Institute of Islamic Banking

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Demand side factors of insurance and Takaful
(University of Management and Technology Lahore, 2017) Arif, Maimoona
Risk is the main reason of psychological and economic stress in different countries but conventional (or Islamic) insurance is a mean to transfer (or share) risk. Insurance/Takaful is one of the risk transfer mechanism which transfer (or share) risk from policy holder to insurance operator. The aim of this study was to examine the key economic and socio-economic determinants for the demand of conventional/Islamic insurance in selected GCC and ASEAN countries. The data was taken on yearly basis from 2004 to 2016. OLS, Fixed and Random effect models were employed to examine the impact of economic (inflation, income, unemployment rate and interest rate) and socio-economic (dependency ratio, life expectancy and education level) on the demand for conventional and Islamic insurance (net premiums). The findings of the study concluded that life expectancy, per capita income, education, interest rate, dependency ratio found to be statistically significant in case of conventional insurance. However, only income and life expectancy found to be statistically positive significant, while dependency ratio and inflation found negative yet significant in case of demand for Islamic insurance.