Analyzing the Impact of Takaful Marketing and Channels

This report examines the significant impact of Takaful marketing and distribution channels on the Takaful business, particularly in increasing consumer awareness, especially among Muslims. It highlights the crucial role of distribution channels, including Takaful agents, media, and family, in disseminating information and influencing consumer behavior. The report emphasizes the importance of Shari'ah compliance in marketing strategies and the need for effective marketing tactics to retain clients and expand market share. It analyzes how product knowledge, influenced by promotional strategies and endorsements, plays a key role in consumer decision-making. Furthermore, the report presents data on the growth of Takaful market share, particularly in Malaysia, comparing it with conventional insurance and emphasizing the need for increased public awareness to drive further growth. The report also cites statistics from Fitch Ratings and Bank Negara's surveys to support its findings, highlighting the importance of marketing and distribution in the Takaful sector.

2.0 THE IMPACT OF TAKAFUL MARKETING AND DISTRIBUTION CHANNEL
ON TAKAFUL BUSINESS
2.1 Increase awareness among consumers about Takaful
Through marketing and channels distribution programs, Takaful companies get the
chance to increase consumer awareness of Takaful as a risk management solution,
particularly among Muslims. Distribution channels are thought to be an important strategy for
attracting consumers to try Takaful products (Salman & Htay, 2014). Takaful agents also
have an important role since they are one of the distribution channels that help to raise
awareness (Kamil & Mat Nor, 2014). It’s important to make sure that Takaful agents are
well-trained and understand the benefits of Takaful so that the general public does not lose
out on crucial Takaful information. All of a Takaful operator's concepts, mechanisms,
materials, and marketing operations must be compliant with Shari’ah principles. This is
necessary in order to keep the image of Islamic financial institutions clean in the eyes of the
public (Mortuza, 2010). There are also other distribution channels such as media, family and
sales persons that play a significant role in Takaful awareness level. According to the study
led by Waseem-Ul-Hameed (2017), the level of Takaful awareness is substantially influenced
by Takaful distribution channels.
In addition, Takaful service providers must increase the diversity of customer
proposals by employing effective marketing tactics. This is necessary in order to retain
existing clients and increase Takaful transmission capacity in the plan sector (The Globe
Takaful Review, 2013). Consumers often gather information about a product and service
before making a buying decision. Product knowledge refers to being aware of information
about a certain product. The most essential source of product knowledge may be gained by
assisting in the promotion of how Takaful services may improve one's daily life by
encouraging current participants to influence future consumers' preferences for Takaful
services (Mortuza, 2010). Consumers can be educated on the importance and benefits of
Takaful through promotion strategies, ensuring that they have a wide knowledge of the
product, as well as a strong public reception and demand for Takaful. It should be
emphasized that high-profile media education is required, such as the creation of television
advertising and the recruiting of popular and well-known celebrities to endorse Takaful

products (Mortuza, 2010). Based to Al-Wasani (2011), Takaful companies should emphasise
the benefits of Takaful over traditional insurance in order to persuade customers to have a
positive attitude toward Takaful services. Aside from that, according to a research by Syed
Othman Alhabshi (2013), in which 20 Takaful supervisors were interviewed, the most crucial
attributes that influenced Takaful transmission were Distribution Channel programs, which
were agreed upon by 90% of the respondents, and marketing practices, which were agreed
upon by 85% of the respondents. Thus, Channels of distribution and marketing are important
because through these methods customers get to know about insurance business and their
awareness about Takaful.
2.2 Increase Takaful Market Share
Besides that, the marketing and channels distribution program make an impact by
increasing the market share of the Takaful. Based on the TheStar News (2020), although the
Takaful market share used to be disappointing, the Takaful business has taken a backseat to
Islamic banking in terms of expansion, market penetration, and share, as compared to the
conventional insurance during the previous three decades. According to Fitch Ratings' global
head of Islamic banking and insurance, Bashar Al Natoor, increased product knowledge is
also a factor in enhancing market penetration. Marketing and channel distribution
programmes provide product knowledge, which is critical for influencing consumer
behaviour. Consumers who have more information about the product or service are more
likely to make sensible judgments. Product value is assessed based on this knowledge, and
buying risks are made (Marketing Principles, v. 1.0). Thus, many people will accept Takaful
as a kind of protection as a result of this factor.
As the demand for Takaful program grows, so does the market share. According to
international rating agency Fitch Ratings (2020), family and general Takaful premiums
increased by 29.6% and 16.4% respectively in the first half of 2019, compared to 12.2% for
conventional life and -1.3 % for general insurance. In 2018, premiums for family and general
Takaful increased by 13.1% and 8%, respectively. As per Fitch statistics, the Takaful sector
in Malaysia gained momentum in the first half of 2019, which is mostly made up of family
Takaful, accounting for 35 % of the entire life market based on new business premiums, up
from 32 % at the end of 2018. Takaful business in Malaysia is seen to grow faster than the
conventional insurance business in 2019 owing to the solid domestic consumption and rising

consumer awareness (Al Natoor, 2020). However, according to Bank Negara's latest
Financial Capability and Inclusion Demand Side Survey, over half of Malaysia's population
is unprotected resulting in a lack of understanding about the Takaful industry's broad range of
options. So for this reason, Takaful companies should be more active in increasing public
awareness and knowledge regarding Takaful products in order to gain customer support such
as through marketing or distribution channels (Bashar Al Natoor, 2020).