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Efficiency Analysis of Malaysian Family Takaful Using Stochastic Frontier Approach

Salsabila, Labibah and Nasution, Zubaidah (2022) Efficiency Analysis of Malaysian Family Takaful Using Stochastic Frontier Approach. In: The 4th International Conference on Business and Banking Innovations (ICOBBI) 2022.


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Malaysia has the most extensive family takaful market globally with a growth rate of 16 percent in 2015. Takaful development in Malaysia should be assessed to govern better improvement for insurance industry. This research aims to examine the efficiency level of 11 family takaful in Malaysia from 2017 to 2020 using Stochastic Frontier Approach (SFA) method involving management expenses as an input, net benefits and claim, and investment income as output. This examination will investigate the effect of management expenses and net benefits and claim to investment income using regression test in SFA. The result shown that Malaysian family takaful is considered less efficient from 2017 to 2020, with production efficiency level average at 57.38 percent. It indicates that takaful is inefficient in claims payment and generating investment income. Several firms have efficiency levels up to 80 percent, such as Zurich Takaful Malaysia Berhad and FWD Takaful Berhad. The most significant growth happened on Etiqa Family Takaful which increased by 30.92 percent from 2017 to 2020. The author finds that management expenses negatively affect investment income, while net benefits and claims give positive impact. However, both variables are not significant enough to influence investment income. Keywords: Malaysia, Family Takaful, Efficiency Level, Stochastic Frontier Approach

Item Type: Conference or Workshop Item (Paper)
Divisions: ICOBBI (International Conference of Business and Banking Innovations)
Depositing User: Perpustakaan Universitas Hayam Wuruk Perbanas Surabaya
Date Deposited: 27 Jun 2022 04:39
Last Modified: 28 Jun 2022 03:43

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