Islamic Insurance Research Articles

Determinants Of The Proportion Of Tabarru' Funds In Indonesian Sharia General And Life Insurance For The 2018-2022 Period

This study examines the impact of claim expense ratio, commission expense ratio, total assets, and investment profit sharing income ratio on the proportion of tabarru' funds in general and life Islamic insurance in Indonesia, both sharia and full-fledged business units. The aim is to recognise the factors that influence the allocation of tabarru' funds and how it affects the financial performance of the company. Using panel data regression analysis, this study found that the claims expense ratio has a significant positive impact on full-fledged insurers, while the commission expense ratio has a significant positive effect on the combined model and Islamic business units. In contrast, total assets negatively affect the proportion of tabarru' funds significantly in the combined model and Islamic business units, but not significantly in full-fledged insurers. The investment profit-sharing income ratio does not show a significant effect in all models. These results provide useful insights for the financial management of Islamic insurance companies in designing effective tabarru' fund allocation policies, especially during the transition period from Islamic business units to full-fledged Islamic insurance companies.

The Effect of Financial Soundness Level on Premium Growth of Companies Listed in AASI

Analyze how the effect of financial health level as measured by liquidity ratio, investment balance ratio with liabilities, investment income ratio, claim expense ratio, tabarru' fund change ratio, and risk-based capital ratio on premium growth of Islamic insurance companies listed in the Indonesian Sharia Insurance Association (AASI) for the period 2018-2022. Quantitative research using panel data regression analysis with SPSS 26 program.There is a significant influence between the variable ratio of investment income on the growth of premiums of Islamic insurance companies indicated by a partial significance test value of 0.044 <0.05 and there is also an influence between the variable ratio of changes in tabarru's funds on the growth of Islamic insurance premiums indicated by a partial significance test value of 0.007 <0.05. Meanwhile, there is no influence between the variables of liquidity ratio, investment balance ratio with liabilities, claim expense ratio, and risk-based capital (RBC) ratio on the growth of premiums of Islamic insurance companies.

Analisis Strategi Pengembangan Infrastruktur Asuransi Syariah Terintegrasi Di Era Digital

This study aims to analyze the strategies required by Islamic insurance companies to enhance their infrastructure in the digital era. The primary issue identified is the inadequate development of infrastructure, which hinders the companies' ability to compete effectively in an increasingly competitive market. A qualitative approach employing the Multi-Factor Evaluation Process (MFEP) was used to evaluate and identify the most relevant strategies to address the challenges and capitalize on the opportunities presented by the digital era. The findings reveal that Islamic insurance companies require a set of integrated infrastructure development strategies. The recommended strategies include, (1) Developing differentiated products tailored to market needs, which can expand the customer base and enhance product appeal, (2) Enhancing human resource professionalism through continuous training and competency development to strengthen internal capabilities and respond to market dynamics, (3) Optimizing corporate governance by implementing advanced digital technologies to improve operational efficiency, reduce costs, and enhance service quality and (4) Intensifying product promotion efforts and increasing consumer literacy, including more aggressive education about the benefits of Islamic insurance to raise public awareness and understanding. In conclusion, the implementation of these strategies is crucial for supporting the long-term growth of Islamic insurance companies. An integrated infrastructure that is responsive to technological changes will strengthen the companies' competitive position, enabling them to be more adaptive to the evolving market needs and fully leverage the opportunities offered by the digital era. This approach will also enhance consumer trust and expand the market reach of Islamic insurance.

