‘Takaful’ insurance : alternative to conventional insurance

Abstract

This research study is intended to explore people’s perception towards an alternative form of insurance namely, Takaful insurance. This form of insurance is based on Islamic teachings and was introduced for Muslims as an alternative to the conventional contract of insurance which is believed to be contrary to the will of Allah since it involves elements of uncertainty, speculation and interest. People’s perception towards this form of insurance, which is considered as a novelty in comparison to the local insurance market, was collected by means of focus group sessions. The researcher made use of a qualitative form of data collection method as perception could not be quantified. To gather an extensive amount of data the researcher used three separate cohorts for this study. The cohorts were composed of insurance students, insurance professionals and a group of participants of no financial background. The collected data was analysed and interpreted qualitatively with the aim of determining whether people’s acceptance or rejection of the product would be influenced by knowing that it originates from Islamic teachings. An extensive amount of data was collected thus a thematic approach was used to effectively analyse the data. Through this analysis two themes emerged. Conclusively, the local demand for insurance products that are Shariah compliant is low. In addition, more awareness to this alternative form of insurance is required. Nevertheless, participants kept an openminded stance about the product, as they were more concerned about the financial returns and security of the product rather than its Islamic epistemology.