One instance of the growing economy and people changing lifestyles can be emphasized towards increasing spending as well, be it for household's items, health care and the life. Such scenario also calls for increasing needs of insurers in the market to attend to the needs and requirement of the middle class population in the form of providing high-end and cost-effective insurance to the consumers. From the given case scenario, one particular point is clear that in Malaysia for example, middle class households are increasing by the day. Thus, the need of the time felt bankers and financial providers are to provide major incentive to consumers in the form of insurance that is cost-effective in strengthening the financial market.
One important point to note as per case study scenario was that commercial medical and health insurance, as well as medical and health takaful are expected and is still growing and spiraling. Hence, in that capacity, the role that insurance and takaful industry would play in the Malaysian economy would be significant to an extent that it would also help in strengthening the development of market, given that the Takaful and Insurance industry has made and is an important components of the private voluntary pension market and also support a strong financial system which is crucial to the social, and economic development of Malaysia.
Report statement and issue
Considering these aspects and features of the Malaysian economy in particular, and in respect of the financial market in Malaysia, the attempt of this work is thus to answer major question related in context of the above summary, which is stated as follows.
What are two fundamental similarities and two similar differences between commercial (medical & Health) insurance and takaful (medical & Health) insurance?
Identify and evaluate any two condition that are needed in order to grow takaful (medical & Health) insurance business in Malaysia.
Identify and evaluate any two condition that are needed in order to grow takaful (medical & Health) insurance business in UAE.
Hence, it should be clarified that the attempt of this work overall is to relate and trace the significant aspects of the given case scenario, which we discuss accordingly to their subheading as stated concurrently below one after the other.
Commercial Vs Takaful (Medical and Health) Insurance: Similarities and Difference
To begin with in this context and to discuss the matter therein, we feel that in recent times financial market in Malaysia have mushroomed and spiraled, especially in the backdrop of solid insurance and takaful industry that have made their presence in the country. To emphasize on this notion, we are of the opinion as well that the market and industry specific to takaful and commercial insurance in Malaysia posits many similarities and differences, which we will discuss accordingly.
Commercial Insurance in Malaysia
One important point to note related to commercial insurance in Malaysia and as available news reports and the highlights that relates to is the fact that, "Financial market in Malaysia did and has played a significant role in the last couple of years in the development of the social fabric of the country. What is crucial to these developments is the fact that, Malaysia insurance is part of the 1999 WTO Financial Services Agreements, which have been crucial to the financial buildup within the social and economic fabrics of the country." (EconomyWatch)
These eventual turn of events is where we can derive the essence of insurance, that is to say, commercial insurance industry in Malaysia, to confer some features of it, and conclude accordingly.
Takaful Insurance in Malaysia
In another part of this discussion, we now come to the point to relate some of the features of the Takaful industry in Malaysia.
What we know of the takaful insurance is that it is an Islamic banking and financial services that have made its presence in Malaysia, and one major contributor in strengthening the financial market in the country apart from the commercial insurance. As per available news reports, "it mentions that takaful is a mushrooming business in Malaysia, with a huge global market cap as well. Together with it, as per analyst estimates, the growth of takaful in Malaysia alone is pegged at US $ 900 million, and is considered to be the second largest market next only to Saudi Arabia." (BI-ME, 2010)
Hence, to derive the nature of such developments we feel that the tactful and commercial insurance business in Malaysia is a direct juxtaposition of the recent development that has taken roots in the country. In that capacity, we feel also that it would be prudent that certain backgrounds between the similarities and difference of the takaful and commercial insurance is also exemplified, which is as follows.
Similarities between Takaful Insurance and Commercial Insurance
Major point of similarities between takaful (health and medical) insurance and that of commercial (health and medical) insurance can be emphasized upon the fact that:-
Both are insurance providers in the first instance, that also which relates to factor attached to medical and health insurance.
In the second instance, the similarities between Takaful and commercial insurance can be emphasized to the fact that both derive and posit social benefits, and support the financial market through their presence.
Difference between Takaful Insurance and Commercial insurance
Major difference between takaful and commercial insurance are:-
Takaful operates in the principle of the Shariah law, however, the case is not so when it concerns commercial insurance.
Secondly, in takaful "there are usually four parties involved, namely - participant, operator, insured, and beneficiary. However, in a commercial insurance, the case is otherwise, which derives the major difference between these two.
