Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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PLEASE ANSWER (D) ONLY
Transcribed Image Text:Case study
The global Takaful industry expands progressively. In Malaysia,
the Malaysian Government Bank (Central Bank of Malaysia) is
entrusted to play an important role of promoting Family Takaful
business via providing better financial infrastructure and
providing incentives for sustaining the demand for Family
Takaful such as tax relief for Takaful contribution from RM
5,000 to RM 6,000. Additionally, to the new parliamentary
initiatives such as the New Economic Model (NEM), the
Economic Transformation Program (ETP) and the Tenth
Malaysian Plan.
However, the growth of Malaysian takaful industry is still
lagging behind the total Takaful market share. According to
Datuk Syed Moheeb Syed Kamarulzaman, the president and the
Chief Executive Officer of Takaful Ikhlas Sdn Bhd, the
penetration ratio for Takaful market in Malaysia was around
10% compared with conventional insurance at 40% in 2010.
According to Bank Negara Malaysia report (2012), there is wide
gap between the total assets of the Malaysian Takaful industry
and insurance industry. The total assets for the Takaful industry
was only RM10.6 billion in 2008 compared to the total assets for
the conventional insurance with RM130.9 billion for the same
period. In 2012 the total assets for the Takaful industry had
approached RM19.1 billion compared to RM195.6 billion for
conventional insurance. By considering the volume of total
assets of both Takaful and Insurance industries, it can be
observed that the Takaful fund was way behind the conventional
insurance.
The above facts represent a considerable untapped market in the
Takaful industry in Malaysia. Therefore, it is of critical
importance to highlight the predictors of the demand for Family
Takaful in Malaysia. Understanding the predictors of the
demand on Family Takaful is critical for capturing the utmost
potential of growth in the industry.
a) Identify the concept of Family Takaful and give examples
of its types, aims and applications.
b) Identify the predictors of the demand of Family Takaful
based on reviewing the previous studies on the Family
Takaful in general and on Malaysian Family Takaful in
particular.
c) Elaborate about the challenges facing the development of
Family Takaful industry in Malaysia, and suggest solutions.
d) Propose a conceptual model for the predictors of the
demand on Family Takaful.
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