Determinants of Takāful and conventional insurance demand: A regional analysis

Abstract

Abstract:In this study, we focused on analysing and differentiating the determinants of conventional insurance and Takāful demand across ASEAN and Middle East Regions. We used panel data econometrics on a sample of 14 Asian countries having both conventional insurance and Takāful over the period [2005][2006][2007][2008][2009][2010][2011][2012][2013][2014]. We applied fixed and random effect regression models to assess the impact of macroeconomic and demographic factors on conventional insurance and Takāful demand. Income and financial sector were found to have significant positive impact on insurance demand across all regions. On the other hand, dependency ratio was found to be negatively affecting Takāful demand across all regions while inflation shows positive impact. Urbanization was found to be significant positive impact on both conventional insurance and Takāful demand. Financial sector development positively triggers the insurance and Takāful demand across ASEAN region, while it triggers conventional insurance demand only in Middle East Region. Education shows negative impact on Takāful demand across both regions while it shows positive impact on insurance demand in Middle East. The study recognises the key role of urbanization and education in creating awareness to enhance Takāful demand in large populated countries of ASEAN and South Asia.

The Determinants of Life Insurance Ownership

“…Activities in clan associations are generally related to religious rituals in the Batak community. Another explanation is provided by Akhter & Khan (2017) who found that urbanisation increased the consumption of life insurance in the ASEAN region. This was due to the level of urbanisation lead to the development of insurance sector.…”

“…This result is consistent with the argument that the better the education the ability to manage their own financial risks is also better (Kim & Hanna, 2019). Akhter & Khan (2017) argued in ASEAN countries education negatively affect sharia insurance ownership, this was due to low awareness of the product benefits and features. Saur matua life insurance is still unfamiliar among Bataknese.…”

“…Other studies include ethnicities as part of culture (Kim & Hanna, 2019;Gutter et al, 2020). Near to Indonesia, Akhter & Khan (2017) observes demographic and financial development factors of life insurance ownership in ASEAN countries. However, few research that examine the determinants of life insurance ownership on ethnic specific to the dimensions of culture.…”

“…Other studies that include socioeconomic factors such as household income (Luciano et al, 2016;Moshirian et al, 2016;Akhter & Khan, 2017;Dash, 2018;Gutter et al, 2020), the the use of financial planner (Kim & Hanna, 2019), saving motives the desire to give inheritance (Zakaria et al, 2016) and home ownership are also determinants of life insurance ownership based on empirical findings (Kim & Hanna, 2019;Gutter et al, 2020;Luciano et al, 2016). Previous research has focused on the demand for life insurance in the context of individuals and families that do not include cultural elements in it.…”

Empirical Study of Community Interest to Islamic Insurance

“…Ismanto (2018) continued his studies with a qualitative approach in the Pekalongan area, that the community has a good level of understanding of Islamic insurance products. According to Akhter and Khan (2017) that financial sector income has a significant effect on Islamic insurance demand. Hidayat (2015) found that education plays an important role in increasing public knowledge about the concepts and principles of Islamic insurance.…”