Proceedings of 8th Annual London Business Research Conference
Imperial College, London, UK, 8 - 9 July, 2013, ISBN: 978-1-922069-28-3
Evidence on the Relationship between Acquiring Takaful and
Conventional Insurance and Religiosity
Aysha Al-Salih and Christopher J. Napier
Although conventional insurance has existed for many centuries, Islamic
insurance (Takaful) is a more recent development. Takaful emerged soon after
the development of modern Islamic banking. The Islamic banking industry today
has assets worth over $900 billion, and Islamic finance has spread to 75
countries from East to West, extending from Muslim to non-Muslim countries.
Yet, unlike banking and general investment, Takaful has relatively lower
coverage in the literature on Islamic finance, and its workings are not fully
understood. The availability of both Takaful and conventional insurance in many
markets provides customers with the opportunity to choose between them
according to their needs, perceptions and beliefs. Identification of customers’
reasons for acquiring particular forms of insurance helps to highlight the
perceived weaknesses and strengths of the different forms. This paper studies
the extent to which the acquisition of conventional and Takaful insurance
policies by Muslims in the United Kingdom and Saudi Arabia can be explained
by reference to customers’ level of religiosity. A structured questionnaire based
on customer-oriented questions has been used to collect the data analysed in
this study. As part of the survey, respondents were asked questions about
religious beliefs and practices. Factor analysis was used to identify different
dimensions to the overall notion of religiosity. Overall, it was found that the
purchase of Takaful policies was associated with greater knowledge of Islam,
while paradoxically purchase of conventional policies was associated with
greater adherence to Islamic practices.
Keywords: Islamic Finance; Insurance; Takaful; Religiosity; UK and Saudi Muslims
Insurance Holders.
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Aysha Al-Salih and Christopher J. Napier, Royal Holloway, University of London, United Kingdom.
Email: aysha.alsalih@live.rhul.ac.uk