Developing a Micro-Takaful Framework in Brunei Darussalam

Abstract

Micro-Takāful is the provision of insurance services to the low-income people. It is of supreme importance for protecting poor lives against accidents, threats and other types of risks. Like any kind of insurance, Micro-Takāful can cover different risks to family/life, health, property/fire among others. This research aims at developing a Micro-Takāful framework in Brunei Darussalam by exploring six main areas of a Micro-Takāful scheme: (i) Micro-Takāful products; (ii) Micro-Takāful providers; (iii) Micro-Takāful funds mobilization; (iv) Micro-Takāful contracts; (v) Sharī’ah compliance mechanisms; and (vi) role of the Government and Takāful operators. In order to explore and explain the topic effectively, a mixed-method approach was adopted. As part of the quantitative research strategy, (1) a survey questionnaire was used with the low-income households. On the other hand, (2) in-depth interviews were conducted with Takāful operators, Government officers and Sharī’ah scholars. The findings in this study interestingly reveal that there is a potential for a Micro-Takāful scheme in Brunei Darussalam. The overall research findings reveal that low-income households are willing to buy insurance products and pay for them, the products can be provided by Takāful operators, MFIs and NGOs, zakāt can be the main sources of funds, Tabarru’ can be the best contracts for the scheme, Sharī’ah compliance mechanisms for IFIs can be implemented on Micro-Takāful scheme, and finally, the Government is ready to support the scheme. Based on the revealed findings the study finally offers and formulates some recommendations to make a Micro-Takāful scheme successful when introduced in Brunei Darussalam.