3.4 billion US dollar, the same to a compound of yearly
development rate (CAGR) around 30%, with the biggest markets being Saudi Arabia and Malaysia.
Territorially, the ASEAN area has been described as the greatest market for the period 2005-2008. In
2008-2010, balanced for international expansion, the division developed at 28% as against the ordinary
market which remained at 5% in the respective Muslim nations and 8% in the MENA districts amid a
similar period (Ernst & Young, 2015).
RETAKAFUL
ReTakaful concept as an arrangement in which a company, the ReTakaful Company, agrees to indemnify
a Takaful Operator, the ceding company, against a portion of the primary risks underwritten by the ceding
company. ReTakaful, however, does not discharge the ceding company from its liability to participant.
The Malaysian Takaful Act 1984 does not define the term per se but imposes a requirement that ‘an
operator shall have arrangements consistent with sound Takaful principles for ReTakaful of liabilities in
respect of risks undertaken or to be undertaken by the operator in the course of his carrying on Takaful
business’ (Bank Negara Malaysia, 2012)
The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) refers to
‘Islamic reinsurance’ (reTakaful) as “the agreement among insurance companies, on behalf of the in-
surance funds under their management, to devise a mechanism for avoidance of part of the risks which
the insurance funds may encounter. Based on such agreement a reinsurance fund which has a distinct
legal personality and independent financial liability is formed up through making contributions out of
the insurance funds paid by the insurance clients based on donation. The reinsurance fund, thus formed,
assumes the task of covering part of the risks encountered by the insurance funds” (AAOFI, 2012).
Yusuf (2011) dictates the main objectives of reTakaful into three. The first objective is to safeguard
the operators against the possibility of insolvency and to engage the operators in Shari’ah compliant
investment. Second objective is to provide adaptable underwriting practice for the operators and the last
objective, to prohibit interest in the reserves of reTakaful fund. Those three objectives clearly show that
even conventional reinsurance and reTakaful share the same functions, but the objectives have put both
the risk mitigating tools into a different set of games and aims altogether.
687
Takaful in Malaysia
Authorities from the Holy Qur’an
God wants us to leave our family ready and in good shape
And those who are taken in death among you and leave wives behind - for their wives is a bequest:
maintenance for one year without turning [them] out. But if they leave [of their own accord], then there
is no blame upon you for what they do with themselves in an acceptable way. And Allah is exalted in
might and wise (AlBkara, 240).
b. Authorities from the Hadith
The Prophet advised us to do our part before leaving the result to God: ‘When the Holy Prophet asked a
Bedouin Arab, who entered the mosque with his camel left outside untied if his camel would run astray,
he said: “In shaallah”. The Prophet (May peace be upon him) then said: “Tie your camel first, then
say In shaallah (narrated by Anas bin Malik, Sahih Bukhari).
TAKAFUL MODELS
Takaful Ta’awuni (Non-Profit Model)
The concept of Ta’awuni model is established upon the idea of commonality, collaboration, and brother-
hood among the members in this model to help the partaking members in an event of the urgent need for
support because of an unexpected accident or a certain tragedy. This form of insurance seeks to realize
the wellbeing of the members and society at large. Takaful operator can be the custodian on behalf of
the customers without considering about making again. Thus, this model is termed a non-profit.
Finally, the excess is allocated in full to all members (Billah, 2004). This model coined in Sudan in 1979
when the first Takaful events began. Afterward, insurance firms are compelled to follow the “tauniuni”
model and adopt the Takaful project under the law. The Ta’awuni model was adopted and implemented
by Bank Aljazira Saudi Arabia when the scholars advocate for Islamic insurance comply with Shari’ah.
The members contribute to the Takaful Fund to pay other members in the event of calamities and afflict.
Consequently, the members and operators in Takaful are to know their rights and responsibilities to the
Fund and the premium in the contribution spread to contributors only (Billah, 2004).
Mudarabah Model (Tijari)
Mudarabah is a deal between a capital supplier (Rab-al-Maal) and a business individual (Mudarib)
through which the Rab-al-Maal offers wealth to be managed by the Mudarib and any profit made from
the wealth is divided between the Rab-al-Maal and the Mudarib in line with mutually consented profit
sharing ratio (PSR). In the process, any financial losses are borne by the Rab-al-Maal if such losses
are not caused by the Mudarib’s transgression (Ta`addi), carelessness (Taqsir) or break of stated terms
(Mukhalafah al-shurut). This model has practiced in Malaysia for two decades. The Takaful Company
was the first and largest company in Malaysia in 1985 has demonstrated the success of the Mudarabah
688
Takaful in Malaysia
model as profitable for both customers and shareholders. This model is also practiced in Brunei where
Takaful companies pay 36% gain to their contributors (Saleh, 2016)
Wakalah Model
The Wakalah model is a remunerated Islamic deal where one party provides funds whereas the other
manages the funds. In this, the other party receives fixed payments instead of profit sharing as in the
Mudarabah deal, to offer his managerial services to prudently invest and manage the funds. Under the
Takaful contract, members offer wealth in the form of a contribution. The Takaful operator manages the
capitals and a fixed fee (termed Agency Fees) for the running of its services (Alnemer, 2013). Agency
fees must be fair, appropriate, determined, and approved by the Shari’ah Supervisory Board (SSB). The
model of the agency is more transparent than the speculative model as the fees are fixed and predeter-
mined by both parties. There are no secret charges. Certain Takaful operators charge excess surcharges
as an incentive to effectively manage funds.
