A Study on Perception of Graduate Students in Iium: a Comparative Analysis Between Takaful and Conventional Insurance in Malaysia.

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A study on perception of graduate students in IIUM: A comparative analysis between Takaful and conventional insurance in Malaysia.

Md. Mahmudul Haque (0823925), Khairina Binti Narawi (0733734), Amal Hakimah Mohd Zuhari (0822490), Eduart Nogu (0826619 Bank Management: section 1
1st Draft

1.0 Introduction
According to the world Bank Development Report 2000, the earth's human population is approaching 6 billion, of which upwards of 25% are practicing Muslims. Malaysia's population, as of July 2010, is estimated to be 28,250,500. According to the Population and Housing Census 2000 figures, approximately 60.4 percent of the population practiced Islam. Domination of Muslim population in Malaysia created a need for a comprehensive insurance system which is in compliance with Shariah laws. So, spurred on by such re-confirmations by Islamic scholars and their own person discomfort with existing insurance schemes, Muslims began in 1973 a rediscovery of the Takaful models and to pioneer their implementation. Takaful originates from Arabic word “kafalah”, which means “to help one another” or “mutual garuantee”. In addition, takaful is an insurance concept which is grounded in Islamic Muamalat, observing the rules and regulations of Shariah. It is a concept that has been in practice for over 1400 years. In principle, Takaful system is based on mutual co-operation, responsibility, assurance, protection and assistance between groups of participants. In other words, it is the provision of shared contributions to help those who are in need. These fundamentals are based on the Holy Quran and the sayings of Prophet Muhammad S.A.W. Allah said: “...Help Ye one another in righteousness and piety but help ye not one another in sin and rancour... (Al Maidah : 2) According to hadith narrations, Prophet S.A.W said- Allah will always help His servant for as long as he helps others. (Narrated by Imam Ahmad and Imam Abu Daud). In rapid succession, groundbreaking efforts to introduce Takaful schemes as Islamic alternatives to conventional insurance produced outcroppings in many countries. In Malaysia Takaful was introduced first by Syarikat Takaful Malaysia Berhad (Takaful Malaysia) was incorporated on the 29th of November 1984.Since then Takaful services started to play a significant role in insurance market. Currently in Malaysia there 8 listed local takaful companies.  CIMB Aviva Takaful Berhad ,  Etiqa Takaful Berhad,   Hong Leong MSIG Takaful ,  HSBC Amanah Takaful (Malaysia) Sdn. Bhd., MAA Takaful Berhad, Prudential BSN Takaful Berhad , Syarikat Takaful Malaysia Berhad and  Takaful Ikhlas Sdn. Bhd. There is a significant research gap of linking IIUM graduate students perception towards the selection insurance when consumers’ demographic backgrounds play a mediating role. Particularly, in a country like Malaysia, empirical research is lacking thus contributing to the need for new knowledge in this area. Studies focusing on Malaysian Insurance holders were hardly ever reported in previous academic studies. The present study aims to gather primary data from respondents from multicultural and multi-religious groups who frequently insurance holders or studying about conventional and Islamic insurance. This paper also presents a conceptual framework and exploratory analysis of the relevant variables.

Therefore, the overall objective of the present study is to test whether the insurance characteristics – such as Riba, Gharar, Mysir – really mediate IIUM graduates perceptions in the choice of a particular Islamic insurance or not. Therefore, this study will directly address the question – ‘‘Do the IIUM graduate perception towards choosing an insurance mediating by Riba, Ghara, Mysir?’’

2.0 Statement of Problem:
The purpose of the study was to gain a better understanding of the factors leading to choice of insurance among IIUM graduates students, the characteristics of the Islamic insurance and conventional insurance and to determine the...
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