Abstracts in English and Arabic.

"A thesis submitted in fulfilment of the requirement for the degree of Doctor of Philosophy in Islamic Banking and Finance." --On title page.

Thesis (Ph.D)--International Islamic University Malaysia, 2024.

Includes bibliographical references (leaves 250-276).

The takaful industry in Malaysia has begun to actively offer microtakaful products and
services to the B40 population, following the issuance of the Discussion Paper on
Microinsurance and Microtakaful by Bank Negara Malaysia (BNM) in 2016. However,
the participation rate of the B40 population, a demographic characterised by lowerincome
levels continues to remain low. The objectives of this study are to (i) assess the
main issues and challenges faced by the takaful industry on the current microtakaful
initiatives, (ii) structure a microtakaful model that practically and smoothly collates and
distributes products and services to the B40 in Malaysia; (iii) explore a sustainable
funding mechanism for the proposed microtakaful model which utilises various sources
of funding, including Islamic social finance instruments, namely zakat and waqf; and
(iv) increase the effectiveness of the proposed microtakaful model’s financial literacy
and awareness programme for the B40. The study utilises a thematic literature review
as well as a one-to-one interview with takaful industry stakeholders, namely the key
personnel of takaful operators (TO), Shariah committee members, a member of a board
of directors (BOD), and two representatives of State Islamic Religious Councils
(SIRCs). The findings and feedback are then utilised to produce a microtakaful
framework that serves as a foundation for the formulation of a robust microtakaful
model that not only addresses the challenges, but also ensures an effective and efficient
distribution of products and services, tailored to the unique needs of the B40. The
interviews explored diverse funding sources, including Islamic social finance
instruments such as zakat and waqf, in order to develop a financial framework that
would ensure long-term stability and resilience of the microtakaful model, which aligns
with the broader objective of enhancing financial inclusivity among the B40 population.
In addition, a tailored financial literacy and awareness programme will also be
established to encourage effective participation in microtakaful products among the
B40. The study provides evidences revealing concerns among the key stakeholders in
relation to product oversupply, limited awareness and literacy, and regulatory
compliance that overshadow the genuine needs of the B40. The study then progresses
to propose strategies for the structuring of an effective microtakaful model, emphasising
on Shariah compliance, fund management, non-governmental organisations’ (NGOs)
involvement, and community engagement. To address the critical issue of sustainable
funding, the study identifies a number of solutions involving corporate social
responsibility (CSR) funds, increased government participation, collaboration with state
entities, and effective marketing. The study highlights improvements in financial
literacy programmes for the B40 through the proposed microtakaful model,
emphasising stakeholder coherence, poverty alleviation and technological leverage. In
conclusion, the study offers a comprehensive understanding of challenges and solutions
in advancing microtakaful initiatives in Malaysia. The envisioned microtakaful model
is expected to enhance coordination, sustainability, and penetration rates among the
B40.