Conversely, certain Takaful operators receive supplementary fees as a spur for their efficacy in run-
ning finance and their profit achievement. This model is practiced in Takaful Berhad and Takaful Ikhlas
Sdn Bhd. The Government of Bahrain has also started to enforce a mandatory model on Takaful and
re-Takaful businesses in all its operations. This model has enjoyed acceptance around the globe due
to the benefits such as transparency and the purpose of fixed fees. This brings about an upsurge in the
company’s impact to work better and increase the profits of the stakeholders. Furthermore, there are
less Shari’ah related issues associated with this model that might create conflicts of interests among
Shari’ah scholars of different schools of thoughts (Razimi et al., 2017).
Mixed Model
The mixed model is a fusion of Wakalah and Mudarabah model where Mudarabah deal is implemented
for investment accomplishments whereas Wakalah deal is applied for underwriting agreement (Tolefat,
2006; Djafri et al., 2018). Regarding this, the stakeholders act as the wakeel (agent) on behalf of con-
Figure 2.
689
Takaful in Malaysia
tributors to manage their capitals whereby the Takaful company (stakeholders) gets a contribution, pay
claims, arrange re-Takaful and all other obligatory activities related to Takaful business. The company
charges each contributor a fee recognized as a Wakalah fee, which is commonly a percentage of the
contribution paid by each contributor in exchange for execution these tasks. With regards to investment,
the company invests the extra contributions in Shari’ah -based devices based upon Al-Mudarabah deal,
where the company acts as Mudarib on behalf of contributors (Rab-al-Maal or capital providers).
Nevertheless, in order to fulfill the Shari’ah condition for Al-Mudarabah deal, the ratio of profit is
set and contracted between the two parties, at the start of the deal. Adherents of this model assert that
a Mudarabah procedure is better suitable for management and investment of Takaful finance (Obaidul-
lah, 2005; Almulhim, 2019) and offers a reason to Takaful operator to boost its return by sharing profit.
The Wakalah model is possibly better appropriate than the Mudarabah for running the Takaful business
for the agency fee (cost of insurance). It is more transparent and freer from the contentious indicting of
expenses (including marketing commissions) to the Takaful fund. These measures need to be deemed as
an aspect of attempts to seek for the best model of Takaful and to create concord among existing Takaful
models (Akhter, 2009).
Figure 3.
690
Takaful in Malaysia
Certain financial regulators and international organizations (e.g. Accounting and Auditing Organization
for IFI, AAOIFI) advocate the mixed model as it leverages the strengths of the Wakalah and Mudarabah
models. Implementing the Mudarabah model to investment events assist lessen principal-agent issues,
while the usage of the Wakalah model permits the operator to convalesce the administrative expenses of
underwriting (Swiss Re, 2008). This model is widely practiced in the Middle East market and worldwide
in Takaful companies. In Malaysia, Maybank Takaful Berhad (MTB) and Takaful Nasional Berhad practice
it. A supporter of this model argues this model combines the benefits of Mudarabah and Wakalah model
(Obaidullah, 2005). Therefore, it may help to build a standardized model to be used around the world.
The implementation of a particular model of Takaful makes the issue of CG controversial in terms
of the rights of contributors to Takaful firms. The concern of Takaful employees was to maximize the
profits of the stakeholders while ignoring the rights of the participants, even though the employees are
acting as agents, trustees, and managers of the invested funds that receive their profits in the form of
Mudarabah and the Agency fees. In the absence of a good CG practice, the BODs is not held account-
able and their decisions are not properly monitored for the participants and the community as a whole,
because the participants have no positions in the BODs, so they do not have the right to question the
BODs. (Abdel Karim & Archer, 2002).
PRODUCTS OF TAKAFUL
General Takaful
General Takaful products are typically designed to provide a form of Shari’ah -compliant risk-sharing
and risk management mechanisms on an annual renewal basis. In this scheme, the relationship among the
participants is based on Ta’awuni and Tabarru’; whereas the relationship between Takaful operator and
participants, is based on Mudarabah, Wakalah, or Waqf (Yasin & Ramly, 2011; Abu Hussin, et al., 2014).
Some examples of general Takaful products are:
I. Motor Takaful: This type of policy protects the participant against any losses or damages to the
insured vehicle due to theft, accident, fire or third-party property damage or bodily injury.
II. Fire Takaful: This type of policy protects the participant against any losses or damages caused by
fire, lightning, or explosion to their properties. It includes but not limited to buildings, machinery,
Figure 4.
Source: (Ali, 2016)
691
Takaful in Malaysia
plant, furniture, and accessories. The fire Takaful scheme usually excludes damages caused by
earthquake, volcanic eruption, or typhoon scheme.
III. Engineering Takaful: This type of policy protects the contractor’s interest against any losses, dam-
ages, or liability due to different causes to the construction of bridges, buildings, dams, and towers.
IV. Marine Takaful: This type of policy protects the participant against any perils or damages to the
property while it is in transit. It includes sea peril, collision, stranding, fire, and severe weather.
Such coverage may be provided to marine transport or road and aviation. Moreover, it can also be
a combination of all (Marifa Academy Team, 2014; Yasin & Ramly, 2011).
Family Takaful
Family Takaful products are usually designed to offer protection against the risks of death or permanent
disability. Under this system, the participant may benefit from long-term savings and investment returns
based on a pre-agreed ratio consistent with Mudarabah. In addition, the participants in a family Takaful
scheme entrust their money to the Takaful operator and conduct a Wakalah contract which permits the
operator to act as their agent. The participants’ aid in the form of a contribution to the Takaful fund is
deposited in Participants’ Special Account (PSA).
