Innovative Nature of the Takaful Industry in Malaysia: Are We with The Conventional Insurance Industry? Overview

Abstract

Takaful has originated as an idea for preserving the care of people from financial damage. It can be employed as a risk management device to alleviate the hazards of regular life and trade activities. Furthermore, it gives significance to society’s worldwide economic growth as a tool of assembling funds in the economy. Takaful supports organizations to decrease their monetary burden. Businesses can buy Takaful to claim casualties acquired due to the misfortunes of workers in the workplace. Takaful takes responsibility for the protection and welfare of workers. Takaful has numerous products such as Motor Takaful, Family Takaful, and so on. However, Takaful products’ innovation is prolonged, causing the Takaful industry to lag behind the insurance industry, especially in marketing and pricing. Thus, this research aims to explore Shari’ah advisers’ views towards the innovation of Takaful products in Malaysia. A mixture of convenient sampling and purposive sampling methods are employed for choosing the Shariah advisers as the interviewees. The data for the research is collected via interviews with 11 Shariah advisers. The findings of this research show that Shariah advisers believed that many potentials need to be explored. One way to discover the potential is through innovation. Among the Takaful industry segments that need to be improved are products, marketing, pricing, customer services, and distribution channels. Moreover, the lack of awareness among customers on Takaful gives rise to many problems. Nevertheless, Shariah advisers contributed many reasonable clarifications to the current condition, suggesting that several Takaful industry areas could be improved to become an innovative industry.