Editorial: Embracing New Horizons

In September 2024, ‘ISRA International Journal of Islamic Finance’ (IJIF) has been rebranded, and its publication is being continued under a new title, ‘International Journal of Islamic Finance and Sustainable Development’ (IJIFSD), following an institutional collaboration between the Islamic Development Bank Institute (IsDBI) and INCEIF University. The collaboration in the publication of IJIFSD marks the interest of both institutions in driving innovative research to create more meaningful real-world impact and support sustainable economic development in societies. The collaboration brings the combined resources and expertise of the two institutions in providing a premier platform for showcasing cutting-edge research by synthesising the principles of Islamic finance and sustainable development practices. While IJIFSD will continue to be published by ISRA Research Management Centre, INCEIF University, it will now have the added leverage of IsDBI to support its sponsorship and ensure its open and free accessibility to readers. The new title incorporates the terms ‘sustainable development’ as a strategic move to align the journal with the evolving landscape of Islamic finance that promotes global sustainability goals and, thus, results in a journal that is broader in scope and coverage. Therefore, besides focusing on the areas of Islamic economics, banking and finance and its related fields—Islamic capital markets, Islamic social finance, takāful (Islamic insurance), Islamic financial law, and Sharīʿah applications in Islamic finance—attention will also be given to the discourse on sustainability and sustainable economic development. With the expanded scope, it is expected that the journal will garner increased appeal to a wider range of authors and readers. It will also be able to reach a wider range of markets that have not yet been served, as well as have greater impact through enhanced citations. The key features of the rebranded journal therefore include: Focus: emerging trends such as green finance, impact investing, financial inclusion. Platform: fostering a community of forward-thinking scholars, researchers, policymakers, and practitioners to share insights on issues of concern. Goal: providing practical solutions for sustainable economic development and showcasing Islamic finance’s role in creating shared prosperity.

Perkembangan Asuransi Syariah di Indonesia Ditinjau dari Pertumbuhan Eksponensial

The purpose of this study is to determine the six exponential processes experienced by Islamic insurance companies in Indonesia. The research method used is qualitative method. This research uses a literature approach sourced from books, journals and articles that are in accordance with the topic and focus of the research. The literature study method is used in this research to find scientific and theoretical studies. The analysis technique used uses the concept of exponential growth which consists of six stages. The results of this study show that sharia insurance in Indonesia has gone through exponential stages similar to technological developments in other industries. Six stages such as digitalization, deception, disruption, dematerialization, demonetization and democratization have adopted technology and found new ways to integrate those innovations into the business, allowing to increase efficiency, lower costs, and provide added value to customers. PT Asuransi Jasindo Syariah is one of the sharia insurance companies in Indonesia that shows a significant increase to reach the democratization stage, because it is not only a sharia insurance application, but there are many choices of features other than insurance such as several Islamic articles, sadaqah features and the implementation of cash waqf.

A Study on the Islamic Insurance : Peculiarities and Future Challenges

A Study on the Islamic Insurance : Peculiarities and Future Challenges

Application of tàawun (mutual assistance) in cross-subsidisation of surplus among different takaful operators: an exploratory study in Malaysia

Purpose This study aims to investigate the possibility of practicing cross-subsidisation of underwriting surplus among different takaful operators. It responds to the recent discussion paper published by Bank Negara Malaysia (BNM) on broader application of tàawun (mutual assistance), which seeks insights into cross-tàawun of underwriting surplus within takaful industry. Design/methodology/approach A qualitative, semi-structured interview is used to gather primary data, featuring 13 one-to-one interviews with selected Sharìah and operational experts in takaful. Open-ended questions are drafted according to BNM’s discussion paper to guide the interview. A content analysis method is used to delve into the topic based on scholarly papers, books and regulatory guidelines. A thematic analysis is applied to explore the qualitative data. Findings This study establishes the feasibility of cross-subsidisation of underwriting surplus in takaful. Given that participants are the rightful owners of the underwriting surplus, cross-tàawun is deemed permissible with participants’ consent. With the view that underwriting surplus belongs to the fund due to outright transfer of contributions by participants, the regulators have discretion to permit cross-tàawun. The authorities can make any decision if it serves the public interest. Furthermore, the study provides Sharìah and regulatory requirements to govern the practice of cross-tàawun in takaful. Respondents of the study advocate for policy reviews and regulatory adjustments to facilitate cross-subsidisation of takaful surplus. Practical implications This study significantly contributes to the existing body of knowledge in Islamic insurance studies. It offers valuable insights for the regulators to formulate the required policies and guides takaful operators to develop products accordingly. Moreover, the study supports Sharìah scholars in making informed decisions about cross-tàawun practices. Originality/value This study fills a critical gap in the existing literature by being the first to examine cross-subsidisation of underwriting surplus in takaful. The proposed cross-subsidisation of underwriting surplus will enhance sustainability of takaful funds and contribute to stability of takaful industry. As a foundation, this study encourages future research to explore other relevant aspects of cross-subsidisation of underwriting surplus in takaful operation.