The funds are used to compensate claimant’s family in case of the claimant’s demise or permanent
disability. The contribution in the form of savings is deposited in Participants’ Account (PA) for invest-
ment in Shari’ah -compliant businesses. The Takaful operator is responsible for distributing the surplus
based on participants’ contribution to the fund. There are several types of family Takaful products offered
by various operators which are primarily divided into two categories; 1) Individual family Takaful: In
this type of product, the member of the fund has policy protection against any defined risks, including
mortgage, education, or health. 2) Group family Takaful: In this type of product, the members have
policy protection for themselves and their families against any defined risks, including mortgage, group
health, and education. Their families are entitled to receive financial benefits in case of illness, death or
permanent disability (Marifa Academy Team, 2014; Yasin & Ramly, 2011; Nazarov & Dhiraj, 2019).
CONCEPTUAL AND OPERATIONAL DIFFERENCES BETWEEN
TAKAFUL AND TRADITIONAL INSURANCE
Takaful insurance companies and traditional insurance companies differ concerning their basic concept
models (Kwon, 2007; Kwon, 2010; Lee et al., 2010; Hussain and Pasha, 2011; Maysami and Kwon, 2011;
Matsawali, et al., 2012). Traditional insurance includes an undertaking from an insurance company in
event of payment either to the insured or to another in the event of a certain event. Takaful is an Islamic
substitute for traditional insurance and is built upon the concept of “social solidarity, cooperation and
joint compensation for loss of members”.
In fact, there are some similarities and differences between those two types of insurance. The simi-
larities are the following:
1. The two forms of insurances require payment from the insured to the insurer; in traditional, it is
termed premium while under Takaful, it is termed contributions in the form of endowment (Tabarru’).
2. The value insured is returned to the insurer when particular events happen.
692
Takaful in Malaysia
3. The two forms of insurances have a substantial investment or savings components developed in
them.
The following table summarizes the main differences between both systems.
Malaysia’s Takaful Industry Bodies
Malaysia is one of the forerunners of Islamic finance and banking industry and well famous for having
the most established and effectual Takaful market in the globe. This is because, through the decades,
Malaysia has advanced and well-regulated Islamic financial industry i.e. well supported with the essential
regulatory contexts and conventional physical structures (Abu Hussin, et al., 2014; Remli & Rosman,
2018). The Takaful Act (1984) and the Islamic Financial Services Act 2013 were introduced to advance
the industry towards realizing a tremendous amount of growth and development in the conventional insur-
Table 1. Main differences between Takaful and Conventional
Item Takaful Conventional
Benefits Paid from the related participants’ funds under mutual
assistance. Paid from the company reserves.
Investments
The funds shall be invested in any interest-free Shari’ah
approved assets and also meet any required national
insurance regulations and laws.
The funds may be invested in any assets so long as
they meet required national insurance regulations
and laws.
Operations Operational mechanisms shall be in line with the Shari’ah
rules.
Operational mechanisms shall be in line with
national insurance regulations and laws.
Profit
Underwriting profit is distributed to the policyholders.
Stakeholders’ profit is generated from the return on the
investments of the shareholder capital and expenses paid
to the stakeholders by the policyholders for (i) managing
the company on behalf of the policyholders; and (ii)
managing the policyholders’ investment funds on behalf
of the policyholders.
Policyholders do not get any share of the
underwriting profit (except in mutual companies);
stakeholders’ profit is generated from the
company’s underwriting profit plus any investment
returns.
Premiums Paid premium is treated as both donations (Tabarru’) and
saving (Mudarabah).
Paid premium creates an obligation against the
insurer on a sale and purchase relation.
Company Company is better known as an operator, which acts as a
trustee, manager and also an entrepreneur.
Relationship between the company and the
policyholders is on one to one basis.
Shari’ah
Takaful practices are free from the elements of Riba and
other prohibited elements and are evolved around the
elements of Mudarabah, Tabarru, and other Shari’ah
-justified elements
Conventional insurance (including mutual insurers)
may involve Riba and some other elements, which
may not be justified by Shari’ah principles
Policyholder Fund The policyholder fund belongs to the policyholders on a
collective basis and is managed by the stakeholders.
All (both policyholder and shareholder) funds
belong to the company, though separation of assets
may be maintained between stakeholders and
policyholders for specific insurances (e.g. with
profits).
Regulations
The operational mechanisms and products must be
Shari’ah -compliant and be in accordance with the
required national laws and insurance regulations.
Operational mechanisms and products have to be
in accordance with the required national laws and
insurance regulations.
Sourse: (Khan, 2005, p142)
693
Takaful in Malaysia
ance industry of Malaysia and global. Furthermore, the amounts of regulators that are vigorously backing
the whole value chain of Islamic finance have assisted the industry to expand optimally in the country.
Additionally, many of committed regulators are keenly supporting the complete value chain of
Islamic finance which have also assisted the industry to develop. Further, amounts of ideas have been
presented to bring Islamic insurance into the majority of Malaysia insurance industry (Cuyper, 2012).
This is discussed under the following headings:
The Malaysia International Islamic Financial Centre (MIFC)
A cooperative network started for the country’s financial segment regulators in 2006, for instance Bank
Negara Malaysia (Central Bank of Malaysia), Securities Commission Malaysia, Labuan Financial Ser-
vices Authority, Bursa Malaysia (Kuala Lumpur Stock Exchange), Government ministries and other
financial agencies and institutions offering bank services, Takaful, re-Takaful, capital market, human
capital development and proficient auxiliary services.
