FACTORS INFLUENCING CONSUMER CHOICE OF ISLAMIC INSURANCE (TAKAFUL) IN KENYA ABASS MOHAMED THE UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA

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1 FACTORS INFLUENCING CONSUMER CHOICE OF ISLAMIC INSURANCE (TAKAFUL) IN KENYA BY ABASS MOHAMED THE UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA SPRING 2017

2 FACTORS INFLUENCING CONSUMER CHOICE OF ISLAMIC INSURANCE (TAKAFUL) IN KENYA BY ABASS MOHAMED A Research Proposal Submitted to the ChandariaSchool of Business in Partial Fulfilment of the Requirement for the Degree of Masters in Organization Development (MOD). THE UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA SPRING 2017

3 STUDENT DECLARATION I, the undersigned declare that this research project is my original work and has not been submitted to any other institution of higher learning for credit other than United States International University-Africa Signed: Date: Mohamed Abass (Student ID) This research project has been submitted for examination with my approval as the appointed supervisor. Signed: Date: Fred Newa Signed: Date: Dean, Chandaria School of Business ii

4 ABSTRACT The purpose of this study was to determine factors influencing choice of Takaful insurance in Kenya. The study was guided by the following research questions: How does customer awareness influence customers choice of Takaful insurance? How does insurance price influence Takaful insurance? How does religion influence choice of Takaful insurance? This study adopted the descriptive survey research design. The study had a population of 10, 112, and utilized stratified sampling technique to pick a sample size of 384. A closed ended structured questionnaire was used to collect primary data. Data was analyzed using for descriptive statistics (frequencies and percentages) and inferential statistics (correlation and regression) using Statistical Package for Social Sciences (SPSS) version 22. The findings have been presented using tables and figures The findings on influence of customer awareness and choice of Takaful insurance revealed the existence of a positive relationship between customer awareness and choice of Takaful insurance, r (0.775); p < The study looked at choice of Takaful, customer awareness of Takaful insurance option; knowledge of insurance options, liking of insurance options, and customers conviction of Takaful insurance. All these components were statistically significant The second research question examined how insurance pricing influences customers choice of Takaful insurance. The findings show there exists a significant relationship between insurance price and choice of Takaful, r (0.695); p < The study examined price perceptions on choice and price competition on choice of Takaful insurance. All these components were statistically significant. The third research question examined the influence of religion on choice of Takaful insurance. The findings show that there exists a significant relationship between religion and choice Takaful insurance. The influence of religion considered Sharia compliance on issues like riba, Islamic brotherhood, and cooperate trust. All these components contributed to the statistically significant relationship between religion and choice of Takaful iii

5 This study concludes that there exists a statistically significant relationship between customer awareness and choice of Takaful. Knowledge enhanced customers ability to comprehend Takaful products and options as compared to other conventional insurance products. This study concludes that perception also plays an important role for customers choosing Takaful insurance. This study concludes that price perception and price competition were statistically significant in enhancing customers choice of Takaful insurance. Price perception determine whether customers rate the insurance premiums as affordable, cheap or expensive. When prices insurance prices are perceived to be expensive, customers choice of insurance premiums diminish, while when the perceived price of insurance of affordable, customers choice for insurance increases. This study also concludes that the teachings of Islam, particularly on riba (interest) significantly influence customers choice of Takaful insurance. Most customers who use Takaful insurance are doing so in compliance to Shariah principle on riba. Similarly, most customers who choose Takaful insurance are doing so in compliance to Islamic teaching on brotherhood and cooperate risk, rather than other fundamentals as provided by conventional insurance firms The study recommends that management at Takaful insurance should put mechanisms in place to enhance current customers, and potential customers knowledge on Takaful insurance benefits, options, risks, in addition to how Takaful principles work. There is also need to enhance awareness of customers perception that Takaful is only an Islamic insurance entity. This study recommends that to enhance uptake of Takaful insurance, management at Takaful insurance of Africa should device mechanisms for channelling positive Takaful price perception at the market place, and to potential customers. There is also need to enhance competitive pricing of Takaful insurance premiums to be in line with what other conventional insurance firms are offering on the market. Finally, this study recommends that management at Takaful Insurance of Africa should develop mechanisms of reaching out to other religious groups outside Islam. To effectively compete and develop a wide pool of heterogeneous clients, the organization should reach Christians that are the majority on the components of insurance options that Takaful is very competitive compared to conventional insurance. iv

6 ACKNOWLEDGEMENT I would like to acknowledge Mr. Fred Newa for consistent guidance throughout the entire process of writing this research project. Thank You v

7 DEDICATION I would to dedicate this project to my family and friends for their continuous love and support throughout the entire process of writing this project vi

8 TABLE OF CONTENTS STUDENT DECLARATION... ii ABSTRACT...iii ACKNOWLEDGEMENT... v DEDICATION... vi TABLE OF CONTENTS... vii LIST OF TABLES... ix LIST OF FIGURES... xi GLOSSARY/ACRONYMS... xii CHAPTER ONE INTRODUCTION Background of the Study Statement of the Problem Purpose of the Study Research Questions Significance of the Study Scope of the Study Definition of Terms Chapter Summary... 7 CHAPTER TWO LITERATURE REVIEW Introduction Customer Awareness and Choice of Tafakul Insurance Insurance Price and Choice of Takaful Insurance Influence of Religion on Choice of Tafakul Insurance Chapter Summary CHAPTER THREE vii

9 3.0 RESEARCH METHODOLOGY Introduction Research Design Population and Sampling Design Data Collection Methods Research Procedures Data Analysis Methods Chapter Summary CHAPTER FOUR RESULTS AND FINDINGS Introduction Demographic Information Customer Awareness and Choice Takaful Insurance Insurance Price and Choice of Takaful Insurance Influence of Religion on Choice of Takaful Insurance Correlation Analysis Multiple Regression Analysis Chapter Summary CHAPTER FIVE DISCUSSION, CONCLUSION, AND RECOMMENDATIONS Introduction Summary Discussion Conclusion Recommendations REFERENCES APPENDICE 1: QUESTIONNAIRE..60 viii

