Determinants of Takāful and conventional insurance demand: A regional analysis

In this study, we focused on analysing and differentiating the determinants of conventional insurance and Takful demand across ASEAN and Middle East Regions. We used panel data econometrics on a sample of 14 Asian countries having both conventional insurance and Takful over the period 2005-2014. We applied fixed and random effect regression models to assess the impact of macroeconomic and demographic factors on conventional insurance and Takful demand. Income and financial sector were found to have significant positive impact on insurance demand across all regions. On the other hand, dependency ratio was found to be negatively affecting Takful demand across all regions while inflation shows positive impact. Urbanization was found to be significant positive impact on both conventional insurance and Takful demand. Financial sector development positively triggers the insurance and Takful demand across ASEAN region, while it triggers conventional insurance demand only in Middle East Region. Education shows negative impact on Takful demand across both regions while it shows positive impact on insurance demand in Middle East. The study recognises the key role of urbanization and education in creating awareness to enhance Takful demand in large populated countries of ASEAN and South Asia.