The impact of internal forces on acceptance of takaful by insurance policy-holders in India

Purpose - Insurance is a modern risk-management tool. Although the idea is novel, its practice is not free of interest, uncertainty and elements of gambling.Takafulhas been introduced as an alternative to modern insurance. India has an established insurance industry, and although the country has the second largest Muslim population in the world,takafulhas not been introduced there. Moreover, no research has examined how internal forces affect policy-holders to buy new insurance products such astakafulin India. This study aims to examine whether internal factors influence individual insurance policy-holders to open up totakaful. As internal factors reflect the innovative nature of policy-holders, this paper seeks to determine whether there is significant difference in the innovative nature of two independent sample groups (e.g. between Muslims and non-Muslims) in participating intakaful. Design/methodology/approach - New product adoption theory is used in developing the hypotheses and a questionnaire. Snowball sampling method is used in this survey, with a sample size of 909 respondents, including Muslim and non-Muslim policy-holders. The internal forces that encourage potential policy-holders to participate intakafulis the independent variable here, while the respondents’ actual willingness to participate intakafulis the dependent variable. Religion and level of education are used as control variables, and regression andT-tests are performed to analyze the data. Findings - Results show that the internal factors have significant impact at 1 per cent on the acceptance oftakafulby policy-holders. There is also a significant difference in the innovative nature between Muslims and non-Muslims. Mean values from theT-test show that Muslims are more innovative than non-Muslims in India, offering a good sign for India to start offeringtakaful, as Muslims could be the core customer base. Research limitations/implications - This study focuses on internal factors influencing individual policy-holders’ willingness to participate intakaful. The findings can be the starting point for future research exploring the influence of external factors on such willingness to participate with potential benefits to local authorities, investors, insurance companies and the public in India. Originality/value - This study provides crucial information about the demand side oftakafulin India. The innovative nature of Indian policy-holders signals positive potential for operators to offertakafulin India and to concerned regulatory bodies to expedite its introduction to the market.