Assessing the Assessing the Efficiency of Takaful and Insurance Companies in Emerging Markets

Abstract

This research was conducted to compare and contrast the effectiveness of Takaful and Conventional insurance providers in developing markets like Pakistan. This was achieved by collecting and analyzing information from the databases of four Takaful and four traditional insurance providers covering 2012-2018. The technical, cost and allocative efficiencies were determined using data envelopment analysis. Total assets and employee count were inputs, while investment income, net premium revenue, and other income were measured as outcomes. Labour and asset costs were included in determining profitability. As of 2012, Pakistan's Takaful insurance sector was considered extremely technically efficient. Conventional insurance companies were more technically efficient than Takaful insurance companies throughout the review period, with an average technical efficiency score of 0.890 compared to 0.730 for Takaful insurance companies. Pak-Qatar General Takaful was found to be the most technically efficient (0.855), Pak-Qatar Family Takaful most allocative (0.703) and cost-efficient (0.597) among all Takaful insurance firms in Pakistan. On average the technical efficiency score is 0.810, allocative efficiency 0.490 and cost efficiency 0.407. Tobit regression estimates found that investment income, size of the firm and number of employees significantly affects the efficiency scores of insurance companies. Based on the above discussion the researcher concludes that conventional and Takaful insurance companies require to improve their technical, allocative and cost efficiencies.

Integration of Takaful Insurance in the Tunisian Market: Analysis of consumers’ perceptions

“…By identifying significant factors influencing non-Muslims' willingness to adopt Takaful insurance, the research provides insights for Takaful insurers to enhance market penetration among non-Muslim populations. Furqan et al (2023) conducted a comparative analysis of efficiency between Takaful and conventional insurance companies in emerging markets, focusing on Pakistan. The study employed data envelopment analysis to assess technical, allocative, and cost efficiencies of Takaful and conventional insurers.…”

Do underwriting profit factors affect general insurance firms’ profitability in South Africa?

“…In addition, Burca and Batrinca (2014) discovered that the profitability of underwriting has a positive correlation with the solvency of general insurance firms, which is yet another critical component of profitability. However, various factors such as premium revenue, investment income, operational expenditures, and claims expenses (Shawar & Siddiqui, 2019;Furqan et al, 2023;Hissiyah & Meylianingrum, 2023) also influence the relationship between underwriting profit and profitability. These variables serve as examples of the broader impact on the link between underwriting profit and profitability.…”

Iqtisodiy Tizmida Takaful Sug‘urtasining Afzalliklari Va Uning Islomiy Moliylashatirishning Muqobil Usullarini Baholash

“…Malayziya kabi islomiy mamlakatlarda takaful sanoatining kengayishi uning iqtisodiy oʻsish taʼsiriga ega [19]. Miqdoriy topilmalar Takaful sug'urtasininig real iqtisodiy oʻsish oʻrtasidagi ijobiy bogʻlanishni koʻrsatadi, bu esa taʼminot boʻyicha yetakchi gipotezani qoʻllab-quvvatlaydi [20]. Takaful ish o'rinlari yaratish va ishtirokchilar va bizneslarga qo'shimcha qiymat qo'shish orqali iqtisodiy o'sishga hissa qo'shgan [21].…”