Importance of financial literacy and awareness in microtakaful: implications for industry stakeholders

• Main Authors: Md Ariffin, Kartina, Kassim, Salina, Redzuan, Nur Harena, Zakariyah, Habeebullah
• Format: Proceeding Paper
• Language: English; English
• Published: 2024
• Subjects: HG3368 Islamic Banking and Finance; HG8719 Islamic Insurance Takaful
• Online Access: http://irep.iium.edu.my/112261/1/ICONIE2024_12%20Financial%20literacy%20and%20awarenesss%20in%20microtakaful.pdf; http://irep.iium.edu.my/112261/2/ICONIE2024_12%20Financial%20literacy%20and%20awarenesss%20in%20microtakaful.pdf; http://irep.iium.edu.my/112261/; https://ircief.kuis.edu.my/the-3rd-iconie-2024-e-proceeding/

A take-up rate of microtakaful products depends very much on the awareness, knowledge and understanding of the targeted customer segment. Malaysian microtakaful programmes target the Bottom 40% (B40) of society with literacy and awareness. Due of the poor penetration rate of microtakaful goods despite the takaful operators' vast product offerings and government subsidies, industry stakeholders have criticised the B40 for failing to understand the necessity for financial protection. While research have supported this emphasis, a question remains if B40 literacy and awareness is the primary cause for poor microtakaful penetration in this group. This study uses purposive sampling to interview takaful operators, Islamic finance training institutes, Shariah committees, and State Islamic Religious Councils to gain insight into the takaful industry and their institutions' B40 assistance. For microtakaful initiatives to succeed, the literacy and awareness programme must include takaful operators, the regulator, and the State Islamic Religious Councils.