Islamic insurance (takaful): demand and supply in the UK

Tahani Coolen‐Maturi

International Journal of Islamic and Middle Eastern Finance and Management, 2013, vol. 6, issue 2, 87-104

Abstract: Purpose - This paper aims to examine empirically whether there is a real demand fortakafulproducts among Muslims in the UK, and to assess the awareness abouttakafulinsurance and its main principles among UK Muslim communities. Design/methodology/approach - The paper uses empirical data collected via an online questionnaire. Findings - The study shows that the survey respondents are likely to buy car, health, home and home contents insurance if the same cover is offered as conventional insurance and if prices are competitive. The paper also shows that there is quite a lack of awareness abouttakafulinsurance and its main principles among UK Muslim communities, and that most respondents are only aware of theribaandmaysirconcepts. It also showed that about half the respondents are not sure whethertakafulinsurance is in accordance with Islam. The majority of the respondents prefer to gettakafulproducts via banking channels rather than from independenttakafulinstitutions. Not surprisingly, the majority of respondents agreed to the use of Arabic terms for the Islamic insurance to show that these are Islamic products and to differentiate them from conventional alternatives in order to attract more Muslim participants. Practical implications - This findings presented in this paper would encourage more banks in the UK to developtakafulproducts to target the rapid increase in Muslim populations in the UK and increase the demand for Islamic insurance products. Some promotion strategies may be needed to increase the customers' awareness of the existingtakafulproducts and, more importantly, to their compliance to the Shariah law. Despite the fact that there is an obvious preference among the survey participants towards using Arabic terms intakafulproducts, one could argue for the financial benefits of introducing these Islamic insurance products to non‐Muslim customers where Arabic terms are avoided but with the explanations of the main concept oftakafulproducts. Originality/value - The paper examines empirically (via an online questionnaire) whether there is a real demand fortakafulproducts among Muslims in the UK.

Keywords: Islamic insurance; Takaful; Riba; Maysir; Gharar; Surveys; United Kingdom (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eme:imefmp:v:6:y:2013:i:2:p:87-104

DOI: 10.1108/17538391311329806

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