Impacts of Risk Based Capital Regulation in Malaysian Islamic Insurers (Takaful)

Abstract

Risk Based Capital framework for Takaful operators (RBCT) is enforced by the Central Bank of Malaysia with the aim to ensure that Takaful operators have adequate capital to provide sound financial service. The objectives of this article is to examine the impacts of RBCT on efficiency, productivity and competitiveness level of Family Takaful Operators (FTO) and the relationship between efficiency and competitiveness in FTO in Malaysia. This study employs three methods namely Data Envelopment Analysis (DEA), Malmquist Productivity Index (MPI) and Panzar Rosse (PR) to investigate the impacts of RBC on the efficiency, productivity and competitiveness of FTO in Malaysia. The efficiency results indicate that after RBCT comes into effect, the cost efficiency has achieved higher efficient level. Although the productivity efficiency are improving, the technological systems of FTO are yet to achieve a reasonable level. From competitiveness results, the FTO are less competitive prior the implementation of RBCT, but has become more competitive after the regulation of RBCT framework. Furthermore, the more efficient of a Takaful market, the more competitive the market is. The implication of this study is that regulators need to impose prudent risk based capital regulation because it will improve the efficiency and competitiveness of Islamic insurers.

A bibliometric analysis of Halal and Islamic tourism

“…The number of keywords related to Halal and Islamic tourism studies literature shows an awareness of the need for an ethical and moral framework in the marketing field (Lee et al , 2019) and the growth of halal markets throughout the world (Alserhan, 2010a, b). Increasing the awareness of the Muslim population on Halal products is also a business prospect for Muslim entrepreneurs and those with other backgrounds (Abuznaid, 2012), and this serves as a motivation for different groups to explore the Islamic marketing field.…”

The Effect of Stimulus Policies and Risk-Based Capital Levels on Solvency at PT. Indonesian Takaful using Sharia Principles during the Majeur Force Period (Covid-19 Pandemic) in Indonesia

“…This research is initiated by the results of previous studies including: Lee et al (2019) after the introduction of RBCT, FTO is facing with a more challenging operating environment to maintain the capital requirement and market share. The higher operating costs may arise in meeting the RBCT requirements.…”

Literature survey on DEA in the insurance industry with a focus on identification of research hotspots with text mining

“…The eliminated keywords by us are given in Appendix 1e. In this period we have investigated the following issues: how the financial sector reforms affect the efficiency and productivity (Noreen and Ahmad, 2016), efficiency and productivity of property-liability insurers (Cummins and Xie, 2016), efficiencysolvency linkage (Sinha, 2017) the performance evaluation of life, general insurers and its' ownership (Nourani et al 2018), the corporate performance (Tone et al 2019) and the corporate governance effect (board characteristics) on efficiency of life insurance companies (Alhassan and Boakye, 2020), the efficiency and competitiveness (Lee et al 2018), efficiency of the Medicare plans (Brockett et al 2018), efficiency of the publicly held insurance industry (Copeland and Cabanda, 2018), the determinants of the insurance profitability (Camino-Morgo and Bermudez-Barrezueta, 2019), the effect of risk-based capital on efficiency, productivity and competitiveness (Lee et al 2019), the life micro-insurance portfolio of insurance companies (Savitha et al 2019), the relationship between efficiency and profitability of insurance companies (Eling and Jia, 2019), the performance of non-life companies and its determinants (Ilyas and Rajasekaran, 2019), the measure and rank efficiency of general insurance companies (Meher et al 2020), the risk-management efficiency and determinants of non-life insurance companies (Noreen, 2020), private health insurance (Nguyen and Worthington, 2021) and lastly managerial ability (Banker et al 2021).…”