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Measuring the efficiency between conventional general insurance and general Takaful in Malaysia

Cheah, Chee Keong (2014) Measuring the efficiency between conventional general insurance and general Takaful in Malaysia. Masters thesis, Universiti Utara Malaysia.

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One of recommendations to achieve the vision of The Financial Sector Blueprint launched by Bank Negara Malaysia (BNM) in year 2011 is to intensify the internationalization of Islamic finance through regional and global takaful/ retakaful outreach in Malaysia. While these discussions continue, the performance, particularly in the general or non-life sector whether has consistently achieve a productivity level that outpaced the conventional general insurance in Malaysia. This thesis examines the efficiency of general insurance and takaful industry in Malaysia during the period 2009 to 2013. A total of 31 of general insurance and 8 general takaful operators are selected in this study which cover all the firms in the general insurance industry. The inputs of claim expenses and management expenses, outputs of premium/ contribution earn and investment income are selected based on approach consistent with several literature to measure the efficiency scores. This study employed a non parametric approach which is Data Envelopment Analysis (DEA) base on input orientation measurement to estimate the technical efficiency, pure technical efficiency and scale efficiency to compare the difference between both industries sector. The model results based on constant return to scale (CRS) and variable return to scale (VRS) to assess the efficiency scores between both industries sector. The findings indicate that there is a significant difference in efficiency between takafui industry and insurance industry where that takaful has higher efficiency than conventional insurance throughout the year 2009 to 2013. The finding shows that the general takaful industry improves of their efficiency compare with previous literature where takaful have lower efficiency compare to conventional insurance. The Malmquist productivity index shows a significant improvement in overall productivity of both industry sectors. The study suggests diversified and more selective of risk business while underwrites the risk portfolio in general insurance and takaful industry in Malaysia reduce the claim ratio

Item Type: Thesis (Masters)
Uncontrolled Keywords: DEA, Efficiency, Insurance, Islamic, Takaful
Subjects: H Social Sciences > HG Finance
Divisions: Othman Yeop Abdullah Graduate School of Business
Depositing User: Mr. Badrulsaman Hamid
Date Deposited: 30 Jun 2015 02:46
Last Modified: 14 Apr 2016 03:42
URI: http://etd.uum.edu.my/id/eprint/4715

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