10 LIST OF TABLES Table 4.1: Reliability of Study Tool Table 4.2: Customer Awareness of Takaful Insurance Table 4.3: Awareness Influences Choice of Takaful Insurance Table 4.4: Knowledge of Takaful Insurance Table 4.5: Knowledge of Takaful Influences Choice of Takaful Insurance Table 4.6: Takaful Insurance Product Options Table 4.7: Benefits of Takaful and Choice of Insurance Table 4.8: Takaful Services Table 4.9: Perception of Takaful Insurance Table 10: Benefits of Takaful Influences Choice of Insurance Table 4.11: Recommending Takaful Insurance Table 4.12: Price Awareness Table 4.13: Fairness of Takaful Premiums Table 4.14: Takaful Insurance Premiums Attract Customer Table 4.15: Insurance Price and Perception of Benefit Table 4.16: High Premiums are Expensive Table 4.17: High Premiums are Unaffordable Table 4.18: Price Competition Table 4.19: Price Competition for Takaful Products Table 20: Price Competition and Choice Table 4.21: Recommendation Choice of Insurance Table 4.22: Takaful and Shariah Principles Table 4.23: Religion and Choice of Insurance Table 4.24: Riba Table 4.25: Takaful and Idea of Brotherhood Table 4.26: Takaful and Collective Religious Trust Table 4.27: Takaful and Cooperate Risk Table 4.28: Takaful and Mutual Benefit Table 4.29: Takaful and Religious Equality Table 4.30: Insurance Based on Religious Ideas Table 4.31: Recommending Takaful to Religious People ix

11 Table 4.32: Correlation Table 4.33: Model Summary Table 4.34: ANOVA Table 4.35: Coefficients x

12 LIST OF FIGURES Figure 4.1: Respondents Gender Figure 4.2: Respondents Marital Status Figure 4.3: Respondents Age Figure 4.4: Number of Years Using Takaful Insurance Figure 4.5: Respondents Religion xi

13 GLOSSARY/ACRONYMS Fatwa Fiqh Fuqaha Ghabn Gharar Ijtihad Kafalah Maiser Muamalat Mudarabah Quard-Hasam Riba Skuks Tabarru Zakat Brotherhood/Togetherness Islamic Jurisprudence. Muslim jurist Fraud or Deception that Permits Injustice An Arabic Word for Uncertainty Intellectual Interpretation of Original Sources of Islam To Help or Assist One Another An Arabic Word for Gambling Islamic teachings especially in Madrasas. An investment Partnership Long Term Investment Similar to Treasury Corporate Bonds An Arabic Word for Interest Investment Instruments Similar to Equity To Donate for the Benefit of Others An Obligatory Charity Placed on the Rich to Help the Poor xii

14 CHAPTER ONE 1.0 INTRODUCTION 1.1 Background of the Study Insurance has been described as the economic institution that facilitates financial risks transfer from individuals to a pooled group of risks through contracts by two-party contracts (Archer, 2009). Insurance has also been referred as a promise of compensation for a defined potential future loss in exchange for a premium or periodic payment. The concept of insurance therefore means co-operation among a group of people to reciprocally guarantee each other. It means giving surety to each other or holding responsibility to help each other in case of unexpected or untimely accidents or events that cannot be met financially by any one individual separately (Taylor, 2010). The two main types of insurance in the offering include the conventional and Islamic Insurance. Historically, insurance products were channeled through insurance brokers acting on behalf of the insured/customer. However, insurance agents acting on behalf of the insurance company and insurance business have also been marketed directly without going through the intermediaries (Walmsley, 2005).Conventional and Islamic insurance (popularly known as Takaful) are two different contracts based on their nature and processes. Conventional insurance is a product designed to give protection to individuals and businesses against specified contingencies, created out of human needs for security and stability while Takaful is an insurance system which complies with Islamic regulations (Hendon, Zuriah&Sharifah, 2009). The first Tafakul Insurance Company was established in 1979 in Sudan set up to fulfil the conditions of Fatwa (brotherhood) as provided for in the Shariah (governing law) board of Faisal Bank (Ernest & Young, 2014). Later, Takaful spread to other parts of Islamic countries including Bahrain, Kuwait, Jordan, Saudi Arabia, United Arab Emirates, Egypt and Qatar. Takaful has since been established in non-islamic including United Kingdom, Australia, USA, Singapore, Ghana, Kenya, Luxembourg, and Trinidad and Tobago (Deloitte, 2014; Malik, Majeed, Ayaz & Shughla, 2016). 1

15 According to Ernest and Young (2014), the current estimate of the size of Islamic financial assets ranges between $ $1.22 Trillion with an expected growth to $3.4 Trillion by 2018, with Takaful industry estimated by be US$ 20 billion by end of Salleh and Kamaruddin (2011) equally posit that the market growth and profitability prospects for Takaful vary from markets and sectors depending on market maturity, industry and regulatory structure. However, despite the uncertainty and volatility in the financial and insurance market, Takaful momentum has been recorded in three key markets namely: Saudi Arabia, United Arab Emirates (UAE), and Malaysia (Redzuan, Rahman, & Aidid, 2009). According to Lim, Idris and Carissa, (2010) South Asian countries such as Indonesia, Malaysia, Singapore, Sri Lanka, Brunei and Bangladesh are examples of thriving markets for Takaful. For instance, unparalleled growth in Malaysian financial market has been credited to efficiency and effectiveness of Takaful. Based on the Takaful model, Malaysian banking assets increased by 15.9% from 2009 to 2010, while at the same time the Takaful sector grew by 17.8% to RM 14.7 billion in 2010, the total Takaful industry in Malaysia accounted for 9% of the total conventional insurance products (Masood, Naizi, & Ahmad, 2011). Africa's Islamic investment market is growing providing wide opportunities for Takaful operators to take up various Sharia -compliant investments and moderate any concerns by regulators (Taylor, 2010). According to Deloitte (2014), the African region in the recent past has been led by Sudan whose gross contribution income was US$363.4 million in the year 2010, followed by Egypt with a gross contribution income of US$58.9 million during the same year in Islamic investments that require Takaful and conventional insurance. In as much as African region is experiencing growth in Takaful products, some countries are still at the initial stages in the Takaful industry which includes Kenya, Nigeria and Tunisia show some promising performance (InsureAfrika, 2015). In Nigeria for instance, the products of Halal Takaful range from individual family to group products, while in Tunisia, Takaful has been available since 1982 with firms offering a wide range of Takaful products. In Kenya, the insurance sector is crowded with more than 40 insurance firms, however, negative perceptions, collapse of major insurance players, and lack of adequate education 2

