An analysis of the viability of micro health takaful in Malaysia

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.

The global cash waqf: a tool against poverty in Muslim countries

“…Many contemporary academicians and researchers strongly advocate for the applications of waqf s or endowments to ensure the welfare of Muslim communities and societies (Htay et al , 2015). As a pioneer study in the area of the cash- waqf , Ahmad and Ab Rahman (2011) examined the application of waqf s in a takāful product.…”

Proposed Secured Bay-Salam Model for Financing Agriculture by Islamic Banks

“…Agricultural insurance is compulsory for agricultural loans in developing countries (Mahul and Stutley, 2010). However, the potential clients in the least developed countries are mostly illiterate and thus may not aware of insurance; there are also other barriers such as lack of affordability and limited access to insurance programmes (Htay et al, 2015;Johnson et al, 2018;Mahul and Stutley, 2010). For many low-income farmers, agricultural insurance is a low priority (Mahul and Stutley, 2010).…”

“…Islam encourages its followers to anticipate any possible negative occurrences and to take precautions to mitigate them (Mahmood, 1991). Takaful is a form of insurance based on Islamic law, which encourages mutual assistance (Ali and Nisar, 2016;Htay et al, 2015;Mahmood, 1991;Maysami and Williams, 2006). Instead of paying premiums as in conventional insurance, all members in a Takaful arrangement contribute money to a common pool to guarantee each other against damage or loss (Htay et al, 2015).…”

“…Takaful is a form of insurance based on Islamic law, which encourages mutual assistance (Ali and Nisar, 2016;Htay et al, 2015;Mahmood, 1991;Maysami and Williams, 2006). Instead of paying premiums as in conventional insurance, all members in a Takaful arrangement contribute money to a common pool to guarantee each other against damage or loss (Htay et al, 2015). The Takaful fund may be invested in any Shariah compliant investments and any profit generated from the investment will be credited back to the fund (Htay et al, 2015; Kassim, 2013; Maysami and Williams, 2006).…”

“…Microfinance has been proven effective in creating opportunities for self-employment (Jia et al, 2013) and alleviating poverty (Manap et al, 2017). Equally, micro-insurance has received growing attention from the industry experts (Mahul and Stutley, 2010), scholars (Htay et al, 2015) and, most importantly, people in need (Gessesse, 2019). It is now time to progress further and consider alternative modes of financing that are in accordance with the principles of Islamic law.…”