International Takaful Operators (ITO)
The financial institutions licensed to carry out a broad range of Takaful and re-Takaful (Islamic reinsur-
ance) business with foreign currencies.
International Currency Business Unit (ICBU)
It is a platform for firms to carry out dealings comprising foreign denominated currencies. It is a scheme
that provides opportunities for undertaking international currencies trade in offshore markets and a
network by which the accessible technical proficiency and expertise in Islamic finance in Malaysia are
being predisposed and exported.
The Malaysian Takaful Association (MTA)
It is an organization founded to offer training, research, and education through institutions such as the
International Centre for Education in Islamic Finance (INCEIF) and Islamic Banking and Finance Institute
Malaysia (IBFIM). Known the dissemination of the Islamic financial industry in Malaysia, especially the
Takaful industry, some professionals are of the opinion that the Takaful industry in Indonesia, Brunei,
and Singapore as a Southeast Asia might threefold that of the Middle East by 2015 (Ismail et al., 2011).
OPPORTUNITIES AND FUTURE CHALLENGES
Takaful industry in Malaysia is anticipated to grow, provided the following opportunities:
1. Ongoing government support to propagate the Takaful segment by executing strong regulations,
intensify public awareness and providing adequate assets for investments.
2. Business players mounting advance Takaful products (e.g., universal life products).
694
Takaful in Malaysia
3. Opportunity in the sequestration savings space.
Yet, the Takaful industry is also anticipated to encounter the following challenges:
Key Issues and Challenges
Lack of Consumer Awareness
Despite the Takaful primer, there is still to be understood the rise in the anticipated rate of dissemination.
Several clients are still unaware of Takaful as a replacement, while others regard Takaful as marketing
traditional insurance into the Islamic world and discard the notion that it is a Shari’ah -compliant tool.
Also, in the Middle East, several people tend to modulate the importance of this scheme. Takaful pen-
etration, like traditional insurance, is generally an offer that needs to be sold to clients (instead of one
that clients buy). In order to enhance client understanding, there is a need to address mainly instructional
problems involving Takaful and individual risk management among Muslim communities. Many of
the current Takaful education is among the professionals and investors concerned or linked, and very
restricted awareness campaigns are regarded for the target individuals.
Insurance and Shari’ah Expertise Shortages of Human Capital
The current small group of specialists with appropriate Takaful expertise in areas such as law, sales, and
actuarial services can hinder future development. With traditional insurance experience, most Takaful
companies would frequently use human resources. These resources would generally tend to know Takaful’s
Shari’ah characteristics and familiarize their previous knowledge with integrating Shari’ah compliance
laws into their fresh responsibilities. Therefore, standard opinions and resolutions tend to determine the
attitude of many carriers and, consequently, creative thoughtfulness in the sector has been limited. Sev-
eral Takaful classes have been provided recently, and one provided by the Chartered Insurance Institute
(CII), helping with both insurance and Shari’ah skills in the growth and training of human resources.
Shortage of Shari’ah Scholars With Enough Practical Experience
Each Takaful company must have a Shari’ah Supervisory Committee whose members are not less than
three Shari’ah scholars to supervise the company’s business. Takaful companies face significant regional
challenges, so they are required to build confidence in their target markets. Therefore, they must rely
on the preferred Shari’ah scholars and those have practical experience in the Takaful markets. Shari’ah
scholars should be experienced in financial fields not only in Shari’ah issues, but especially in private
financial transactions in Takaful. This is the main task of the members of the Shari’ah Committee to
implement and control the work of the Shari’ah transaction and to ensure compliance with Shari’ah.
By contrast, the amount of Shari’ah academics with expertise in both Islamic jurisdiction and insur-
ance is restricted; definitely, these academics are currently sitting on multiple boards that can generate
interesting encounters and negotiate counseling quality. The scarcity of academics on fresh rivals con-
tinues a short-term barrier and speeds up the cost of developing Shari’ah board.
695
Takaful in Malaysia
Lack of Standardization in the Industry as a Result of Shari’ah Explanation
Since the Takaful sector is only lately recognized, there is a broad series of problems presently being
deliberated amongst technocrats and Shari’ah scholars, mainly those inclosing the descriptions and
practices that are considered suitable and Shari’ah -compliant.
Different Legislative Approaches and Absence of Centralized Rules
The Takaful sector relies on Shari’ah Committee, which apply the provisions of Islamic Shari’ah,
subjected to any local legislative constraints, in the non-existence of standardization of a worldwide
Takaful regulatory scheme. When it comes to coping with Takaful, local authorities have implemented
a variety of techniques.
Solvency and Capital Requirements
Numerous regulatory contexts, specifically those implemented a ‘level playing field’, In Takaful compa-
nies, liquidity and principal are a major obstacle same as conventional insurance companies, Conversely,
the following challenges, which are particular to Takaful companies, need to be resolved:
• Present governing systems have not given suitable attention in treating Qard-e-Hasana in resolv-
ing the solvency necessities for Takaful operator (i.e., the Qard-e-Hasana may be a probably
added capital base for the Takaful endowment)
• The concern of whether the ‘level playing field’ is justifiable at long run for Takaful
• The concern of the excess dissemination and likelihood reserve techniques that can result in a
lesser capital requirement for Takaful bodies.
