Takaful as manifested in its present form is
something of a recent phenomenon. Despite the thriving rate of growth as
witnessed in Malaysia over recent times, the concept of takaful is still
alien to some and vague to many. After thirteen years of existence,
there are still many in Malaysia asking the question, "what is the
difference between takaful and insurance?"
In Malaysia, the Takaful Act was gazetted in 1984 and
up the end of 1997 the takaful industry managed to accumulate a total
asset of RM441 million. Compared to the insurance fund asset, it is only
1.5 percent. Worldwide in 1997 takaful accounts for about US$375 million
in premiums per year but predictions for growth are impressive. For
instance, the Bahrain - based Arab Insurance Group (ARIG) forecasted
that the takaful market will be worth US$2.1 billion by the year 2010.
Especially over the last few year the takaful
industry in Malaysia have grown quite substantially. In terms of new
business it had grown from 3,638 new policies in 1993 to 50,005 in 1997
at an average annual rate of 318.6%. Over the same period, the in force
business has grown from 18,345 policies to 112,605 at an average annual
rate of 128.4%.
As mentioned earlier, even though the growth of the
takaful business had been somewhat dramatic, the concept of takaful is
still hazy to many people. Why is this so? Is the target segmentation of
takaful products skewed towards a certain sector of the market or being
Islamic, takaful is only accepted by the Muslims? Is the marketing
strategies adopted presently open enough to the general public? Are
there constraints prohibited other than Muslims to participate? Does
takaful entail universal features? These questions and others will be
discussed in the ensuing pages.
Takaful being a relatively new concept is
knowledge-based and ought to be explained to the public as widely as
possible. This could be done quite extensively through the mass media.
Presently, there is a dearth of literature on takaful. The public ought
to be informed and educated about: [a] what takaful is? [b] how is it
different from insurance? [c] what are the philosophies that underlies
it? [d] how is it being operationalized and [e] what are the products
These information can be disseminated through many
channels of the media, radio, television, newspapers and others. To this
end I must commend Ybhg. Dato’ Fadzli, CEO of Syarikat Takaful
Malaysia Berhad who have over the years taken time to write weekly
columns in the local press about takaful. Other avenues can also be used
such as through public gatherings, conferences and seminars and also
through courses offered in schools and institute of higher learning. In
a multiracial country like Malaysia it would be most useful if these
information are also being disseminated through other languages. By
spreading information this way, it would create greater awareness among
Other prerequisite that operators ought to understand
is that takaful being a service product inherit unique service features
such as :
[a] intangibility - takaful being a service product
is intangible that cannot be held, touched or seen before the purchase;
on the other hand they are rich in so-called credence attributes.
[b] inseparability - consumer cannot separate the
service from the deliverer of the service or the setting in which the
[c] inconsistency - marketing services is challenging
because the quality of service is often inconsistent. Services depend on
the people who provide them, their quality varies because people have
different capabilities and also vary in their job performance from day
[d] inventory - Inventory of services is different
from that of goods. Inventory carrying cost are more subjective and are
related to idle product capacity which is when the service provider is
available but there is no demand.
As providers of takaful services one ought to be
aware of the above-said features when faced with problems often
encountered by service-related products.
Apart from the above, another essential prerequisite
that is most wanting in today’s management arena is to be equipped
with a reliable, tested computer system. In this day and age, takaful
business have to be computer-assisted in almost every facet of its
operations, be it in underwriting, claims management, accounting,
retakaful and also marketing.
Together with a well-oiled system there should be
also a dedicated and knowledgeable pool of staff to brace and withstand
the rigorous and daunting effort not only to spread the message of
takaful but also to perform dakwah to the ummah at large.
DEVELOPING MARKETING STRATEGIES
Just like other tangible good marketers, a takaful
marketer must strive to provide a bundle of benefits that satisfies the
needs of consumers. In other words an operator have to make sure that
consumers are satisfied right from the point prospecting up to the
processing and delivery of claims.
Now, the development phase, including defining target
markets and finalizing a marketing mix, is a basic requirement of any
marketing strategy. The following are areas to consider when developing
a service marketing strategy such as that of takaful:
[a] Marketing should occur at all levels, from the
marketing department right to the point where the service is provided.
[b] Allow flexibility in providing the service - when
there is direct interaction with the customers, customise the service to
their wants and needs and this is especially so in case of a group or
[c] Hire and maintain high-quality personnel; often
it is the people in service organization who differentiate one
organization from another.
[d] Consider marketing to existing customers to
increase their usage of the service or create loyalty to the service
provider i.e. an example of cross selling.
[e] Any problems in providing the service should
quickly be resolved to avoid damaging a business’s quality reputation.
[f] Operators should adopt high technology to provide
improved services at a lower cost. Continual evaluation how to customise
the service should be done.
[g] Service providers should brand your service to
distinguish it from that of the competition.
THE MARKETING MIX
Developing a marketing mix for services such as
takaful requires that many questions to be answered. These questions are
pertaining to the services to be offered, the attributes of the services
that should be stressed, the prices that should be charged and how
should the service be distributed and promoted.