16 and information, only 4% of population is insured (Deloitte, 2014). Takaful was established in Kenya in 2008 but formally licenced in 2011, with Takaful Insurance of Africa. The insurance company operates on fundamentals of integrity, honesty, and fairness as outlined by Sharia. In Kenya, Takaful is regulated by the Insurance Regulatory Authority (IRA), and Shariah Supervisory Council (Matsawali et al., 2014). Takaful as a new business concept needs to be taken up with utmost speed and accuracy for the perceived benefits to be realized (Yakob, Yusop, Radam & Ismail, 2012). Many emerging business models tend to undergo only short periods of popularity whereas others tend to be narrowly focused, too broad and abstract to be applied to a specific situation. This is because of some of the challenges encountered during the implementation of new business models which may be due to; failure to understand the customers, inability to predict environmental reactions and inadequate or incorrect marketing research (Yakob et al., 2012). Takaful Insurance of Africa (TIA) is a pioneering company founded in the year 2008 and formally licensed in 2011 (Redzuan et al., 2009). The firm was founded to provide risk management and financial security, based on ethical principles and values. Unlike other conventional insurance products, under TIA model, no interest is charged on liabilities or assets but rather, losses and surpluses are shared between TIA and the policy holders. As such, the premiums that are paid by clients are held in a risk fund that is managed by TIA. According to Matsawali et al., (2014), the risk fund pays for losses suffered by contributors to the pool, however, once the risk fund surpasses the set limit, the surplus is given back to members. According to Deloitte (2014), TIA acts as an agent in managing Takaful operations on behalf of their clients including administrative processes, collection of Takaful contributions, processing of member claims. In return, TIA charges operations processing fee which is paid as a percentage of contributions paid 1.2 Statement of the Problem Takaful insurance model has taken prominence in Islamic countries and currently, the model is being established in non-islamic countries like Kenya. However, factors that enhance uptake of Takaful in non-islamic countries is not well researched and documented. As such, it is difficult to tell what factors could be attributed to the uptake and success of Takaful in countries like Kenya. According to Deloitte (2014), Kenya has 3

17 an Islamic population of about 10% however, Takaful has not been taken by Muslims only, but non-muslims too. Various studies on Takaful have been conducted in the South Asian Islamic markets. This includes a study by Redzuan et al., (2009) in Malaysia that noted per capita income as the main predictor of family Takaful. Sherif andshaairi (2013) also conducted a study in Malaysia and reported that income, Islamic banking development, education, dependency ratio and Muslim population contributed to Takaful demand. Khattak and Rehman (2010) study in Pakistan on customer satisfaction and awareness of Islamic Banking system concluded that that mostly people are unaware about the product in Islamic financing system and therefore resort to the conventional insurance system. Abdullah (2012) investigated the factors that contributed to the demand in family Takaful compared with conventional counterpart, however, the study was only limited to family Takaful, with countries gross domestic product (GDP), education, and religion being the study variables. Another study by Sadumanand and Okusman (2005), and Ahmand, Masood and Khan (2010) in Turkey on the knowledge and uptake of Takaful reported that factors that led to uptake of Takaful in non-islamic nations like Turkey was not known, since knowledge on Islamic finance banking and insurance was nascent. Kenya, being a non-islamic country, has in the recent past realized the uptake of Takaful, however, factors that lead to this uptake and not well researched or documented. Most studies, as mentioned above, heavily focused on Islamic countries, or South Asian countries like Malaysia. Therefore, there exists a gal in literature on Takaful in non- Islamic states like Kenya. This study therefore, seeks to fill this gap by examining how Takaful awareness, price, and religion influences uptake of Takaful in Kenya. 1.3 Purpose of the Study The main purpose of this study is to determine the factors influencing consumer choice of Islamic Insurance (Takaful) in Kenya. 1.4 Research Questions This study was guided by the following research questions: 4

18 1.4.1 How does awareness influence customer choice of Takaful insurance in Kenya? How does price influence customer choice of Takaful insurance in Kenya? How does religion influence customer choice of Takaful insurance in Kenya? 1.5 Significance of the Study This study is valuable to the following: Takaful Insurance Africa The management at Takaful Insurance Africa will benefit from this study by being able to articulate the factors that influence uptake of Takaful in the Kenyan market. This will not only enhance knowledge, but also how the organization will package Takaful products to reach a wider Kenyan market Government Agencies The government and regulatory agencies like the insurance regulatory agency (IRA) will be able develop policies and guidelines that will promote and enhance Takaful Insurance growth in the country. Since the insurance industry is a highly regulated industry with Takaful requiring a different legal frame work such as Shariah Supervisory Council (SSC) to ensure that the organizations adherence to the tenets of Muslims faith Policyholders and the Public Policyholders and the public will be greatly informed by the availability of this literature and enable them to make informed decision when engaging or purchasing Takaful products. In addition, they will know the similarities and contrast that exists between conventional and Takaful insurance and thus enable them to make informed decisions on their insurance needs Researchers and Academicians Future researchers may benefit from the study by identifying thefactors influencing consumer choice of Islamic insurance (Takaful) in Kenya. They will benefit from the study as it would serve as source of reference and in particular on the Takaful subject. 5

19 Moreover, new questions arising at the end of this study will present an opportunity for future researchers to explore. 1.6 Scope of the Study This study focused on factors influencing customer choice of Takaful by examining awareness, price and role of religion. This study was conducted in Nairobi Kenya in March Takaful Insurance Africa clients were the respondents of the study. The study was be limited to the fact that most Takaful clients are Muslims, however, to mitigate this challenge, the study deliberately sought non-islamic Takaful clients to take part in the study. 1.7 Definition of Terms Customer Awareness Customer awareness is the knowledge that a client has concerning a given product in the market, usability, purpose or function, and how to access the service or product (Hamid &Rahman, 2011) Price Takaful price is defined as the monetary exchange for receiving a Takaful service or product in accordance (Yakob et al., 2012) Religion Religion is defined as a particular system of faith or worship, or interest to which someone ascribes supreme importance, and uses as a guide to affairs of live (Archer, 2009) Takaful An insurance product based on Shariah compliance. It is an alternative to conventional insurance which presents itself as a form of mutual help (Taawun) in furthering good/virtue by helping others who are in need or in hardship (Yakob et al., 2014) 6

20 1.8 Chapter Summary This chapter has presented the background on the factors influencing consumer choice of Islamic insurance (Takaful) in Kenya. The chapter has also outlined the research questions, the importance of the study, scope of the study as well as the working definitions of specific terms used in the project. Chapter two has presented the study literature review; Chapter three has highlighted the study research methodology; Chapter four findings of the study and chapter five has discussions of findings, conclusions and recommendations for improvement and for future studies 7