Is Takaful (Islamic Insurance) More Efficient Than Conventional Insurance A Comparative Analysis Of Insurance Industry In Malaysia

The efficiency of the Malaysian insurance industry (II) has drawn increasing international attention as the country has a dual-insurance system that comprises conventional insurance (CI) and takaful (Islamic) insurance (TI). Therefore, the objectives of the present study are to evaluate the efficiency of the Malaysian II as well as compare the efficiencies of CI and TI in Malaysia. Secondary data, spanning 2013-2021, from 46 CI and 28 TI providers was used. The results of the data envelopment analysis (DEA) indicates that scale efficiency (SE) has a significantly larger impact on the impact the total efficiency (TE) of the Malaysian II than pure technical efficiency (PTE). Therefore, larger insurance companies, with higher SE, are better suited to deal with large-scale risks, while smaller insurance companies may need to diversify or reinsure to limit their risk. Meanwhile, the results of the parametric and non-parametric tests indicate that there is a significant difference between the efficiencies of the Malaysian CI and TI industries. More specifically, that the Shariah-compliant nature of the Malaysian TI industry is a more conservative investment approach. As such, it decreases the risk of losses and financial instability. The purpose of comparing the efficiencies of the Malaysian TI and CI industries was to stimulate innovation and competition in the Malaysian II.

Efficiency Analysis of Islamic Life Insurance and Islamic General Insurance with Data Envelopment Analysis (DEA) Approach 2017-2022

The Islamic insurance industry in Indonesia has yet to reach stability. There are still numerous issues to be addressed on both the demand and supply sides. An efficiency study is required to establish the extent to which Islamic insurance companies may optimize their resource use and have a significant impact on Islamic finance in Indonesia. The goal of this study is to evaluate the effectiveness of Islamic Life Insurance and Islamic General Insurance in Indonesia from 2017 to 2022. The purposive sampling strategy was used to acquire the data for this investigation. The approach used is Data Envelopment Analysis (DEA) with VRS assumptions. According to the study's findings, Islamic Life Insurance and Islamic General Insurance achieved the maximum level of efficiency (100 percent) between 2017 and 2022. However, PT Asuransi Islam Keluarga Indonesia as Islamic Life Insurance and PT Asuransi Jasindo Syariah as Islamic General Insurance have yet to achieve efficiency. This is because the company's tabarru funds, total assets, operating expenses, and claim expenses still need to be more efficient.

Asuransi dan Koperasi Syariah di Indonesia

This paper aims to optimize Islamic insurance and cooperatives in Indonesia, reviewed from philosophical, historical, juridical and sociological studies. The method used is library research which examines literature analyzed qualitatively using a sociological, historical, juridical, and philosophical approach. The study results show that insurance and cooperatives carry the spirit of togetherness and help each other. The spirit of insurance and cooperatives is deeply rooted in Indonesian society; it's just that they are not institutionalized regularly. The Indonesian government is trying to accommodate insurance and cooperatives in various laws and regulations legally. However, there is still a need for firmness and clarity regarding the Sharia insurance and cooperatives law, especially if there is a dispute. In addition, insurance and cooperatives must improve their practice and understanding so that the community feels their benefits.