• Concern about mutual conduct under Solvency II whether the same technique can be appropriate
to Takaful businesses
• Concern about the treatment and technique used by rating agencies towards Takaful bodies.
Corporate Governance
The present correlation between the Takaful operator’s Board of Directors and Shari’ah Supervisory
Board is usually one of enormous trust and integrity. Conversely, setting a clear written standard on the
Shari’ah board’s scope and duties is still essential. Compliance with Shari’ah must include all opera-
tional characteristics, the implemented Takaful model, products introduce, investments, fee structures,
contract contents, and marketing expression. There are currently no compliance guidelines and normal
reference conditions for Shari’ah boards in the sector. There are other problems concerning the Shari’ah
board function and potential conflicts of interest among Shari’ah academics.
The risk may be from the focus of the Shari’ah board on jurisprudential issues related to Shari’ah
and not equally focusing on major technical issues, for example underwriting, actuarial, and wider risk
management. Alternatively, the management’s concern is to maximize the value of shareholders, which
can create additional prospective encounters from a portion of Shari’ah compliance. There are also
issues in the concentration of assets invested in related businesses with interest and risk management
(Jaffer et al., 2010).
696
Takaful in Malaysia
The Limited Size and Capacity
Despite relatively rapid growth, the industry is still very small compared to the conventional insurance
market. In 2006, participants’ contributions stood at US$2 billion, accounting for only 1 percent of the
US$3.7 trillion global insurance premiums. The Takaful assets are estimated to be around US$20 bil-
lion, in contrast to the Islamic banking assets of US$500 billion. There is a high capital need for Takaful
enterprises despite Takaful having lower levels of securities, hence making it a challenge to contest with
traditional insurances due to lack of economies of scale for various Takaful operators (Ismail et al., 2017).
Practical Challenges and Difficulties
Furthermore, there are numerous practical problems in Takaful sector that may be relevant to the Takaful
industry’s evaluation and risk management. Some of the primary technical problems considered are:
Handling of Qard-e-Hasana (Interest-Free Loan)
Qard-e-Hasana or “benevolent loan” is an interest free loan given by the Takaful Company in the case
of scarcity in Takaful finance. Shari’ah rules does not obviously dictate this development, but there is
an expectation that in the case of a shortage, the operator will introduce the funds. The loan or Qard can
then be reimbursed for future surplus development. However, the instrument and subtleties of the loan
and its consequent payments are highly insecure and absence of precision.
Determining and Allocating Surplus
Since a third party’s risk insurance (risk transfer) is prohibited in Islam, any excess or profit gained from
the risk share is prohibited by default. There is a distinction of perspective as to the nature and manage-
ment of Takaful’s supporting surplus, as listed below:
Opinion 1: Since insurance risk transfer is prohibited, Takaful operators may not take advantage of
any surfacing surplus underwriting. These must therefore be disseminated back to the contributors who
guarantee each other together.
Opinion 2: The excess surface is the result of the extensive risk management of the Takaful operator.
A surplus ratio should be distributed as a reward to the operator.
Opinion 3: The underwriting surplus does not benefit either the Takaful operator or the contributors
as favourable underwriting experience is considered possible by Allah (Subhanahu wa Taala). Therefore,
in the real spirit of Takaful, all growing surpluses should be provided to charity.
Handling of Emergency Reserves
As an alternative of allocating whole, the underwriting surpluses as explained earlier, often the possibil-
ity of retaining a portion of the underwriting surplus is considered to counter the possibility of future
demand for capital maintenance (Jaffer, et al., 2010).
697
Takaful in Malaysia
FUTURE STRATEGIES CAN BE CONSIDERED FOR
PLANNING AND IMPLEMENTATION
• There is a strong need to form a more globalized Takaful industry through grander connectivity
across jurisdictions. Takaful operators need to give satisfactory importance on cross-border asso-
ciations at regional and international levels. This will not only broaden the market but also more
significantly bring disclosure to the different challenges to establish strength and competitiveness.
• Attempts towards rigorous branding for Takaful must be recruited and developed. Through inten-
sive branding, we could improve the appeal of Takaful to the global community. The Takaful phi-
losophies of mutuality, transparency, and assistance could be further popularized to lead exclusive
products for the global community.
• Globally, Shari’ah must be the enabler of higher connections for Takaful markets. Research and
training in the Shari’ah and Shari’ah -related problems and fields may be one strategy to prolifer-
ate the impact of the Shari’ah and Takaful in all markets that Takaful can serve. The critical short-
age of human capacity cannot be overlooked at all.
• Takaful, like any business that deals with a huge number of customers, must be well-appointed
with infrastructure that can aid accelerate processes and enhance precision to alleviate risks in
these regions. It is not limited physical infrastructures such as IT, but also the regulatory frame-
work must be more reinforced.
• Takaful should not be viewed simply as a business concern but should also locate areas where
socio-economic support is absolutely required. Corporate Social Responsibility could use as a
means of reaching out to assist in community development.
• Internationally accepted Shari’ah compliance standards
• Training on Islamic finance on a global scale from the core centers of expertise in Islamic finance
• Structure awareness for customer needs in insurance and Takaful (e.g. mortality gap, retirement,
and pensions, longevity, etc.)
• Micro Takaful for the poor aspect of population
• Vigorous in new product development to achieve financial needs of modern days consumers – (in-
novative products: Takaful operators need to offer an exclusive value proposition to compete with
conventional offerings)
• Effective dissemination channels – The distribution channels should be diversified to reach a
greater segment of the market.