21 CHAPTER TWO 2.0 LITERATURE REVIEW 2.1 Introduction Chapter two focuses on prior research conducted with the aim of analysing the factors influencing consumer choice of Islamic insurance (Takaful) in Kenya. The awareness of Takaful and influence of customers choice is presented first, followed by how price influences customer choice of insurance, and finally, how religion influences customer choice of Takaful insurance. 2.2 Customer Awareness and Choice oftafakul Insurance Choice of Takaful Insurance There are various reasons that push customers to pick Takaful as insurance of choice. First and foremost, Matsawali et al., (2012) notes that Takaful is an insurance that is based on Shariah compliance, which is a guideline from Quran teachings on how to deal with elements of uncertainty(gharar), interest and interest rates (riba) and gambling (maysir) (maysir). Takaful is therefore an alternative to conventional insurance, where it provides customers an opportunity to adhere to religious obligation in insurance matters, while at the same time presents itself as a form of mutual help (taawum) as in furthering virtue by partnering to help others who are in need or hardship (Ismail et al., 2011; Masood & Khan 2010). Apart from religious obligation, other factors that may influence choice Takaful include the price of insurance in the market place(matsawali et al., 2012) and availability of the service in markets where customers can reach them. To elaborate and elucidate on choice of Takaful insurance, this study adopted the Hierarch of Effects Model (HEM) by Lavidge and Stainer (1961) to explain the relevance of customer awareness of a product or service, and the resultant choice to purchase the product. The HEM suggests six steps of creating awareness of product or services. This steps include: awareness, knowledge, liking, preference, conviction and purchase. This study examines awareness, knowledge, liking and conviction components of the model 8

22 2.2.2 Awareness According to Lavidge and Stainer (1961), there is a direct link between awareness of a product and customers choice to utilize the product. Awareness is not only essential in establishing usability and function, but also benefits and remedies inherent within a product or service. A study conducted by Sadumanand and Okusman (2005) and Ahmand et al., (2010) in Turkey on the uptake of Takaful insurance noted that lack of awareness of Islamic financing and insurance products and services, has led to a slow growth of Takaful in Turkey. Similarly, the study noted that lack of awareness on Islamic Takaful significantly impacted customer choice, as customers had limited knowledge on products and services being offered in the Turkish market. To this end, Fisher and Taylor (2011) argue that customer awareness of the number of products Takaful insurance offers is important in enhancing adoption and choice. A study conducted in Brunei by Matsawali et al., (2012) to examine customers awareness of the difference between Takaful and conventional insurance, particularly on benefits, principles and values, revealed a significant lack of awareness. Brunei being an Islamic state, one would like to imagine that sensitization of Takaful has been done effectively. However, the study revealed that 85% of customers used Takaful because it was available, and the other 65% also noted to use conventional insurance because it was available. For instance, Hamid and Rahman (2011) argue that to create awareness, one has to establish the distinction between conventional insurance and Takaful. To this, they note that Takaful is based on the concept of Tabarru, within Shariah, which means that one has to donate for the benefit of others, and not just self. There is also the concept of mutual responsibility (Ong, Yap, & Khong, 2011) that is based on protecting one another in times of difficulties, disaster or misfortunes Knowledge Awareness of a product without the knowledge of how to use the product might diminish the significance of a product or service. According to Bello and Ayuba (2014), there exists a positive relationship between clients knowledge and choice of Takaful. Concerning Takaful, customers can gain knowledge through organized clinics by Takaful 9

23 agencies, through books and journals, and through advertising. However, it is the responsibility of Takaful agents to ensure that customers and potential clients have access to information that will boost their knowledge concerning Takaful (Ong, Yap & Khong, 2011). Conversely, Fisher and Taylor (2011) contend that customers usually lose interest in any product if they are not able to get sufficient information and knowledge on a products purpose, usability and benefits. According to Moohamad and Mohd (2009), knowledge in the insurance sector is important in enhancing customer choice or a product, or range of products. In Takaful for instance, there is Takaful life insurance (family Takaful) and non-life insurance (general Takaful). If clients are aware on this product but do not have functional knowledge of how each of this products operates, limits their choice options. Ainley and Ali (2007) posits that it is important to educate clients on how they can join Takaful, how they can make contributions, and share premiums. Equally important, Bello and Ayub (2014) posit that customers need to be educated on how Takaful savings instruments can be used to secure their future, both as investments, as well as retirement packages. According to Hamid et al., (2011) operations of conventional insurance does not conform to the rules and requirements of Shariah, since conventional insurance involves elements of uncertainty (Gharar) in the contract of insurance, gambling (Maysir); uncertainty and interest (Riba) which contravene the rules of the Shariah. Therefore, it is important that clients are not only made aware of this provisions in Takaful, but how they impact their policies (Ismail et al., (2011) Liking For a customer to be influenced by a product, he/she has to like the product. One of the fundamental way to ensure a customer like your product is by providing sufficient information on functionality and benefits of the product/service (Onimbo, 2014). As such, Wang, Dou & Zhou (2008) argue that customer specific dispositions that are linked to customer value enhance the probability that a customer will like the choice of product. However, if the product/service contravenes the customers values and beliefs, then the customer s choice for the product is significantly reduced. For instance, a study done by Ismail et al. (2011) noted that Takaful has lower technical efficiency than conventional insurance. Therefore, if a customer is seeking for an insurance with lower technical 10

