THE FACTORS INFLUENCING THE DEMAND FOR FAMILY TAKAFUL PRODUCT: A VIEWPOINT FROM TAKAFUL'S AGENT

Abstract

The emergence of the takaful sector in Malaysia in the early 1980s was motivated by the Muslim public's need for a Shariah-compliant alternative to conventional insurance and to supplement the operations of the Islamic bank, which had been formed in 1983. It was primarily precipitated by a ruling issued by the Malaysian National Fatwa Committee, which determined that life insurance in its current form is an invalid contract owing to the existence of the elements of Gharar (uncertainty), Riba' (usury), and Maysir (gambling). The growth rate of Malaysian Takaful since 1984 is excellent. From just two operators in 2003, the number of takaful operators has increased to fifteen over the past 30 years, demonstrating the sector's rising popularity and growing significance to the growth of Islamic finance. Even though the industry's penetration rate reached 18.6% in 2021 compared to 16.9% in 2020, the increase in penetration rate for 2021 remains low because it has not yet reached the BNM's target of 25% of the population set in its Financial Sector Blueprint 2011-2020. As a result, this study was conducted to prioritize the factors that can be used to boost demand and subsequently increase growth and penetration rates in the takaful industry. Hence, the data was collected through primary and secondary data by interviewing two members of the takaful agent in the Ikhlas Tijarah Sinergi Associate PLT (IKTiSAS) Company and reviewing the past research. Thus, the study found that the service quality provided by the takaful operator is the most influential factor that can affect the demand for Family Takaful products from the viewpoint of the Takaful's agent.