Statement of the Problem Islamic Insurance (Takaful)
In spite of the significance of commercial insurance, in human life, there exists a low level of insurance culture among Nigerians (Yusuf, Gbadamosi & Hamadu, 2009). Historically, religion has provided a strong source of cultural opposition to life insurance. Because; many religious people believe that reliance on life insurance is resulted from distrust of God’s protective care.
This might have been among the reasons (because, many Nigerians have respect very much for their religion and it has become part of their culture) that modern insurance is not popular in African countries (Yusuf et al, 2009).
In addition; the opposition to conventional commercial insurance enjoys much more widespread support in the Muslim countries. Conventional insurance as argued by Swartz & Coetze (2010) is an agreement whereby an insurer undertakes (in return for the agreed premium) to pay a policyholder an amount of money (or its equivalent) on the occurrence of a specified event.
The specified event must have some elements of uncertainty about it. The uncertainty may either lie in the fact that although the event is bound to happen in the ordinary course of nature; the timing of its occurrence is uncertain; or the fact that the occurrence of the event depends upon accidental causes, and/or the event, therefore, may never happen at all. These features are what have disqualified the service to comply with the shariah injunction.
Scholars have discussed the prospect of Takaful (Bilal, undated; Alamasi, 2010; Rahman, Yusif & Bakar, 2008 and Redzuan, Rahman & Aidid, 2009). Yusuf (2006) sees an interest- free insurance scheme in the developing nations to have gained the support and patronage of the Muslim population. Also Osoko (1992) cited in Yusuf, Gbadomosi &Hamodu (2009) argues that there exists for long time before the advent of commercial insurance, an institution of social insurance.
Social insurance institution evolves through the existence of extended family system and social associations such as age groups, naming ceremonies, marriages etc. It operates by means of providing cash donations etc, to help members of extended family or communal associations who suffer a mishap. This social insurance which is very common among Nigerians has resembled Takaful insurance.
However, the long existence of social insurance institution has been determined to have no significant effect on building a strong insurance culture among Nigerians (Yusuf, Gbadamosi
& Hamadu, 2009). Until now, there is no, to the knowledge of the researcher, study
conducted to assess the institution of Islamic insurance (Takaful) to determine its position with regard to the public attitude/Islamic insurance culture and service patronage by Nigerians. Therefore, this study is aimed to explore non-factors determining Takaful services consumption in Kano Metropolis, Nigeria.
The emergence of Islamic insurance which has considerable features that suit the religious culture of the majority of people in Kano Metropolis; it would expectedly gain high support and patronage from the populace. But, the preliminary survey by the researcher has shown otherwise. Conceptual study by Yusuf (2006) predicts high support and patronage of Islamic insurance products among Muslim population.
The empirical findings of Redzuan et al (2009), also, state that income level of a household is a strong predictor of family Takaful consumption in Malaysia. In Kano Metropolis, however; despite being a commercial center; many people whose income level can be said to be substantive; are not keen on Takaful service patronage.
The major problems which might have marred the performance of Takaful operators in Kano Metropolis are their inability to identify the right and relevant factors to be considered when marketing the services in the state.
The relevant marketing and consumer variables theoretically presented by the study are: building strong public awareness of the Takaful services; public attitude towards the Takaful services; public perception on the Takaful services; public trust and confidence on the Takaful operators; and capacity and competences of Takaful operator to sell the products in the market.
These go in line with the assertion which has stated that Islamic Insurance products (Takaful) are unsuitable to be sold under the branch, division or window of conventional insurance companies. Because, it is observed that the conventional insurance has already enjoyed negative connotation, especially among
Muslim community. Therefore, the existing operators might not have had the necessary capacity and competences to build the trust that the products are Islamic and are different from the conventional insurance which is declared unlawful by the religion of Islam. These factors; however; are already conceptually identified by many studies (Ali; undated; Billah, undated; Zelizer 1979 cited in Yusuf, Gbadamosi & Hamadu, 2009 and Akhter, Akhtar & Jafri; undated). This study, therefore, aims to determine these factors empirically.