Abstract
Takaful operators are expected by the policyholders to act beyond the role of traditional insurance companies that only offer Shariah-compliant protection services. They are expected to be commercially viable. One of the ways to be commercially viable is takaful operators must be able to invest the policyholders' funds in the profitable investment avenues. Nevertheless, the critical issue before investing the funds is to develop products that are suitable with the takaful operators' investment strategy. This study employed a questionnaire survey to gather the feedback of fund managers from 11 takaful operators in Malaysia — all were the senior staffs of takaful operators in Malaysia were surveyed. The questionnaire is developed in the form of a Likert scale ranging from 1 to 5 as the research instrument. By Delphi technique, the draft of the questionnaire was sent to a panel of experts for review, was adopted, and their feedback reflected in the final questionnaire. The experts were a shariah advisor, a corporate finance manager, and a senior executive at the central bank. Findings indicate that policyholders' expectations on their investments are met and the products so far compatible with takaful operators' investment strategies.
Highlights
Until 2018, there are three types of takaful have been licenced to operate in Malaysia: family takaful; general takaful; and composite takaful.1Importantly, licences for these takaful operators, issued by the central bank, differ depending on the nature of the takaful business. Islamic Financial Services Act 2013 (IFSA), (2013) mandated significant changes to takaful operations, as it requires a dedicated takaful operator for each type of takaful business
Descriptive analysis Questionnaire statement: The products offered by the takaful operator influences our firm's investment style. 91.3% or 21 respondents in family takaful agreed with the statement while only 8.7% or two respondents disagreed (Table 3)
The near-consensus results correspond with those of Tolefat& Asutay (2013) and In Lewis & Wallace (1997) study about the influence of takaful and insurance products on the institution's investment style, the investment strategies of takaful operators are closely related to the type of products offered by the takaful operators, which requires ‘a mix and match approach’ in terms of assets and liabilities (Khan, 2007)
Summary
Until 2018, there are three types of takaful have been licenced to operate in Malaysia: family takaful; general takaful; and composite takaful (both combined).1Importantly, licences for these takaful operators, issued by the central bank, differ depending on the nature of the takaful business. Islamic Financial Services Act 2013 (IFSA), (2013) mandated significant changes to takaful operations, as it requires a dedicated takaful operator for each type of takaful business. Beginning of 2018 sees the end of the five-year transition period provided under IFSA 2013 for composite takaful companies to implement the requirement to separate their family and general takaful businesses into two separate entities. To date (as of March 2018), only one composite takaful operator, Etiqa Takaful Berhad, has officially segregated the entity into general takaful and family takaful businesses. This operator is evidenced in the appointment of separate chief executive officers for each of the two businesses — Etiqa General Takaful and Etiqa Family Takaful. The remaining composite takaful operators are expected to follow soon, since 1st July 2018 is the cut-off date for completion of the business segregation process
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