81
Fire Takaful covers any loss or damage to property caused by fire or other identified threats.
There are four types of Takaful under this plan, namely basic fire Takaful, house owners’ Takaful,
householders’ Takaful and consequential loss Takaful/business interruption Takaful. Loss of or
damage to buildings such as factories, shops, offices, private dwellings and the like; as well as
the buildings’ contents such as furniture, fixtures, fittings, office equipment, stocks-in-trade,
personal effects and household goods are covered under Fire Takaful. Normally such losses or
damages may be caused by fire, lightning and explosion of gas used for illuminating and
domestic purpose.
Personal Accident Takaful is an annual plan that offers compensation in the event of death,
disablement or injuries arising only from an accidental cause. Participation in this Takaful can
be personal or group plan for a family. Personal Accident Takaful is also available for short
durations, should any accident occur during one’s travelling abroad.
6.1.6. Issues and Challenges
The Malaysian insurance and Takaful markets face several challenges to achieve its potential
despite the robust growth realized over the years. Though the challenges are unique to both the
insurance and Takaful sectors, the emphasis is placed on the Takaful sector. The major
challenges identified are as follows:
1. Lack of Awareness. In Malaysia, lack of awareness of Takaful products hinders the
development of the Takaful market (Salleh & Laksana, 2018). According to the Malaysian
Takaful Association, there have been various forms of campaigns and programmes to
promote Takaful products. These include media plan, community engagement, lecture
series and collaboration with other organisations. Lectures are also conducted at several
local universities throughout the year to enhance awareness about Takaful (MTA, 2018).
2. Low Penetration Rate. The Takaful penetration rate in Malaysia is still low, especially
among the bottom 40 household income segment. Malaysians are categorised by income
levels into three groups: Top 20% (T20), Middle 40% (M40) and Bottom 40% (B40).
According to the Malaysia Department of Statistics (Yeap, 2019), the mean and the median
income for T20 is MYR 13,148 and MYR 16,088, respectively. For the M40, the median and
mean household income are registered at MYR 6,275 and MYR 6,502 respectively. Lastly, for
the B40 the mean and median income are registered at MYR 3,000 and MYR 2,848
respectively. According to BNM (2018) only 30.3% of the B40 group has life insurance and
Family Takaful coverages.
3. Inadequate Technology Capabilities. The advancement in technology has changed the
behaviour of people in the way they save money in banks. However, there seems to be a little
change in people’s behaviour relative to the Takaful market. According to Ernst and Young
(2015), the TOs need to invest in appropriate technology platforms to have a good
relationship between the customers across products and locations. Malaysia is still
struggling to catch up with developments in the insurance technology sector.