Assessment of Takaful (Medical and Health) Insurance in Malaysia
As far as takaful insurance business goes, most of it is based on the principle of the Shariah law. That is to say, Islamic principles that take into account all the peculiarities of the terms and conditions "in accordance to the Islamic doctrine, which are mostly adopted by Islamic insurance operator today." (ESMAN, 2007)Hence, what we can assimilate from this fact is that the takaful operational conditions are largely based on the principle of the Islamic law. Thus, this is what we feel is a direct insistence of the conditions that are needed to grow takaful business in Malaysia. Apart from it, facilitating a social contributory role in context of the Shariah principles in the social makeup of major Islamic followers are an added conditions that calls for attention. In addition, since the takaful insurance operating in Malaysia derives the direct "influence of Shariah principles, as it has evolved since it made its presence in 1984 in Malaysia, and currently, takaful insurance is one large fish in the Malaysian market, which is comprehensive and comes as the biggest alternatives in the market through its insurance products that attends to raising middle class households needs in Malaysia, especially in medical and health insurance products." (ESMAN, 2007, pp. 15-17)
What is particular to takaful business in Malaysia can be emphasized to the recent reports in the media which relates that takaful insurance in particular is gaining a solid holding in Malaysia. One important point to note again is that "takaful insurance market in Malaysia is considered to be impressive in terms of growth and registers readily with the public, which is estimated to be close to US $900 million, a point to note, apart from the fact that Malaysia comes as the second largest market holding for takaful." (BI-ME, 2010) Hence, from this fact and assimilation of it, we can derive the substantial value that takaful and its presence in Malaysia is tremendous. Besides the term and condition of takaful insurance in Malaysia also designate and offers to its consumers the simplistic principle of the Islamic laws, be it in terms of products, services and anything that has to do with insurance operation, regulation and its managements in the country.
Moreover, what we feel is that insurance regulation in Malaysia has been befitting to takaful growth and its progression. What analyst felt is that "generating profitability for takaful business is still faced with many dangers and challenges, in terms of market volatility, given the presence of other players and financial service provider. Although, conditions as far as regulation and terms in the country are flexible, which takaful operators comply with directly, that have translated itself into progressive and favorable tide in the Malaysian market, especially in terms of posted growth and business, which financial analyst feels is driven by the components of better underwritten results." (BI-ME, 2010)
Hence, what we can accumulate from these insistence and assessment of it is that takaful is making a good point as far as business and its role in the Malaysian market is concerned. Together with it also, one important point to relate again is that takaful business also have been crucial in facilitating and strengthening the financial market in Malaysia for the starts. Such instances are a major boost for the economic development of the country to tread its course for developments in major arena of the social fabric as well.
What experts feel is that the presence of takaful insurance in Malaysia presents many opportunities to meet the market gap being felt, in context of the spiraling growth and demands of the market due to increasing middle class consumers in Malaysia. The popularity and business presence of takaful in Malaysia also can be emphasized to the fact that "it allows participants in particular to benefit from two point, plus the opportunities that comes with it is also huge and tremendous, given the monetary benefits in the first instance, and the profit sharing basis, which is a huge hit and registers readily with Malaysian middle class household that meets their needs accordingly in the most befitting way." (Anonymous, 2009)
Thus, what we can conclude is that, market gap in context of demands in health and medical insurance in Malaysia is also met with as far as insurance is concerned, especially within the arena of medical and health insurance that takaful insurance provides, and one point that we can conclude that the course of takaful insurance in Malaysia is smooth sailing, yet challenges are there, which calls for takaful operators and insurance providers to up their game as a measure to make its holding and market presence a huge impact to the social and economic development of Malaysia.
Assessment of Takaful (Medical and Health) Insurance in UAE
In any given assessment of the term that relates to this point, we are of the opinion that the presence of takaful (medical and health) insurance within the backdrop of Islamic social setup directly can derive its influence and popularity. As the case also relates to UAE, there is no denying the fact that takaful has a huge popularity in UAE, given the Islamic setup of the economy and in particular of the facts that takaful and its operation in the global arena and in UAE it takes into account Shariah principles.
However, there are insistences as it relates that in "the UAE takaful insurance is subjected to certain and distinct modalities and regulations. What is peculiar to these conditions can be emphasized to the facts that the UAE insurance authority boards have a profound control of the takaful in UAE in terms of regulations, distinct in a sense that regulation is different from conventional insurance and its governing." (Hodgins, 2010)
In context of this media reports and assimilating the same, we feel the necessary conditions for starting takaful insurance in UAE also is clear and precise. Besides, it is also important to note that "takaful operators in UAE also are to comply directly to UAE federal law that is specific to insurance providers in all insistence, wherein the takaful regulation as it is with UAE must be read in conjunction with Insurance law applicable in UAE," (Hodgins, 2010) which we can succulently conclude posits the elements and that features that defines the conditions that are needed to grown takaful (medical and health) insurance in UAE.