Determinants of the Profitability of Commercial and Islamic Insurance Companies in Iraq: An Applied Study (Workers in Iraqi and National Insurance Companies)

Determinants of the Profitability of Commercial and Islamic Insurance Companies in Iraq: An Applied Study (Workers in Iraqi and National Insurance Companies)

Ethical discourse of ethical (Islamic) finance: a systematic literature review (1988–2022) and the way forward

Purpose This paper aims to portray the publication pattern, key themes, study trends and future directions for the studies on ethics in Islamic finance. A total of 194 published documents that includes journal articles, books and book chapters and conference proceedings were screened for the period 1988 to August 2022 and categorized based on designated sectors of the Islamic finance industry. This paper also highlights the change in research trends in all three sectors of Islamic finance and suggests possible areas for future research. Design/methodology/approach A comprehensive systematic literature review was conducted using the “advanced search” function of “google scholar” by using the option “find articles” with the keywords “Ethic (s/al)”, “Islamic banks”, “Islamic banking”, “Islamic finance”, “Islamic capital markets” Takaful, Islamic insurance without restricting the time frame, author list and the platform. Furthermore, the search for relevant articles was conducted on other mainstream index databases such as “Web of Science” and “Scopus”. Findings Among the highlights of the findings were an increase in publications on ethical issues after the global financial crisis and an increase in publications in high-impact mainstream business and finance journals. A higher number of studies were documented in the area of Islamic banking and finance followed by Islamic capital markets and Islamic insurance/Takaful. Although a greater number of empirical studies were published than conceptual studies, dominance was resulted due to the replication of the studies in various jurisdictions based on the same concepts or models rather than applying diversified concepts in various jurisdictions. Originality/value This study contributes to the growing literature on ethical and/or Islamic finance as a guide for researchers to identify research gaps and provides a systematic direction for future studies in the area of ethics in Islamic finance.

Takaful as an Islamic Alternative to Conventional Insurance: A Thematic and Bibliometric Review

Islamic insurance, or Takaful, offers a Sharia-compliant alternative to conventional insurance, circumventing the prohibitions on uncertainty, interest, and speculation. This study presents a bibliometric review of 228 Takaful research articles from the Scopus database, using RStudio® for visualization from 1989 - mid 2023. The analysis encompasses science mapping techniques such as co-citation analysis, bibliometric coupling, word analysis, and trending topics on alternative investments. The findings reveal Malaysia as the leading nation in Takaful research, with significant contributions from International Islamic University Malaysia and Universiti Kebangsaan Malaysia. Prominent journals in this domain include the Journal of Islamic Accounting and Business Research, Journal of Islamic Marketing, and International Journal of Islamic and Middle Eastern Finance and Management. This study found the article entitled; “Establishing construct validity and reliability: Pilot testing of a qualitative interview for research in takaful (Islamic insurance)” written by Dikko (2016), as the most global cited document with 61 citations. Notably, the research focus has evolved from operational, shariah principles, and risk management to awareness, family Takaful innovations, micro-Takaful and relationship commitment. This study serves as a valuable resource for researchers, offering quantitative bibliometric insights and thematic analysis, and highlighting areas for future investigation.

SOCIETAL BEHAVIOR TOWARDS ISLAMIC INSURANCE: A SOCIOLOGICAL AND ANTHROPOLOGICAL PERSPECTIVE ON SHARIA ECONOMIC LAW

Islamic insurance has become a popular investment choice among Muslim communities, as it offers a means to mitigate future risks. The success of Islamic insurance companies is closely linked to the community's understanding of the importance of Islamic insurance. This study aims to identify and analyze the factors influencing societal behaviour towards Islamic insurance from a sociological and anthropological perspective on Sharia economic law. The analytical methods include data reduction, fact presentation, and conclusion drawing. The study's findings indicate that the most significant factor influencing the decision to adopt Islamic insurance is the level of understanding of Sharia principles, followed by the quality of the products. However, indicators such as premiums and promotional activities are less known among respondents, suggesting that insurance companies must enhance their efforts to promote Islamic insurance to the public. This research provides a deeper understanding of the factors influencing societal behaviour towards Islamic insurance and offers relevant recommendations for developing effective marketing strategies for Islamic insurance in Indonesia from both sociological and anthropological perspectives.