• Build re-Takaful capacity, which would cater to the unique principles of Takaful products and to
provide essential technical capabilities in managing risks
• Develop Takaful talents particularly in the advisory and operations level
• Investment in research and development for market divisions, products structuring and differentia-
tion that would advantage to Takaful operators in the long run (Hans De Cuyper, 2012).
698
Takaful in Malaysia
CONCLUSION
Takaful industry in Malaysia is quite new when compared to other areas of the financial industry but it has
experienced strong growth. Conversely, even though the strong growth, the infiltration rate for Takaful in
Malaysia remained lesser and this shows that there is a momentous prospect for future growth. Malaysia
has more experience in developing the Takaful industry. One advantage that makes Takaful industry in
Malaysia to propagate positively is the participation of the Bank Negara Malaysia (the central bank of
Malaysia) to offer a discrete regulatory body, completely responsible for the guideline and monitoring
the Takaful industry. Takaful industry witnessed 30% growth in the last decade.
Despite the swiftly growing Takaful industry it is, still, encountered by several regulatory and techni-
cal challenges in Malaysia. These encounters range from competitive components, business model, and
practices, altering customers’ requirements and demands for better product selections. These challenges
include the low level of awareness regarding the basic spirit and importance of this types of insurance
products, low level of suitability of its products, insufficient regulations and ineffectual CG, scarcity
of qualified workforces, absence of new products and limited funds undertakings for Takaful finances.
Takaful industry tries to enhance competitiveness and to comply with Shari’ah demands, treating
consumers, and Takaful companies equitably. Therefore, the Takaful Industry should comply with new
trends in global economics to be competitors worldwide and be the only choice among customers among
Muslims and non-Muslims.
Moreover, for the technical challenges, there are also regulatory challenges within the Takaful in-
dustry. Due to differences in Shari’ah interpretations, it is hard to create global standards or regulations
in the Takaful industry. In the Malaysia context, the government is devoted to promote Takaful and to
make Malaysia a Takaful hub in South-East Asia. This chapter provided a brief on the Takaful industry
in Malaysia. Therefore, future and in-depth study in this area are required to overview and discussion.
CLASSIFICATIONS
JEL Classification: G22, G52, M41
KAUJIE Classification: E22, I44, L1
REFERENCES
Abdou, H. A., Ali, K., & Lister, R. J. (2014). A comparative study of Takaful and conventional insur-
ance: empirical evidence from the Malaysian market. Insurance Markets and Companies: Analyses and
Actuarial Computations, 5(1), 22–34.
Abu Hussin, M. F., Muhamad, N. H. N., & Hussin, M. Y. M. (2014). Takaful (Islamic insurance) industry
in Malaysia and the Arab Gulf States: Challenges and future direction. Asian Social Science, 10(21),
26–34. doi:10.5539/ass.v10n21p26
Accounting and Auditing Organization for Islamic Financial Institutions (AAOFI). (2012). Shari’ah
Standard No. 41. Islamic Reinsurance, Manama. (2019, Aug. 25). Retrieved from https://aaoifi.com/
Shari’aha-standards/?lang=en
699
Takaful in Malaysia
Act, T. (1984). Bank Negara Malaysia. The Central Bank of Malaysia.
Akhter, W. (2009). Potential of Takaful in Pakistan: Operational and transformational paradigm. (Un-
published doctoral dissertation), National University Of Modern Languages, Islamabad.
Akhter, W. (2010). Takaful Models and Global Practices. Munich Personal RePEc Archive. No. 40010.
Akhter, W., Pappas, V., & Khan, S. U. (2017). A comparison of Islamic and conventional insurance
demand: Worldwide evidence during the Global Financial Crisis. Research in International Business
and Finance, 42, 1401–1412. doi:10.1016/j.ribaf.2017.07.079
Alhabshi, S. O. (2017). Challenges for the Takaful industry. In M. Ariff, & M. S. Mohamad (Eds.),
Islamic Wealth Management. Edward Elgar Publishing.
Ali, M. M. (2016). Takaful Models: Their Evolution and Future Direction. Islam and Civilisational
Renewal, 7(4), 457–473. doi:10.12816/0035216
Almulhim, T. (2019). Analysis of Takaful vs. Conventional Insurance Firms’ Efficiency: Two-stage
DEA of Saudi Arabia’s Insurance Market. Cogent Business & Management, (just-accepted), 1633807.
Alnemer, H. A. (2013). Revisiting Takaful Insurance : A Survey on Functions and Dominant Models.
Afro Eurasian Studies, 2(1&2), 231–253.
Archer, S., & Karim, R. A. A. (2002). Islamic finance: innovation and growth. Euromoney books and
AAOIFI.
Arifin, N. M., Daud, W., & Norhayateb, W. (2018). Takaful Rules and Regulations in Takaful Industry
for Malaysia. Proceedings–ICLG, 2018, 107.
Bank Al-Jazira. Saudi Arabia. (2006). Retrieved from www.baj.com.sa
Bank Negara Malaysia. (2006, April). The Takaful Annual Report 2005. Retrieved August 23, 2019,
from http://www.bnm.gov.my/index.php?ch=en_press&pg=en_press&ac=823&lang=en
Bank Negara Malaysia. (2010). Annual Report Bank Negara Malasia. Retrieved July 21, 2019, from
http://www.bnm.gov.my/files/publication/ar/en/2010/ar2010_book.pdf
Bank Negara Malaysia. (2012). Guidelines on Takaful Operational Framework. Kuala Lumpur, Malay-
sia: Author.
