A comparative analysis of the selection of conventional and takaful models: An insurance industry study

This study examines the factors influencing the decisions of the United Arab Emirates (UAE) consumers when choosing between conventional and takaful automobile insurance, with a particular focus on why takaful policies are less popular. An online questionnaire survey was conducted among Emiratis in Dubai, using convenience sampling with a sample size of 340. Data analysis was performed using SPSS software. The results conclusively show that for takaful insurance, respondents prioritized reputation, ease of interaction, and Sharia compliance as crucial determinants, aligning with previous studies that emphasize the importance of ethical considerations in Islamic finance (Raza et al., 2020). However, unlike some previous research that suggests cost-effectiveness as a key factor (Shaikh et al., 2024), our findings highlight that comprehensive coverage, positive reviews, and recommendations are more influential for conventional insurance. Notably, Emiratis prefer conventional insurance due to its familiarity and market dominance, a trend consistent with global patterns where traditional insurance models often lead in market share (Md Husin & Ab Rahman, 2016). The findings contribute to the existing literature by shedding light on the specific selection criteria for auto insurance versus takaful plans in the UAE market. Contrary to some studies that suggest takaful’s growth potential is hindered by a lack of awareness (Kamil & Mat Nor, 2014), our results indicate that while awareness is important, enhancing service quality, digital platforms, and branding strategies could be more critical for increasing takaful’s market share. Specifically, takaful companies could leverage mobile apps to improve customer interaction, promote the benefits of Sharia compliance, and engage in targeted marketing to build brand recognition. By addressing these areas, takaful providers may increase their appeal to Emirati consumers, potentially expanding their market presence in the UAE.