Dynamics of Takaful Adoption: Examining Current Challenges in the Government-Assisted Rural Community in Malaysia Using a Mixed-Method Approach

Abstract

Takaful is based on the principles of solidarity, cooperation, and mutual support to help members to recover from losses due to incidents. It is important to be aware of the challenges this concept faces in rural communities, where access to information, assistance and insurance services is often more difficult than in urban areas. The research study employed an Exploratory Sequential Design (ESD) within a mixed-methods research paradigm. Qualitative data were obtained from two Focus Group Discussions (FGDs) and a personal interview with a total of 10 respondents and analysed by thematic analysis. Quantitative data were collected through an online questionnaire (n=1199) and analysed using exploratory factor analysis and multiple regression. The results showed that there are two main factors (challenges of Takaful adaptation and current coping methods for managing unexpected events) that create obstacles and negative impacts towards Takaful adoption in the rural palm oil plantation estate community in Malaysia. The study emphasises the importance of flexible, trust-based and culturally sensitive Takaful models based on the real-life experience of the rural community. To increase the adoption rates, Takaful providers and policymakers need to address not only awareness issues but also the structural and behavioural challenges that are rooted in the community’s risk management habits.