24 efficiency, then Takaful becomes the choice, however, if a customer is seeking for insurance with high technical efficiency. Similarly, Fisher and Taylor (2011) explored the growth of Takaful as a means to tackle risks and engage in long-term financial transactions. The study provided the profile and statistics of global insurance industry along with the size and scope of Takaful markets worldwide. It was found that numerous Takaful schemes and re-takaful (reinsurance) facilities have appeared in many countries as Islamic alternatives to conventional (re)insurance. This means that clients who are interested in taking lower risk, and who are willing to invest both in short term and long term financial transactions and insurance, particularly in Muslim states, are choosing Takaful model (Wambura, 2012; Hagel & Davison, 2010) Conviction Conviction one of the stages of creating awareness for customers to desire a given product (Lavidge & Stainer, 1961). This stage is basically concerned with crating customers desire to purchase a given product or service. According to Masood and Khan (2010), advertisers of products usually allow customers to sample their products as a way of creating conviction and choice. However, in the insurance sector, it is abit difficult for customers to sample since most Takaful services are not tangible. Nonetheless, Fisher and Taylor (2011) argue that product and service sampling are sure ways of creating customer conviction and choice of product/service. In Takaful, various mechanisms can be used to enhance customers conviction. First and foremost, Bello and Ayub (2014) argue that Takaful is based on Shariah principles, therefore, utilizing and emphasizing these principles would bring customers who subscribe to Islam to conviction, and thus, choose the product. The choice is therefore informed by the need to adhere to Shariah. This can only be a challenge in countries with Muslim populations, but lack Takaful facilities. Secondly, in targeting non-islamic clients, Onimbo (2014) argues that there is need to enhance product sampling to this group as a way of reassuring the group that the products are safe, and wont contravene their beliefs or values. According to Rahman and Daud (2010), cconsumer s tradition and culture plays a significant role in shaping their mindset in anything material (products/insurance). Attitude toward life style, education, risks and 11

25 more importantly the consumption habits are made by consumers based on their conviction and beliefs. To this end, Wang, Dou & Zhou (2008) argue that it is important that advertising and information packaging for Takaful should be done in a manner that enhances customers preference and needs. According tolavidge and Stainer (1961), consumer choice is a psychological tendency that evaluates ones related entity with some degree of favor or disfavor. Thus, in creating awareness of Takaful, there is need to first evaluate desired clients attitudes and behavior to as to model the products per consumption behavior. According to Haron, Ahmad and Planisek, (1994) there is a large number of Muslim consumerswho do not understand well the concept of Takaful and not aware about the existence of Takaful products, and therefore, do not have conviction of Takaful compared to conventional insurance. 2.3 Insurance Price and Choice of Takaful Insurance Insurance price, usually referred to as insurance premium significantly affect the choice of insurance policy a customer takes (Ghazali, Mohd, Mamat & Ahmad, 2011).Insurance price is the cost of premiums customers pay to insurance firm for a policy cover on a given unforeseen risk (Saleh & Kamaruddin, 2011). Insurance price is therefore important in trying to understand customers choice of Takaful. Just like any other product on the open market, the forces of supply and demand dictate the pricing of the product. Similarly, in Takaful insurance, the market forces, cost of risk, need for cooperation and brotherhood help informs pricing of Takaful insurance (Bello & Ayuba, 2014). Various studies have been conducted trying to establish the link between insurance premiums and customer choice of insurance (Redzuan et al., 2009; Bello & Ayuba, 2014; Ong, Yap & Khong, 2011). All this studies established that the higher the premiums, the lower the subscription, while the lower the insurance premiums, the higher the subscription. According to Yakob et al., (2012) price of insurance premiums directly affects clients disposable incomes, and thus, directly affect clients choice of insurance product Ghazali et al., (2011); Redzuan et al., (2009); customer awareness of the Takaful product and services 12

26 2.3.1 Price Perception Price perception is defined as the value of worth of a product or service as conjured in the mind of a consumer (Ghazali et al., 2011). Most consumers of insurance services are unaware of the actual or true cost of offering insurance product or service. However, they have an internal feeling on how much such a product or service should cost. A study by Redzuan et al., (2009) in Malaysia and noted that perceived price of insurance premium was a robust predictor of family Takaful demand. In as much as the perception of price may be different from actual product or service price, it still determines the choice of insurance. According to Aris et al., (2012) the overriding principle of Takaful is cooperative risk sharing and community s well-being and not profit maximization. On the other hand, conventional insurance is for profit maximization, which means, the price of the premiums will affect the profit margins. If the perception of clients under Shariah insurance regulation is to stay away from insurance models that conflict with Shariah compliance, then, the uptake of conventional insurance will diminish. According to Yazid et.al. (2012), clients from Islamic states have a perception on insurance premium is it is not structured in alignment with Shariah. This perception therefore, informs the choice of insurance package one engages. Saleh and Kamaruddin (2011) posit that customers of who are non-muslims might not have a negative perception of conventional insurance. This is because interest rates and profitability drives conventional insurance, premiums, and profitability. As such, perceptions of Muslim clients and non-muslim clients on Takaful might vary due to the underlying fundamentals in belief, traditional practices and utilization of insurance products. According to Bello & Ayuba, (2014) the perception that insurance premiums under Takaful are better because of the concept of collective risk management enhances customer choice for clients who subscribe Takaful business operational principles. Thus, Takaful operators suggests the need for being proactive in managing clients risk, offering good governance and best practice code as significant contributions toward insurance premium, and favorable price perception (Yazid et al., 2012). 13

27 Wekesa (2010) posited that in as much as conventional insurance continues to evolve there is perceived credibility crisis of the industry in the eye of the public regarding settlement of claims and scope of covers for the various products that they sell. To this, Further, Ramadhan, (2009)notes that lack of adequate knowledge has compounded the situation resulting to low penetration of insurance, particularly conventional insurance in Islamic states. Hagel and Davison, (2010) blamed majority of insurers on the basis that they do not prioritize investment in training, career development and recruitment to enhance their human resource competitiveness and thus affecting their service delivery. Thus, the current insurance perception problems facing the industry will not be eliminated if paradigm shift is not adopted to address and mitigate challenges both in conventional and Takaful insurance (Onimbo, 2014) Price Competition Price competition is one of the factors that influence choice of that influence choice of insurance. According to Swartz and Coetzer (2010), price competition is one of the ways that a product or service can compete in the market place. In this regard, two products substantially similar are judged by consumers based on their respective pricing, followed by purchase made based on what is cheaper. Thus, Takaful and conventional insurance products and services can compete on the open market and influence customer choice and demand (Sherif & Shaairi, 2013). One of the major issue influencing price competition among insurance companies, and between Takaful and conventional insurance is the effect of long term interest rates, saving rates, and consumption rates. In this regard, one can argue that insurance firms that price their premiums competitively will remain competitive and sustainable in the long run (Aris et al., 2012) Long-term interest rate and composite stock indexhave significant relationships with family Takaful consumption, which is connected on price of insurance premiums (Aris et al., 2012). In addition to that, the works of Sherif and Shaairi (2013) hasdemonstrated that factors such as income, Islamic banking development, education, dependency ratio andmuslim population are positively related to Takaful demand, while on the other hand, inflation, realinterest rate, financial development and life expectancy appeared to be 14

