UK Demand for Islamic Financial Services

Takaful Islamic Insurance  UK Demand for Islamic Financial Services

Post By: Insurance Top Stories

Following the closure of the Al-Baraka bank in the early 1990s and the failure of the Halal Mutual Investment Company in the mid-1990s to attract sufficient customers, it has been doubted whether there is a real demand for Islamic financial services among Muslims in the UK. Dar (2005) based a study on 503 Muslims living in ten cities in the UK that have large Muslim communities. He found that two thirds of the UK Muslims were indifferent to Islamic financial services (e.g. mortgages, current and savings accounts).

Takaful Islamic Insurance

Furthermore, only 5 per cent of UK Muslims were seriously interested in Islamic finance services, while 23 per cent claimed they would be interested in Islamic mortgages if they were comparable in price with conventional mortgages. According to the survey, the typical consumer of Islamic finance services is likely to be a highly educated person with a high income and a higher professional job living in the North or Central England. Despite London being considered the international finance centre, the study showed that a Londoner who is highly educated, who works in a highly professional job and earns a high income is likely to be, at best, indifferent to Islamic finance services. On the other hand, a person living in Manchester with similar credentials is three times more likely to use Islamic finance services than being indifferent to them.

Takaful Islamic Insurance

In addition, the study showed that the majority of Muslims in the survey (about 83 per cent) did not believe that these Islamic services and mortgages are really Islamic (Halal). This reveals the lack of awareness of Islamic finance among Muslims which naturally has a significant impact on the demand for Islamic finance services. Therefore, according to Dar (2005), there is no significant demand for Islamic finance services in the UK despite Muslims showing great interest for such services. As a result, Islamic financial providers need to create a demand for their products and services because it may not already exist.



References 
Abdi, S. (2007), “Taking takaful to the next level: how the industry can create demand for its services”, in Jaffer, S. (Ed.),Islamic Insurance: Trends, Opportunities and the Future of takaful , Euromoney Institutional Investor Plc, London, pp. 22-33.
Abdul Hamid, M. and Othman, M.S. (2009), “A study on the level of knowledge and understanding among Muslims towards the concepts, Arabic and Shariah terms in Islamic insurance ( takaful )”,European Journal of Social Sciences, Vol. 10 No. 3, pp. 468-478.
Abdul Rahim, A.A. (2009), “Is the Islamic mutual (composed) insurance a commercial insurance?”, J. KAU: Islamic Economics, Vol. 22 No. 2, pp. 125-153 (in Arabic article, available at: http://iei.kau.edu.sa/Files/121/Researches/57701_27906.pdf).
Abdul Rahim, A.A. (2010), “The Islamic insurance system: sharing the risk”,J. KAU: Islamic Economics, Vol. 23 No. 1, pp. 55-93 (in Arabic article, available at: http://iei.kau.edu.sa/ Files/121/Researches/58910_29181.pdf).
Abdul Rahman, Z. (2009), “ takaful : potential demand and growth”,J. KAU: Islamic Economics, Vol. 22 No. 1, pp. 55-72.
Alreck, P. and Settle, R. (1995),The Survey Research Handbook, Irwin Press, New York, NY. Anon (2005), “ takaful emerges as the leading segment of Islamic financial sector”,NewHorizon, Vol. 144, pp. 21-22.
Anon (2009), “New charity takaful scheme”,NewHorizon, Vol. 173, p. 9.
Asaria, I. (2009), “The spirit and models of takaful : meeting of minds or parting of ways?”, NewHorizon, Vol. 172, pp. 38-40.
Bhatty, A. (2007a), “Retailing takaful products”, in Jaffer, S. (Ed.),Islamic Insurance: Trends, Opportunities and the Future of takaful , Euromoney Institutional Investor Plc, London, pp. 100-112.
Bhatty, A. (2007b), “The growth and global market for takaful ”, in Jaffer, S. (Ed.),Islamic Insurance: Trends, Opportunities and the Future of takaful , Euromoney Institutional Investor Plc, London, pp. 3-21.
Dar, H.A. (2005), “Demand for Islamic financial service in the UK: much ado about nothing?”, NewHorizon, Vol. 145, pp. 11-12
Haron, A. and Taylor, D. (2009), “Risk management in takaful ”, in Archer, S., Abdel Karim, R.A. and Nienhaus, V. (Eds), takaful Islamic Insurance: Concepts and Regulatory Issues, Wiley, Singapore, pp. 169-192.
Hill, R. (1998), “What sample size is enough in internet survey research?”,Interpersonal Computing and Technology: An Electronic Journal for the 21st Century, Vol. 6 Nos 3/4, available at: http://emoderators.com/ipct-j/1998/n3-4/hill.html (accessed 4 October 2010).
IIBI (2010), “ takaful ”, Institute of Islamic banking and Insurance, London, available at: www. islamic-banking.com (accessed March 2010).
Kader, H.A., Adams, M. and Hardwick, P. (2010), “The cost efficiency of takaful insurance companies”, Geneva Papers on Risk & Insurance – Issues & Practice, Vol. 35 No. 1, pp. 161-181.
Kassim, Z.A.M. (2007), “ takaful : a question of surplus”, in Jaffer, S. (Ed.),Islamic Insurance: Trends, Opportunities and the Future of takaful , Euromoney Institutional Investor Plc, London, pp. 48-52.
Khorshid, A. (2004), Islamic Insurance: A Modern Approach to Islamic Banking, RoutledgeCurzon, London.
Kwon, W.J. (2007), “Islamic principle and takaful insurance: re-evaluation”,Journal of Insurance Regulation, Vol. 26 No. 1, pp. 53-81.
MIS (2010), Muslim Insurance Services, available at: www.musliminsurance.com (accessed 5 March 2010).
ONS (2010),Religious Populations, The Office for National Statistics, Newport, available at: www.statistics.gov.uk/cci/nugget_print.asp?ID¼954 (accessed 05 March 2010).
PIH (2010), Principle Insurance Holdings Limited, available at: www.biih.co.uk (accessed 5 March 2010). Rabiah Adawiah Engku Ali, E. and Odierno, H.S.P. (2008),Essential Guide to takaful : Islamic Insurance, CERT Pubs. Sdn. Bhd., Kuala Lumpur.
Sadiq, C.M. (2006), “Islamic insurance ( takaful ): concept and practice”, in Ali, M. (Ed.), Encyclopaedia of Islamic Banking and Insurance, Institute of Islamic Banking and Insurance, Geneva, pp. 197-208.
SHI (2010), Salaam Halal Insurance, available at: www.salaaminsurance.com (accessed 5 March 2010).
T’azur (2010),Sadaqah Plan, available at: www.tazur.com (accessed 15 March 2010).
UKCISA (2010), Higher Education Statistics, available at: www.ukcisa.org.uk (accessed 5 March 2010).



To cite this document:
Tahani Coolen-Maturi, (2013) "Islamic insurance (takaful): demand and supply in the UK", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 6 Issue: 2, pp.87-104, doi: 10.1108/17538391311329806.