[a] Service Attributes - Service attributes such as
security, consistency, attitude, completeness, condition, availability
and timing may be important factors in the purchase decision. If it is
correctly identified attributes can become the foundation for a customer
- oriented service ethic throughout the company. The attributes can be
advertised, promoted and marketed to customers and more importantly to
be understood and internalised by the employees.
[b] Service Mix - Service mix is a listing of all
services a supplier has to offer. Service organisations especially the
smaller ones often overlook mix considerations. Since no inventory
exists, the request for a service slightly different from existing
services often lead to an attempt to provide the requested service.
Therefore, companies or organizations should develop a clear definition
of what they offer.
[c] Pricing - In Malaysia and in may other countries
the insurance industry is subjected to both tariff and non-tariff
rating. On the other hand takaful is not subjected to either of them.
However, in this instance prudence should prevail in managing long term
liabilities. Offering reduced prices can be attractive to customers but
can pose a problem too. Since it is difficult for customers to evaluate
a service, they may use price as a surrogate for quality. Thus they may
equate low or discounted prices with poor quality.
[d] Distribution - Distribution is a major factor in
developing service marketing strategy because of the inseparability of
services from the producer. In view of the relatively low exposure of
takaful to the public, the role and number of the different channels
that is to be made available is vital. The dissimination of information
can make use of the various distribution networks be it through the
agents, brokers, banks, government agencies, cooperatives and others.
[e] Promotion - As intangible - dominant products,
services are not easily promoted. The intangible is difficult to depict
in advertising, whether the medium is print, television or radio.
Service advertising should thus emphasise tangible cues that will help
consumers understand and evaluate the service. The cues may be the
physical facilities in which the service is performed or some relevant
tangible object that symbolises the service itself. Personal selling and
contact with the customer are very important parts of the promotional
program for service firms. Courtesy, diplomacy and the resolution of
customer problems by employees usually are desired features of
Publicity also occupies an important role in
promotional strategy for service companies. Contribution of time and
money to charitable organisations, sponsorship of public events increase
favourable public awareness if properly publicised.
Another important aspect a takaful operator have to
develop in facing the insurance market that is congested with the
various insurance companies is the art of positioning. Positioning
starts with a product. The process of positioning is not that what you
do to a product but rather what you do to the mind of the prospect. In
short, it is a process of shaping the way customers perceive the
The religious compatibility that is directly linked
to takaful products is dear to the heart of many Muslims. Coupled with a
quality service and a competitive price a takaful should not face any
resistance from the Muslim Ummah which comprises of half of the
world’s population. In this form of niche marketing, Islamic values
can positively be used to position oneself in facing the Muslim markets.
On the other hand the excellent service and competitive price plus the
Mudharabah or profit-sharing can also attract non-Muslims to participate
in the takaful ventures.
In positioning your business, one have to be mindful
of many questions and situations. Such as, what position do we own and
what position do you want to own? Whom must you outgun? Do you have the
resources to do it? In positioning, one must understand the role of
words (especially in advertising); how words affect people and
subsequently create change. To uphold positioning we need vision,
courage, objectivity, simplicity, subtlety, patience and willingness to
sacrifice. Finally in this day and age we also need a global outlook.
Takaful coverage even though considered as a niche
product, it can be marketed both through the mass market approach as
well as the segment market method. However, in launching a takaful
business a segmented market approach would be preferred. As a product
that is Syariah - based it would caught the attention and imagination of
the Muslims more than the others. As such, a segmented market approach
is more appropriate.
Segmentation which involves dividing a market into
distinct groups can be of necessity, because a diverse and changing
market can be better satisfied, and communication and distribution
within a market segment can be more focused. The search for competitive
advantage may also called for segmentation. Improved assessment of
competitors in a market segment is possible, as is more precise
knowledge of the market segment. In short, the advantages of
segmentation come from that of specialisation.
Segmenting process involves several steps that
culminate in the selection of the appropriate market segments. The steps
 Identify the total market
 Select segmentation bases
 Determine specific variables within selected
 Assess potential of each segment
 Select the market segments.
In Malaysia for instance where the society is
multiracial in nature it would be most appropriate to segment the market
in accordance to groups that could easily assimilate and rationalise the
philosophy underlying takaful i.e. the Malays which are Muslims and also
the government agencies which are supportive of the cause. By so doing,
we find a niche in the market and as time progressed the segment can be
widened further to cater for non-Muslims as well. Presently, the takaful
concept are being accepted both by the Muslim and non-Muslim alike.
Even though the concept of takaful existed since the
days of the Prophet (s.a.w.), its present day form only appeared quite
recently. Nevertheless, with its universal appeal takaful managed to
grab some piece of the action in countries like Malaysia, Indonesia,
Brunei, Saudi Arabia, Luxemburg and many others. With a proper strategy
and approach, I sincerely believe the takaful concept which is based on
solidarity and mutual understanding will prosper and thrive in the years
to come, Insyaallah.