28 significant factors that adverselyinfluence total family Takaful consumption.however, Yazid et.al. (2012) found evidence to support the contention that the percentage of society The study conducted by Ghazali et al., (2011) indicated the existence of a positive relationship between the insurance premiums and, and the tolerance towards insurance premiums. This means that insurances with competitive prices are perceived to be more competitive compared insurance firms with higher rates. Similarly, Rafiq (2010) argue that the challenge with pricing of insurance premium is that clients don t get to interrogate the insurance benefits if the price is high. Other insurance firms can use price differentiation to set themselves apart from other firms, and use that as a marketing tool to gain more customers to choose their company as insurance of choice (Fisher & Taylor, 2011). Takaful in non-muslim countries have to find ways to convince regulatory regimes on the operations of Takaful model pricing and how eve investments instruments are just as competitive as conventional insurance (Bello & Ayuba, 2014). The difference is that the latter is structured as Shariah compliant, and should be compared to other Takaful products within the same market (Fisher & Taylor (2011). A study conducted by Zainuddin and Noh (2013) determined that the emergence of Takaful is part of the Islamic policy. The study went further to suggest that Muslims are strictly prohibited in purchasing conventional insurance products as it is forbidden haram and violates the Islamic principles. A study by Billah (2000) highlighted numerous sources that could form the basis of law governing Islamic insurance. Ismail, Alhabshi and Bacha (2011) found that there was a significant difference in technical efficiency between Takaful industry and the conventional insurance industry. According to Saleh and Kamaruddin (2011) the overriding purpose of Takaful is cooperative risk is not only to ensure community well-being, but also competitive pricing> Thus, one can argue that the Takaful model can be difficult to sustain since the aim is not profit maximization. Lack of profit maximization means that Takaful can hardly compete with other conventional insurance whose aim is to provide policy coverage, settle claims, but at the same time make profit. A study by Aris et.al. (2012) investigated the risk of Takaful competitive model and concluded that the alignment withshariahrequirements sometimes makes Takaful a hard sell to non-muslims and as 15

29 such, most clients who are non-muslims prefer not to choose Takaful as insurance of choice. Study evidence show that the concept of Takaful risk management practice and management of a Takaful operators were better off than conventional insurance operators (Hamid & Rahman, 2011; Fisher &Taylor, 2011). However, Matsawali et al., (2012) argues that the choice of customers is not always considered on the basis of competitive pricing model, but rather, what is conventional, what is accessible, and what family and friends are using for insurance. Therefore, Takaful model might be the best organized and best insurance model for managing claims and risk, however, competitive pricing does not count, if clients does not understand the Islamic Shariah regulations around Takaful (Ghazali et al., 2011). Previous literature on insurance did concur on one thing, insurance is meant to protect the society against any form of unforeseen risk that may put the interest of individual or society at stake and as result, members were encouraged to contribute particular amount under the common pool that would be used to compensate those affected by risks such as fire, accidents and death (Redzuan et al., (2009). However, as noted by Ghazali et al., (2011) majority of clients in non-islamic states do not make their insurance decision on Shariah compliance or regulation. It might be difficult therefore, to compete with other established insurance firms outside Islamic states. The demand for insurance is directly related to consumer s disposable income, and thus, consumers might search for insurance that fits within their disposable income (Otieno, 2013), and not a policy that is well structured, with good benefits, but expensive (Usmani, 2007). 2.4 Influence of Religion on Choice of Tafakul Insurance Religion Religion is an important factor and a determinant in customers choice of Takaful insurance (Otieno, 2013). This is particularly true for customers of Islamic or Muslim faith. Islamic religion requires that insurance products of policies be Shariah compliant. This means that, when one is engaging in provision of insurance, they need to comply with the provisions of the writing of the Quran on the same (Fisher &Taylor, 2011). 16

30 Quran is an Islamic religious book that provides guidelines for religious life and living as a Muslim. Therefore, Muslims choice for Takaful should be considered as compliance to religious beliefs and persuasions. As such, Muslims are required to understand the provisions of Takaful, and how it complies with obligations of religious living. According to Zainuddin and Noh (2013) Muslims with knowledge of Takaful on what led them to choose different products and services provided under Takaful. Equally, it is important to note that Takaful conforms to Shariah laws in accordance with a fatwa that was issued in Malaysia by the National Religious 1982 that stated that conventional insurance was not in compliance with elements of gharar (risk), riba (interest) and maysir (gambling), thus necessitating the genesis of Shariah compliance and growth in choice of Takaful (Bello & Ayub, 2014; Zainuddin & Noh, 2013) Shariah Compliance Islam has strong objections to practices impermissible under Shariah. A consensus exists among majority of Islamic scholars and Fuqaha (Jurist) that conventional insurance is strictly prohibited because it embraces Riba (Interest) in transactions, Gharar (uncertainty due to combination of unknown and doubtful) and elements of Maisir (Gambling) in contracts (Siddiqi (1985). Eliminating all practices conflicting with shariah from commercial insurance cannot be accomplished without structural changes in insurance company contracts, operational modes, types of investment transactions and targets (Abdel, 2011). A study conducted by Zainuddin and Noh (2013) in Malaysia highlights the overview of the emergence of Takafulas part of the Islamic type of policy. Their study attempted to gain a fundamental understanding of what Takaful is all about and how it varies from conventional insurance. In addition, it also aimed at boosting the level of understanding and bridge the gap caused by misinterpretation on the concepts and applications of Takaful as an insurance policy. The study concluded that Muslims are strictly prohibited in purchasing conventional insurance products as it is forbidden haram and violates the Islamic principles (Abdel, 2011) According to Masood and Khan (2010), in Jordan on the attitude of people towards Islamic banking found out that customers prefer return on investment rather than interest 17