Bank Negara Malaysia. (2013). Islamic Financial Services Act 2013. Kuala Lumpur, Malaysia: Bank
Negara Malaysia.
Billah, M. (2004). Different models of Takaful in global sound market. Retrieved July 22, 2019, from
https://www.academia.edu/4669588/Different_Models_of_Takaful_In_the_Global_Sound_Market
Cuyper, H. D. (2012). Takaful for All, the Future of Takaful in Asia. In Proceedings of The 6th Interna-
tional Takaful Summit 2012, Jumeirah Carlton Tower, London, UK. Retrieved from http://www.fstep.
org.my/media/File/Overview%20Week%20Notes/En%20Shahril%20Azuar%20jimin_Evolution%20
of%20Malaysian%20Takaful%20Industry_150411_Etiqa%20Takaful.pd
700
Takaful in Malaysia
Daud, W. N. W., Rahim, M. A., Zainol, F. A., & Ismail, A. G. (2018). Leader’s qualities and organisational
performance: A case of Malaysian Takaful operator. International Journal of Business Performance
Management, 19(2), 189–208. doi:10.1504/IJBPM.2018.090700
Djafri, F., Bin Noordin, K., & Naail Mohammed, K. (2018). The measurement model of performance
determinants: A case study of Islamic insurance (Takaful) in Malaysia. International Journal of Ethics
and Systems, 34(2), 166–185. doi:10.1108/IJOES-05-2017-0075
El-Gamal, M. A. (2001). An Economic Explication of the Prohibition of Gharar in Classical Islamic
Jurisprudence. Islamic Economic Studies, 8(2), 13–15.
Ernst & Young. (2014). Global Takaful Insights 2014: Update markets: Growth momentum continues.
United Kingdom: Author.
Heradhyaksa, B., & Markom, R. (2018). Jurisdiction of Shari’ah Supervisory Board in Indonesian
Takaful Industry. In IOP: Conf. Series Earth and Environmental Science 175 (pp. 1–7). Bangi: National
University of Malaysia.
Holderness, A. (2011, July 4). Hong Kong: Routes To Growth - An Insight Into The Emerging Insur-
ance Markets Of Asia Pacific. Retrieved August 11, 2019, from Mondaq News: http://www.mondaq.
com/x/137506/Insurance/Routes+To+Growth+An+I%20nsight+Into+The+Emerging+Insurance+M
arkets+Of+Asia+Pacific
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.
Islamic Financial Services Board. (2016). Islamic Financial Service Industry Stability Report 2016.
Kuala Lumpur. Retrieved Aug 15, 2019, from https://www.ifsb.org/sec03.php
Islamic Financial Services Board. (2017). Islamic Financial Service Industry Stability Report 2017.
Kuala Lumpur. Retrieved Aug 17, 2019, from https://www.ifsb.org/sec03.php
Ismail, F., Jaffer, S., Unwin, L., & Jamil, S. (2017). Global Takaful Report 2017 Market trends in family
and general Takaful. Milliman. Retrieved from http://www.milliman.com/uploadedFiles/insight/2017/
Takaful-2017-full-report.pdf
Ismail, M. (2013). Determinants of financial performance: The case of general Takaful and insurance
companies in Malaysia. International Review of Business Research Papers, 9(6), 111–130.
Ismail, N., Alhabshi, D. 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.
Johnes, J., Izzeldin, M., & Pappas, V. (2009). Efficiency in Islamic and conventional banks: A com-
parison based on financial ratios and data envelopment analysis. Economics Working Paper Series. The
Economics Department, Lancaster University.
Karbhari, Y., Muye, I., Hassan, A. F. S., & Elnahass, M. (2018). Governance mechanisms and efficiency:
Evidence from an alternative insurance (Takaful) market. Journal of International Financial Markets,
Institutions, and Money, 56, 71–92. doi:10.1016/j.intfin.2018.02.017
701
Takaful in Malaysia
Khan, M. (2005). Takaful vs. Conventional Insurance. Retrieved August 21, 2019, from https://www.
mbri.ac.ir/userfiles/file/Islamic Banking/بانک مقالات/Takaful/Takaful vs. Conventional Insurance.PDF
Kwon, W. J. (2007). Islamic principle and Takaful insurance: Re-evaluation. Journal of Insurance
Regulation, 26(1), 53–81.
Kwon, W. J. (2010). An analysis of organisational, market and socio-cultural factors affecting the sup-
ply of insurance and other financial services by microfinance institutions in developing economies. The
Geneva Papers on Risk and Insurance. Issues and Practice, 35(1), 130–160. doi:10.1057/gpp.2009.32
Laldin, M. A., & Furqani, H. (2018). Islamic Financial Services Act (IFSA) 2013 and the Shari’ah-
compliance requirement of the Islamic finance industry in Malaysia. ISRA International Journal of
Islamic Finance, 10(1), 94–101. doi:10.1108/IJIF-12-2017-0052
Lee, O. F., Tan, J. A., & Javalgi, R. (2010). Goal orientation and organizational commitment: Individual
difference predictors of job performance. The International Journal of Organizational Analysis, 18(1),
129–150. doi:10.1108/19348831011033249
Malaysian Takaful Association. (2010). Annual Report. Kuala Lumpur, Malaysia.
Malaysian Takaful Association. (2017). Annual Report. Kuala Lumpur, Malaysia.
