Kamarul Ariffin Mansor (ariff118@kedah.uitm.edu.my)
Raden Mohd Ngisomuddin Masduki (raden188@kedah.uitm.edu.my)
Masilah Mohamad (masilah@kedah.uitm.edu.my)
BSc candidate Nursidrah Zulkarnain (nursidrah@gmail.com)
MSc candidate Nor Atikah Aziz (noratikah069@gmail.com)
Universiti Teknologi MARA, Shah Alam, Malaysia
Abstract
Since the enactment of the Takaful Act 1984, Malaysia’s Takaful industry has been achieving momentum and increasingly recognized as a significant contributor to Malaysia’s overall Islamic financial system. Hence, for continuing future progress in financial industry’s rapid development, Malaysian government through Bank Negara Malaysia (BNM), invites financial institution across the world to establish Takaful and re-takaful operations in Malaysia to conduct foreign currency business. Nowadays, Muslim’s consumers have the option to choose either Takaful or conventional insurance product. In addition, based on the nature of Takaful product descriptions, it has a higher preference since it is Syariah compliant which align with the Islamic regulation. However, the concept of Takaful is still vague to many people even to the Muslim because there is no proper explanation to educate them on lot of hidden advantages of it. Therefore, this study investigates the causal relationship between consumer awareness, perception and religiosity towards Muslim’s consumer preferences on Takaful product. Primary data were collected through series of questions in a questionnaire that were distributed among Muslim’s Takaful customers of selected Takaful agencies. Analysis on the collected data was performed through confirmatory factor analysis (CFA) and structural equation modelling (SEM) using lavaan package in R software. A CFA result show fit indices that met the recommended values criteria. In addition, the path analysis in SEM reports that two out of three independent variables are significant contributors to Muslim’s customers’ preferences towards Takaful.
JEL Classification: G22