31 free banking on religion basis. This is founded on the quest to obey, or adhere to their religious interests. In Malaysia, in addition to Shariah compliance, three other factors influenced customers choice for insurance: services efficiency, fast transaction, and reputation of bank. (Sudin et al., 1994), while in Egypt most clients choose Islamic banking due to speed of transaction and efficiency of services (Hegazy, 1995). In a study bybello and Ayuba (2014) in Bahrain on customers perception in selecting Islamic banks noted that the main factors that customers consider in their selection process was first and foremost, insurance adherence to Shariah principles. This was followed by desire for services quality and efficiency. The study also revealed that in as much as customers preferred Shariah compliant insurance products, pricing was also a major determinant on the choice of insurance. The rate of Takaful adoption in Kenya is still quite low with the majority of those who have either taken one or more products of Takaful, yet to understand the philosophy on which Takaful operates. Some of the clients either take or buy Takaful products on the basis of family and friends also buying such products (Wambura, 2012). This level of ignorance concerning the principles of Islamic finance, banking and insurance (Takaful) practices, and the chronic shortage of trained professionals with skill necessary to propagate the ideals of Takaful is worrying (Otieno, 2013). This is so because the Islamic financial system is still in its formative stage and therefore, Takaful operators have a huge challenge of getting those acceptable investments instruments for contribution that they receive (Usmani, 2007). A study by Onimbo (2014) indicates that Takaful operators in Kenya have to shift their focus on more resources being put into the development of a message that is relevant to their respective target niche. This will propel the operators in the achievement of client s acceptance of the products in the emerging markets owning property as well as those with little or no property. Similarly, Bello and Ayuba (2014) and Otieno (2013) also notes that strategies adopted by Takaful insurance of Africa in penetrating the insurance market in Kenya and the challenges the organization encounters in the process of its operations found out that surplus and Mosque assurance are the leading strategies adopted by Takaful Insurance of Africa to penetrate the Kenyan Market. 18

32 The success or failures of any services or products offered by Takaful or conventional insurance depend upon the preference and awareness of the customers on their Islamic religious requirement for Sharia compliance. Bello and Ayuba (2014) have noted that consumers perception is the function and reflection of their awareness of the offerings (Takaful) and the trust level built by the consumer on the services providers (Takaful Operators). A study conducted by Zainuddin and Noh (2013) determined that the emergence of Takaful is part of the Islamic policy. The study went further to suggest that Muslims are strictly prohibited in purchasing conventional insurance products as it is forbidden haram and violates the Islamic principles In another study that was conducted by Billah (2002) provided numerous sources that form the governing law of Takaful insurances. Some of this sources include the holy Quran and Sunnah, in addition to secondary sources which includes Ijma, Ijtihad, Maslahah, and Mursalah. According to Hussain and Pasha (2011), to be a Muslim requires compliance with the law governing Takaful insurances, however, other members of the society from other religions are not obliged to support of to comply with Shariah compliant insurance provisions. The requirement for one seeking an insurance policy does not have to be in alignment or compliance with Sharia for non-muslims. In another study, Masood and Khan (2010), compared the conventional system of life insurance and the Islamicmodel, owing to several arguments raised by the scenario of life insurance policy practiced under theconventional system, and the need for compliance with Shariah principles. The study reported that both conventional and Islamic designs tend to have different modelsand hoped that future applications of the Islamic life insurance policy would be successful. This findingalso was supported by the study carried out by Hussain and Pasha (2011), however, the study did not provide insight into the conflict that occurs for customers who are Muslims, and without access to Takaful insurance. It could be assumed that these customers who use conventional insurance are violating Shariah principles, but equally, it could be argued that this clients are utilizing market outputs to address their insurance needs, and thus, should not be held accountable to similar standards as their Shariah compliant counterparts. 19

33 Qureshi (2011) conducted a study to determine whether Takaful insurance did utilize some components of conventional insurance, and ho that might affect the need for pure sharia complaint needs. The study highlighted that in as much as religion was fundamental in designing Takaful, the study highlighted the existence of conventional insurance residual present within Takaful design. Therefore, in different constituencies, Takaful religious requirement in Iran, might not be similar to Takaful design in Malaysia or Sudan. Therefore, the choice for particular insurance design, informs the insurance packages that insurance firms eventually design. A study done by Masud (2011) in Malaysia revealed that in as much as religion plays a major role in choice of insurance for Muslims, the same did not hold true when it comes to reinsurance and investments, the study further established that in as much as the concept of Shariah insurance has developed, there is still two significant areas that Takaful insurance firms are facing in meeting the compliant requirements of Shariah (reinsurance, and investments). Africa's Islamic investment market is growing providing wide opportunities for Takaful operators to take up various Sharia -compliant investments and moderate any concerns by regulators (Taylor, 2010). However, a study by Deloitte (2014), did not show explicitly whether this growth is being pushed by need for Shariah compliance, or because the Takaful model is better compared to conventional insurance models in settling claims, and covering risks. Similarly, the Nigeria, Kenya, and Tunisia that have for long relied on conventional insurance. The assumption built in this studies is that the Muslim populations within these countries are beginning to embrace Takaful insurance from religious persuasion which might not necessarily be the case (Ahmad et.al., 2010) On the other hand, a study by Ramaswamy and Namakumari, (2009) posit that Takaful insurance was designed to address objections encountered in conventional insurance and enhance Muslim brotherhood in service provision in the insurance industry. Thus, religion can serve as an effective market penetration strategy for the conviction of customers of Islamic persuasion on choice of insurance. Religion has also demonstrated how the insurance firms could go about creating value through community centric and brotherhood approach to risk and benefit sharing (Ahmad et al., 2010) 20

34 A study by Rafiq (2010) focused on the challenges of marketing Takaful in non-muslim countries with clear emphasis that a lot of regulatory regime changes have to be implemented to allow Islamic banks to sell insurance products and develop investments instruments that are Shariah compliant. Ford and Gioia (2000 pointed out that some of the challenges encountered while implementing a new business model include; failure to understand the customers, inadequate or incorrect marketing research and inability to predict environmental reactions. Takaful s adoption in Kenya is still very slow and majority of those who have either taken one or more products of Takaful, still do not understand the religious philosophy on which Takaful operates (Bhatty,2002). 2.5 Chapter Summary This chapter reviewed literature as per each research question. First, literature on whether Takaful influences customer choice has been presented. This is followed by literature on influence of insurance prices, and finally literature on role of religion in the choice of Takaful insurance. The methodology adopted for the study is presented in chapter three. 21