What are the key drivers of Fraud reporting in Takaful insurance? Evidence from count data models

Purpose This study aims at investigating the effect of corporate governance attributes on the Fraud disclosure of Takaful insurance companies in Saudi Arabia from 2014 to 2022. Design/methodology/approach This study uses a self-constructed disclosure index to quantify the level of fraud information using content analysis. The count regression (Poisson and negative binomial) models in panel data modeling are used to check the interdependence relationship between the Fraud disclosure and the corporate governance structure of 26 Takaful insurers. Findings The findings confirm the negative effect of ownership structure and the board size on the Fraud disclosure. However, the high proportion of independent board members, the audit board committee and the size of the risk board committee positively affect the extent of Fraud disclosure. Finally, this study provide evidence that large size of Shariah board is associated with a lower level of voluntary Fraud disclosure. Research limitations/implications Both economics-based theories and social exchange theory provide a better basis upon which to understand mechanisms by which board of directors in Takaful insurance provides external stakeholders with valuable information about corporate fraud. Practical implications It seems important to equip audit and Shariah board committee with the tools to give them an operational content that focus systematically on the “tone at the top” in investigating fraud, including disclosure and discipline. Originality/value Corporate governance is rapidly changing in Saudi Arabia and it is unclear whether adopting a corporate governance practices in financial institutions is appropriate for Islamic insurance companies.

The Application of Service Ijarah in Islamic Finance

This research aims to explore the current application of Service Ijarah in Islamic Finance across three major sectors of Islamic commercial finance: Islamic banking, Islamic Insurance, and Islamic capital market. Furthermore, this study identifies potential challenges and risks associated with the use of Service Ijarah by comparing it with alternative Shariah contracts. This research employs a qualitative desk review research method to delineate the practical application of the Service Ijarah. The data was primarily collected from the official websites, product disclosure sheets, and annual reports of Islamic finance and banking institutions in different jurisdictions. Additionally, other secondary sources were used, including Shariah Standards, policy documents, journal articles, and other forms of reports. At least 15 Islamic banks globally have used the contract for financing services such as education, marriage, travel, home renovation, green technology, professional services, and Hajj & Umrah in countries including Oman, UAE, Malaysia, Maldives, Bangladesh, Bahrain, Tanzania, and Nigeria. The contract has yet to be practically applied within the Islamic capital market and Islamic insurance (Takaful). However, there is potential for the structuring of service-based Ijarah Sukuk and the development of Takaful products to cover service-ijarah-based financings. The absence of guidelines on Service Ijarah and the difficulty of finding reliable service providers for custom jobs may present challenges for the banks. This research is expected to be beneficial for industry practitioners seeking to explore a contract that remains relatively underutilised in the Islamic finance field and Shariah and regulatory authorities. It also examines the potential for service-based Ijarah Sukuk and AAOIFI's role in facilitating the development of Service Ijarah-based products.

Efforts to Increase Public Awareness of Sharia Insurance Products in Indonesia Through Management Functions

Islamic insurance, known as Sharia Insurance, has become a crucial component in Indonesia's financial sector. Sharia insurance prioritizes Islamic economic principles by offering products such as takaful (collective insurance) and mudharabah (business partnership). The opportunities for the Sharia insurance industry in Indonesia are substantial, given that the Muslim population comprises 87.2% of the total population as of 2021. Additionally, the Financial Services Authority Regulation (FSAR) Number 11 of 2023, Article 15, mandates Sharia financial institutions to prioritize Sharia financial products. However, data indicates that the growth of Sharia insurance is still significantly low. As of December 31, 2022, the market share of Sharia insurance premiums is only 4.76%. In light of the above challenges and opportunities, this study aims to analyze the constraints, particularly the issue of product awareness, where many individuals still do not fully comprehend and appreciate the benefits of Sharia insurance products. Therefore, this article discusses 1) the factors influencing the lack of understanding and awareness among the public regarding the benefits of Sharia insurance products, and 2) the efforts to address this issue. This research adopts a qualitative approach, utilizing a systematic literature review method for data analysis. Books and other literature relevant to the predetermined theme were systematically searched to provide insights into the challenges and potential solutions for enhancing awareness and understanding of Islamic Insuranceproducts among the public.

