Optimization of solvency margin in family takaful and life insurance institutions in Malaysia: application of data envelopment analysis

Musa, Musliza and Alhabshi, Syed Musa and Haron, Razali (2022) Optimization of solvency margin in family takaful and life insurance institutions in Malaysia: application of data envelopment analysis. Journal of Islamic Accounting and Finance Research, 4 (1). pp. 155-182. ISSN 2715-0429 E-ISSN 2714-8122

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Abstract

Purpose-The purpose of this paper isto present the findings of the study on optimizing solvency margin in family Takafuland life insurance institutions in Malaysia.Method -The population of this study is familyTakaful and life Insurance Institutions in Malaysiaduring the period2010 -2019. The selection of samples in this study uses thepurposive sampling method and selected 11 family Takafuland 14 life Insurance Institutions. The data wereanalyzed usingData Envelopment Analysis.Result-The results showed that for from 2010 to 2019, the family Takaful operators’ efficiencies areimproving, whilst the life insurers have become less efficient even though their efficiency score is higher than the family Takafuloperators. In terms of the optimum size (i.e., scale), the results are reversed which means that the family Takaful operators are still not at the optimum size but once they reach there, they could improve their efficiency substantially. However, for bothfamilyTakafuloperators and life insurers, 2019 seems to dip their efficiency in terms of pure technical and also scale.Implication-The results of this research open a new way of measuring the efficiency of family takaful and life insurance not only in Malaysia but can be generalized to measure the efficiency level of family takaful and life insurance in general.Originality-This research is the first study that used the combination of inputs and outputs specifically for the family Takafuland life insurance institutions in Malaysia

Item Type:	Article (Journal)
Uncontrolled Keywords:	family takaful; life insurance; efficiency; solvency
Subjects:	H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Institute of Islamic Banking & Finance (IIiBF)
Depositing User:	Dr. Razali Haron
Date Deposited:	27 Jul 2022 11:00
Last Modified:	27 Jul 2022 11:00
URI:	http://irep.iium.edu.my/id/eprint/98937

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