Takaful (Islamic Insurance) Industry in Malaysia and the Arab Gulf States: Challenges and Future Direction

Abstract

The Arab Gulf States in the Middle East and some other countries in South East Asia particularly Malaysia have been the epicenters for the development of Islamic banking and finance, as the last couple of years have not only witnessed tremendous development in the Industry but also much attention had been given to it by experts and professionals to brainstorm on its future direction, whereas less attention had been given to the discussion on the Islamic insurance; otherwise known as takaful despite its overwhelming growth. This paper, in a comparative context, examines the growth and development of the takaful industry in Malaysia and the Arab Gulf States by offering an insight into the challenges, prospects and future direction of the industry between these two fertile markets. It also examines the contributing factors to the growth and development of the industry in both markets through the use of historical reports, corporate documentations and professional analyses to arrive at a conclusion that the future of the industry in those two regions is not only germane but lucrative as well.

Impact of COVID-19 on Malaysian Takaful Business

“…The insurance practice was initially established in the beginning second period of the Islamic age in Asia, through the period when Muslim Arabs initiated by expanding their commerce to India, the Malay Archipelago, and several Asian nations (Sadeghi 2010). Due to the lengthy travel concerned, the risks integral in the voyage, and the damages evolving from accidents and disasters, or thefts, the Muslim Arab merchants became collectively and conjointly contracted to donate certain wealth, which would be utilized to support any member in the gathering who bore damages (Abu-Hussin et al, 2014 ). The values that make takaful Shariah-compliant including (1) tabaarru’ (contribution), and (2) ta’aawun (conjoint collaboration).…”

“…Less than a decade ago, particularly in 2012, the industry has expanded rapidly, it is documented that the sector continues to record fifteen percent yearly growth since 2007 (Shatnawi et al 2020 ). Malaysia and the Gulf Cooperation Council (GCC) countries are major actors in the global Takaful market due to the fact that they are productive arenas for the development of this important sectors (Abu-Hussin et al 2014 ). The Takaful sector has become more diversify globally whereas the quantity of Takaful insurers functioning also has increased significantly.…”

A narrative on Islamic insurance in Bangladesh: problems and prospects

“…Malaysia, Sudan (Redzuan et al , 2009) and United Arab Emirates (Mirah and Masa’deh, 2014) to exchange their views that may help to propose proper regulatory drafts to the government. Takaful companies can be regulated and controlled by the Bangladesh Bank which can follow the systems followed by the Central Bank of Malaysia (Bank Negara) (Abu-Hussin et al , 2014). Otherwise, it can set up a bank or institution to oversee all Takaful companies in Bangladesh.…”

Corporate Social Responsibility and Business Performance in Takaful Agencies: The Moderating Role of Objective Environment

“…Takaful institutions began in Sudan in 1979 followed by other countries around the world. Malaysia and the Gulf Cooperation Council (GCC) countries are considered as the leading key players in the global Takaful market [4]. Moreover, countries in Europe such as United Kingdom, Germany, and France have also started introducing and expanding Takaful businesses where they are perceived as among the largest market for Takaful in the world [5].…”