Entrepreneurial leadership: key to sustainable innovation and competitiveness in Islamic insurance companies in Jordan

Purpose This study delves into the significant impact of entrepreneurial leadership (EL), organizational innovation (OI) and competitive advantage (CA) on the sustainability of organizations in the Jordanian Islamic insurance sector. This study aims to unravel the intricate dynamics among these pivotal factors, highlighting their collective role in the sustained success and resilience of Islamic insurance companies in Jordan. By examining the synergistic interplay between EL, OI and CA, the research seeks to offer invaluable insights into cultivating a sustainable future for these institutions. Design/methodology/approach This study adopts a positivist, quantitative approach to investigate the relationships between EL, OI, CA and organizational sustainability (OS). Data collection was achieved through questionnaires in a cross-sectional analysis of these variables. Convenience sampling yielded 389 valid responses, an 81% response rate, ensuring a thorough understanding of the dynamics within this framework. Findings The findings from the study on Jordanian Islamic insurance companies highlight the critical role of EL in influencing organizational dynamics. The research establishes a positive relationship between EL and both OI and OS. Furthermore, it identifies a significant positive correlation between EL and CA, underscoring the importance of leadership in securing a competitive edge. This study also emphasizes the vital role of OI in bolstering OS and confirms that a strong CA enhances OS, reinforcing the interconnectivity of these essential organizational components. Practical implications This study provides important insights for professionals in the insurance sector, especially those within the Jordanian Islamic insurance industry. It emphasizes the crucial role of EL in fostering innovation, competitiveness and sustainability. By understanding the significance of EL, companies can adopt more dynamic and effective strategies in leadership, organizational development and strategic planning, thereby enhancing their overall performance and resilience. Originality/value By conceptualizing EL and OS as second-order constructs, this study seeks to provide a detailed understanding of how EL catalyzes OI, CA and sustainability in an organizational context. This approach contributes significantly to the broader discussion on EL and OS, particularly within the Arab region and specifically in Jordan, offering nuanced insights into their roles and interrelations in shaping organizational dynamics.

Impact of Risk and Competition on Indonesian Islamic Bank Performance: Panel Data Evidence

This paper examines the impact of banking risk and competition on the performance of Islamic banks in Indonesia. The study used financing to deposit ratio (FDR) as a representation of liquidity risk, non-performing financing (NPF) as a representation of financing risk, and the operating expense ratio (BOPO) as a representation of operational risk. Regarding competition, market share (MS) and market concentration (MC) proxies by the Hirschman–Herfindahl Index (HHI) were used. Time series data were collected from 14 Islamic banks operating in Indonesia for the period 2010–2020 and the Least Square method was used. It was found that liquidity risk affects positively the profit of Islamic banks, while financing risk and operational risk impact negatively the variation of the profit. Only market share, influences the variation in the profit of Islamic banks in terms of competition level. Therefore, the Indonesian government should apply a competition policy to the Islamic banking sector in order to increase their profitability and improve economic growth. For future research, it is recommended to include other Islamic finance institutions like Islamic rural banks and Islamic takaful (Islamic insurance) to analyse these effects in a general way.

Modeling the Socio-Economic Factors Affecting Islamic Insurance Adoption: A Structural Equation Modeling Analysis

Modeling the Socio-Economic Factors Affecting Islamic Insurance Adoption: A Structural Equation Modeling Analysis