Insurance Industry Performance in Malaysia: Comparison Between Takaful and Conventional Insurance

Nurfatin Azira Binti Mohd Anuar and Humaida Banu Samsudin
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Nurfatin Azira Binti Mohd Anuar: Department of Mathematical Science, Faculty of Science and Technology, Universiti Kebangsaan Malaysia, Bangi, Selangor
Humaida Banu Samsudin: Department of Mathematical Science, Faculty of Science and Technology, Universiti Kebangsaan Malaysia, Bangi, Selangor

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 14, 2600-2607

Abstract: The insurance industry in Malaysia is divided into two, conventional insurance and takaful. Both types of insurance have the same goal as protection against the risks faced by each individual or business. However, these two types of insurance have different management methods. Therefore, the way to get profit for these two types of insurance is also different. Due to the differences in the management of takaful and conventional insurance, the question arises about the difference in performance between these two types of insurance. This study was conducted to measure and compare the performance of conventional insurance and takaful based on the factors of solvency, liquidity, profitability, underwriting and efficiency. In addition, this study also aims to examine the relationship between the five factors and the type of insurance, namely conventional insurance and takaful. Financial statement data which is secondary data for conventional insurance and takaful companies in Malaysia for 10 years is used in this study. The method used in this study is logistic regression analysis. The results of the study show that conventional insurance is better than takaful in terms of solvency, liquidity and profitability. However, takaful is better than conventional insurance in underwriting and efficiency. Solvency shows an insignificant mean difference between conventional and takaful insurance companies in Malaysia. The results of the logistic regression analysis show that the factors of liquidity, profitability, underwriting and efficiency have an impact on the selection of the type of insurance that is between takaful and conventional insurance.

Date: 2025
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