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The Concept of Tabarru

Autor:   •  January 10, 2018  •  4,036 Words (17 Pages)  •  567 Views

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Under Wakalah model, the agreement is formed between agent (wakeel) and the participant to conduct a certain business. According to Ahmad Tisman & Mher (2013), “cooperative risk sharing occurs among participants where the Takaful operator earns a fee for his/her services (as an agent) and does not participate or share in any underwriting results as these belong to participants as surplus or deficit”. From Dr. Abdussalam (2013), “the role of operator is to manage the financial affairs of the fund for a defined fee”. He then adds that “the fee may be defined upfront (generally within the range of 15% to 30% of the contributions) which may be transferred to the Takaful operator’s shareholders fund. The remaining portion of the contributions may be transferred to the Takaful fund which is used to pay claims, re-takaful costs, etc. The surplus which remains may then be allocated 100% for the benefit of the Takaful participants”. From this it shows that the contributions made by the participants are considered as tabarru.

In terms of Waqf model, “Waqf fund is created as separate legal entity with the contribution of the participant’s amount deposited to this fund is considered as a tabarru donation. The aim of this fund is to provide relief to participants against defined losses according to the terms and condition of the Waqf fund” (Mher & Ahmad Tisman, 2011).

Other than that, there is also Hybrid model which is a combination of two principles. According to (Zulkifli, Rahman, & Ramly, 2012), “under this model, a relationship between the operator which combines the role of entrepreneur of Mudarib as well as the agent or wakil of the participant, whilst the latter in the capacity as both provider of capital or sahib al-mal and principal to the agent”. They then add that “… this arrangement on the part of the operator, an agency fee can be remunerated as upfront charges from the Takaful fund whilst at the same time will have the right to profit-sharing on returns on the investment of the Takaful fund in accordance with the Mudharabah contract”.

2.3 Measuring customer awareness of the concept adopted by Takaful

As in Islam, reward must be accompanied by risk based on the basic principal of investment. Product that is based on debt-based, have a guaranteed or minimum return on the investment, or a practice that is haram cannot be invested in Takaful business (Swartz and Coetzer, 2010). So, Takaful is the best answer to the Islamic alternative concept of conventional insurance.

In Malaysia, since the majority of population is Muslim therefore it is necessary for Islamic financial institutions to come up with a significant role in developing and implementing an alternative model to conventional insurance which is Takaful. Lack in effort of the institutions may be one of the reasons that Takaful is not fully accepted by Malaysian as they still could not differentiate between Takaful and insurance concepts. According to Omaima, Syed Othman & Kamaruddin (2013), “...the factors that deter the public from participating in Takaful could be listed as follows: the lack of public awareness in the advantages of Takaful over insurance products, the limited range of product varieties, the shortage of relevant expertise to explain Takaful products, the need to improve the distribution channels and marketing strategies”. Besides, the poor education towards Takaful knowledge would be the other reason of the lack of awareness towards this concept. As mention by Parker (2006) from Omaima, Syed Othman & Kamaruddin (2013), “One of the major hurdles for Takaful market penetration is poor culture of consumer education”.

In addition, one of the interviewees said “some of the Takaful operators still face shortage of trained and qualified personnel to explain terms and conditions to participants and the range of coverage for Takaful products. This leads to misunderstanding when participants’ claim is out of the range covered; they think the Takaful operator is being dishonest” (Omaima, Syed Othman & Kamaruddin, 2013). So it is important to have knowledge and also communication skills in order to deliver the correct information of Takaful concepts and avoid misconception. In addition Swartz & Coetzer, 2010 also mention that “…they face challenges such as immature banking infrastructure and poor communications infrastructure”.

3. Objectives

The objectives of this study are:

- To investigate the level of awareness of Malaysian on the concept adopted by Takaful.

- To investigate the level of acceptance of Malaysian towards the concept adopted by Takaful.

4. Methodology

Materials:

Quantitative methodological approach was used in this research. A set of questionnaire were used as the instrument to collect data for this study. The questionnaire was divided into two parts where the first part is to investigate the level of awareness of Malaysian on the concept adopted by Takaful and the second part is to investigate the level of acceptance of Malaysian towards the concept adopted by Takaful. It consisted of several questions in order to get the exact data from the respondents.

Participants:

Questionnaires were distributed to randomly 50 people in Malaysia. The questionnaire was answered by Malaysian people with different backgrounds of education and qualification. The samples of Malaysian people with different background were used because this will give a wider data.

Procedure:

The respondents were approach at different location within Klang Valley. The place was selected in order to get people with different background of age, religion, education and employment. It is easy to collect data in this area as there are many people that can be approached easily. The result obtained is then were presented in the form of bar charts.

5. Findings

Data Analysis

The first objective of this study is to investigate the level of awareness of Malaysian on the concept adopted by Takaful.

[pic 1]

Figure1: Awareness on the concepts adopted by Takaful

Figure 1 indicates the number of respondents’ awareness on the concepts adopted by Takaful. The above bar chart consists of 50 respondents

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