Manjoo, F. (2007). Why different Takaful models in the world [Brochure]. ICMIF, South Africa: Series
of Takaful Articles
Marifa Academy Team. (2014). Islamic Banking & Finance: Principles and Practices. Kuala Lumpur,
Malaysia.
Matsawali, M. S., Abdullah, M. F., Yeo, C. P., Abidin, S. Y., Zaini, M. M., Ali, H. M., ... Yaacob, H.
(2012). A study on Takaful and conventional insurance preferences: The case of Brunei. International
Journal of Business and Social Science, 3(22), 163–176.
Md Husin, M., & Ab Rahman, A. (2016). Do Muslims intend to participate in Islamic insurance? Analysis
from theory of planned behaviour. Journal of Islamic Accounting and Business Research, 7(1), 42–58.
doi:10.1108/JIABR-03-2014-0012
Mustafa, A., & Rahman, A. A. (2018). The islamic perspective on the underwriting of health Takaful
products: a study of selected Takaful operators in Malaysia. In New Developments in Islamic Economics
(pp. 135-150). Emerald Publishing Limited.
Nazarov, I. I., & Dhiraj, N. S. (2019). A conceptual understanding and significance of Takaful (Islamic
insurance): History, concept, models, and products. International Journal of Innovation Education and
Research, 7(4), 280–298. doi:10.31686/ijier.Vol7.Iss4.1408
Nordin, H. B. (2018). Industry Growth in Malaysia: Case of Takaful and Conventional Finance. In Pro-
ceedings of Asian Conference on Entrepreneurship (ace 2018) Entrepreneurship on the “one belt one
road”. (p. 178). Kuala Lampur, Malaysia.
Obaidullah, M. (2005). Islamic financial services. Jeddah, Saudi Arabia: Islamic Economic Research
Centre, King Abdul Aziz University.
702
Takaful in Malaysia
Razimi, M. S. A., Romle, A. R., & Ahmad, A. (2017). Business operation model with Shari’ah concerns
and proposed resolution for Takaful. Humanity & Social Sciences Journal, 12(1), 1–6.
Redzuan, H., Rahman, Z. A., & Aidid, S. S. S. H. (2009). Economic determinants of family Takaful con-
sumption: Evidence from Malaysia. International Review of Business Research Papers, 5(5), 193–211.
Remli, N., & Rosman, M. M. R. (2018). Firms’characteristics: a preliminary study of family Takaful
demand in Malaysia. International Journal of Accounting, 3(14), 01-14.
Sadeghi, M. (2010). The evolution of Islamic insurance-Takaful: a literature survey. Insurance Markets
and Companies: Analyses and Actuarial Computations, 1(2), 100-107.
Safder, J., Ismail, F., Noor, J., Unwin, L., & AA, Z. (2010). Takaful (Islamic Insurance): Concept,
Challenges, and Opportunities. Retrieved from https://www.academia.edu/30938531/Takaful_Islam-
ic_Insurance_Concept_Challenges_and_Opportunities_Takaful_Islamic_Insurance_Concept_Chal-
lenges_and_Opportunities
Saleh, M. M. (2016). Challenges in Takaful application within conventional insurance framework in
nigeria – the imperative for legislative harmonization of regulatory instruments. University Of Malaya,
Malaysia.
Salleh, M. C. M., Yussof, S. A., & Abdullah, N. I. (2018). Impact of the government service tax (GST)
on the Malaysian Takaful industry: Issues and challenges. Advanced Science Letters, 24(5), 3178–3183.
doi:10.1166/asl.2018.11339
Salman, S. A., & Htay, S. (2013). Is Islamic Insurance an Alternative To Conventional Insurance? In-
ternational Journal of Business, Management, & Social Sciences, 2(7), 1–4.
Samad, R. R., & Shafii, Z. (2018). Shari’ah Governance Practices in Malaysia Credit Cooperatives: view
of experts. In Asian Conference on Entrepreneurship (ace 2018) Entrepreneurship on the “one belt one
road” (p. 107). Kuala Lampur, Malaysia.
Sherif, M., & Azlina Shaairi, N. (2013). Determinants of demand on family Takaful in Malaysia. Journal
of Islamic Accounting and Business Research, 4(1), 26–50. doi:10.1108/17590811311314276
Swiss Re Ltd. (2013). World insurance in 2013. Swiss Re (Vol. 3). Zurich Swiss Reinsurance Company
Ltd. (2008). Insurance in the emerging markets: overview and prospects for Islamic insurance (Vol. 5).
Zurich, Switzerland.
Thanasegara, H. (2008). Growth of Islamic insurance (Takaful) In Malaysia: A Model for the Region
Singapore. The Journal of Legal Studies, 143–164.
Tolefat, A. (2006). Mixed model is best approach. Kuala Lumpur, Malaysia: ICMIF.
Waris, A., Hassan, H., Abbas, S., Mohsin, M., & Waqar, N. (2018). Shari’ah Screening Process: A
Comparison of Pakistan and Malaysia. Asian Journal of Multidisciplinary Studies, 6(5), 13–21.
Yasin, N., & Ramly, J. (2011). Takaful: A Study Guide (1st ed.). Kuala Lampur, Malaysia: IBFIM.
Yusuf, M., & Yuhasni, R. (2011). Revisiting and redefining the concept of reTakaful and the viability
of its model in Malaysian Takaful industry. Business and Management Quarterly Review, 2(4), 20–32.
