Concept of Takaful

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Mohames Sharif et al. (2011) in his research about the perception of the consumer towards Takaful found that the common problem often faced by the policyholder of Takaful is when to make the claims process where the process is too bureaucratic and complicated. Among the other factors studied were the knowledge of the product, awareness and advertising. The result of the study shows that a large number of the respondents agreed that the awareness of the importance of having insurance should exist within each individual while they in university level. Salman Masood et al. (2014) has conducted a study on has made the study of customer awareness and perception towards Islamic banking and how these perceptions can be further improved to achieve success in the Islamic banking industry. Based on the study, awareness and perception toward Islamic banking and Sharia-compliant services need to be improved through the publication of books or brochures, hiring organization to spread awareness as well as holding seminars to raise awareness in general. In addition, students in institutions of higher learning can take subjects related as one of their subjects to raise awareness among university students.

Tahini Coolen (2013) has conducted a study on actual demand for Takaful products among Muslims in United Kingdom. This study was to assess the awareness of Takaful and the principles which consist of the concept of Takaful. The study found that there is a minimum level of awareness of Takaful and its main principles. This study also shows that half of the respondent only know about the principle of ‘riba’ and ‘maisir’. While half of the respondents also not sure whether Takaful really follow the teachings of Islam or the actual concept of Islam. This thing shows that there is less effort from the Takaful operator and Islamic bodies to teach about the importance of the principles of Islamic insurance and elements contained in it. By the way, some promotional strategies are needed to increase the level of customer awareness of the existence of Takaful.

Asmak Ab. Rahman et al. (2008) has made a comparative study of the purchasing behaviour between protection of vehicle Takaful and vehicle insurance among students in Malaysia. The result of the study found that only a small number of students have Takaful policy, rest of them choose to take conventional insurance because they thought that the insurance conventional policy cars better than Takaful in terms of assets and validity.

3.3 Relationship between demographic factor and awareness

Demographic factors such as religion, age, gender, education level, majors and income levels have been found to influence consumer behavior in the marketing of financial services (Perry, 2008; Phau and Woo, 2008; Worthington, 2006; Dellande and Saporoschenko, 2004).

Religiosity plays a huge role in influencing an individual to purchase an insurance or Takaful. Religiosity can simply be defined as the state of an individual’s belief in God, which is characterized by his/her piety and religious zeal. The stronger his piety and religious zeal are, the stronger his belief in God, the higher his religiosity is (Salleh, 2012). Mansor (2004) found that religious factors had a positive and significant relationship towards awareness Takaful. Besides this, the studies by Hashim (2006) and Mohd Deni (2009) supported the idea that the main factor to join Takaful was due to the existence of an Islamic compliance system and the Takaful operation which most of the Muslim respondents were highly concerned with. Maysami and Williams (2006) conducted a survey in Singapore to judge the awareness of Muslim community about Takaful. They concluded that there is a relationship between Takaful awareness and religious perceptions of the respondents about Takaful (Maysami and Williams, 2006).

Gender is a very important component of a public’s awareness. Sometimes we thought gender or sexual identity did not play any important role in awareness. But, research has been reveal that there are different among gender. Every man and women has their own way how to influence for purchase decision making. Younes and Ahmad (2015) indicate that females have often been found to possess more takaful knowledge and interests compared to males. Females also tend to be risk adverse in financial choices (Dellande and Saporoschenko, 2004).

Hidayat and Rafeea (2014) evaluate the level of public awareness towards the concept and principles of Takaful in Bahrain. They also study the importance of education in creating awareness and the results showed that the level of public awareness in Bahrain towards Takaful to be moderately high. They found that those respondents with higher education level tend to have higher awareness compared to those with lower education level. Therefore, spreading the message of Takaful through the educational system has been scientifically proven as an effective way to increase public awareness on the Takaful concept and principles. Integrating Takaful courses into the academic curriculum of universities and training institutes across countries where Takaful is in existence is believed to be very important in enhancing public awareness, market preference and thus the market share of Takaful.

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