We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Takaful-Charity or Business? Field Study Evidence from Microinsurance Providers.
- Authors
Altuntas, Muhammed; Berry-Stölzle, Thomas R.; Erlbeck, Anja
- Abstract
The growing Muslim population in the U.S. creates a challenging new market for the insurance industry. The challenge is that traditional insurance products do not comply with Islamic principles. Takaful, an insurance mechanism based on Islamic law, emerged in the 1970s; however, the objective of takaful is not to gain profit but to mutually assist each other. To provide an answer to the question whether takaful insurance companies can be profit-maximizing firms, we compare a takaful operator with a clear business objective and a takaful operator which focuses on a non-business related objective (i.e., to support the needy) in an environment that makes it difficult to generate profits: the Indonesian microinsurance market. Our study shows that takaful insurance can indeed be successfully offered on a for-profit basis. Hence, the growing Muslim population in the U.S. represents an interesting business opportunity for U.S. insurers in their home country. In addition, this paper provides the first in depth field study of microtakaful schemes. Since one of the takaful providers included in our field study is owned by an international insurance company, our study also shows that an international insurer can successfully enter the growing microtakaful market in developing countries.
- Publication
Journal of Insurance Regulation, 2011, Vol 30, p339
- ISSN
0736-248X
- Publication type
Academic Journal