Efficiency in the Takaful Insurance Industry

Many studies have focused on the insurance industry in the US and other developed countries. Few studies have investigated the efficiency and organizational form in developing countries. This is particularly true for the Takaful insurance industry. Takaful insurance is mutual insurance based on Islamic principles. The rapid growth of Takaful insurers in many countries around the world and their long existence make it important to examine them. Chapter 1 discusses the history and the practice of insurance during the time of ancient Arabs tribes. Chapter 2 investigates economies of scope and agency problems for Takaful insurance companies operating in 19 countries. I test the conglomeration hypothesis versus the strategic focus hypothesis. Chapter 3 investigates the relationship between insolvency risk and efficiency for Takaful insurers. I measure the insolvency risk by computing the z-score which measure distance to default. Chapter 4 analyzes the coexistence of Takaful and conventional insurance. I test the expense preference hypothesis and efficient structure hypothesis.