35 CHAPTER THREE 3.0 RESEARCH METHODOLOGY 3.1 Introduction This chapter highlights the research methodology used to carry out this study. The research methodology is the systematic scientific process a researcher adopt to ensure the study can produce reliable findings even when replicated with other researchers. The study design highlighting the adopted approach is presented followed by the study population and sampling design, which includes the actual population size, and sampling techniques, size, and sample frame. Similarly, the research data collection methods, procedures and data analysis methods adopted for the study have been presented. 3.2 Research Design In research, there are various designs that are adopted by researchers to carry out a study. This includes descriptive surveys, observations, case studies, and experiments. A descriptive survey design was used for this study. Chandran (2004) defines descriptive survey design as a research design that is used to describe data within its natural environment in a quantitative manner. It helps a researcher describe elements under the study without influencing the study environment. This design was appropriate for this study because it enabled the researcher to examine and report findings in a descriptive manner including use of frequencies and percentages that are critical in a quantitative study. Similarly, Krishnaswamy (2009) and Cooper and Schindler (2012) note that descriptive studies are desirable for quantitative studies. 3.3 Population and Sampling Design Population A study population is defined as the total elements upon which a researcher wishes to refer conclusions (Borg & Gall, 1989). For this study, the population consisted of 10, 112 Takaful policy holders at Takaful insurance of Africa. 22

36 3.3.2 Sampling Design The process of selecting study units for a study to represent the entire population is referred to as the sampling design (Mugenda & Mugenda, 2003). For a study to be scientific a sample of a population must be defined by the sampling design, and must be true to the population. For this study, the design includes the sampling technique, the frame, and the sample size Sample Frame Sample frame is defined as the list that contains total number of elements that a researcher wants to examine (Copper and Schindler, 2012). The sample frame enables a researcher to determine the authenticity of the sample that forms the basis of research. If the sample frame is not well checked, the findings of a study can be erroneous, particularly, is a researcher samples respondents outside the sample frame (Krishnaswamy, 2009). For this study, the sample frame was obtained from Takaful Insurance of Africa head offices in Nairobi Sampling Technique Sampling techniques in research includes either stratified sampling, random sampling, purposive sampling and convenient sampling techniques. Stratified sampling was used for this study. Cooper and Schindler (2012) define stratified sampling as the process of grouping elements with similar characteristics in a research together for the purposes of drawing representative sample for the group and the population. Thus, stratified sampling allows a researcher to group homogeneous and heterogenous elements separately before drawing samples. Since this study was not composed of homogeneous elements, stratified sampling was appropriate as it enabled the researcher to group policy holders in different branches differently, and thus, enabling the researcher to draw a representative sample Sample Size In research, a sample size is defined as a number of units drawn from the main population to be used in a study to develop findings that can be used to draw conclusions to the entire population (Cooper & Schindler, 2012). 23

37 The Krejcie and Morgan (1970) formula was adopted to select a sample size of 384 as indicated: Where: S = Requires sample size S = X = z value (1.96 at 95% confidence level) N = Population Size P = Population proportion (0.5 or 50%) d = Degree of accuracy (0.05) X 2 NP(1 P) d 2 (N 1) + X 2 P(1 P) The sample size distribution table is presented in table 3.1 Table 3.1 Sample Size Distribution Category Population Sample Size Sample Size Percentage Upper Hill Branch 2, % CBD Branch 4, % Mombasa Branch 2, % Eastleigh Branch 1, % Total 10, Data Collection Methods Data collection methods is process a researcher engages to collect data that would answer the research objectives or questions. This study utilized primary data that was collected from the respondents. Primary data was collected using closed ended structured questionnaires. The questionnaire adopted a Likert scale of 5 levels (1to 5). The questionnaire was administered via to respondents. 24

38 3.5 Research Procedures The questionnaire waspiloted by administering to fifteenquestionnaires to respondents not taking part in the actual study. The findings were used to re-adjusted the questionnaire for clarity, validity of questions and reliability. For maximum and complete participation of the respondents, the questionnaires were administered through the branches, where the branch managers from Upper Hill, Nairobi CBD, Mombasa and Eastleigh branches were given questionnaires to administer to their branch policy holders.strategies to ensure a high response rateincluded a clear notification of the respondents on the purpose of the study, and making constant follow up through phone calls. 3.6 Data Analysis Methods Data analysis is defined as the process through which a researcher translates raw research data into meaningful information that can be used by consumers of the data (Cooper & Schindler, 2012). For this study, descriptive analysis was conducted for establish data percentages and frequencies, while inferential analysis was conducted to establish correlations and regressions. Data was analyzed using the Statistical Package for Social Sciences (SPSS) version 22, and presented using tables and figures. 3.7 Chapter Summary The study research methodology has been presented in this chapter. The research design adopted is the descriptive survey design. The study population was 10, 112 from which a sample size of 384 was drawn. Data was collected using a structured questionnaire; analyzed using SPSS. The research procedures adopted have also been presented. The next chapter shows the results and findings of the study.. 25

39 4.0 RESULTS AND FINDINGS 4.1 Introduction CHAPTER FOUR This study examined insurance process, customer awareness, and religion as factors influencing choice of Takaful insurance. The findings are presented in this chapter. The findings on customer awareness as a factor are presented first, followed by insurance pricing factor, and finally, findings on religion as a factor influencing Takaful insurance. The study had a response rate of 52%. A reliability analysis established Cronbach Alpha values above 0.7 as indicated in table 4.1. Table 4.1: Reliability of Study Tool Variables No. of Items Alpha Value Choice of Takaful Customer Awareness Insurance Price Religion Demographic Information The demographic information for the includes the respondents study marital status, age, gender, number of years using Takaful, and religion Gender The findings show that (52%) of respondents were men, while (48%) were women as indicated in figure 4.1. This could be interpreted to mean that Takaful Insurance of Africa has more male policy holders than female 26

40 52% 48% Female Male Figure 4.1: Respondents Gender Marital Status When respondents were asked to indicate their marital status, (36%) indicated they were married, (23%) were separated, (31%) indicated they were single, and (10%) indicated they were divorced as highlighted in figure Divorced Single Separated Married Figure 4.2: Respondents Marital Status Respondents Age When respondents were asked to indicate their age, (35%) were aged years, (27%) were aged years; (27%) were above 50 years of age, while the remaining (11%) were aged years as summarized in figure

41 Years Years Years Above 50 Years Figure 4.3: Respondents Age Number of Years Using Takaful Insurance When respondents were asked to indicate the number of years they had been using Takaful insurance. The findings show that (39%) of respondents has used Takaful for 7-9 years, (31%) has used Takaful for 4-6 years; (23%) had 2-3 years; while the remaining (7%) had used Takaful for less than 1 year as summarized in figure % 7% 31% 23% Less than 1 Year 2-3 Years 4-6 Years 7-10 Years Figure 4.4: Number of Years Using Takaful Insurance 28