Journal article Open Access
The Takaful industry has experienced significant development in Malaysia. It is a substantial component in the Islamic finance system and has continued to play an important role in supporting the economic and social development of this country. Bank Negara Malaysia reports revealed the performance of the Takaful industry in Malaysia is strongly contributed by family Takaful business compared to the general Takaful business. However, this industry is facing a problem of retaining its existing participants, particularly in family Takaful. It is observed within five years, between 2013 and 2017, there was always the number of participants who surrender their family Takaful certificates. The increasing number of family Takaful participants’ surrender has affected the slower rate of Takaful penetration in Malaysia. It is vital for the Takaful industry in Malaysia to focus on participants’ retention by understanding loyalty tendencies. Hence, the objective of this study is to examine the effect of perceived fairness and trust on loyalty in family Takaful. This study also aims to examine the mediating role of trust which can help extend the current understanding of loyalty. The findings of the study expected that perceived fairness will have a significant effect on trust and loyalty. Similarly, trust also expected to have a significant effect on loyalty. Additionally, trust is expected to mediate the relationship between perceived fairness and loyalty. This study will contribute to the existing literature as a reference to better understand the loyalty tendencies, especially in Takaful industry settings.
6. The Effect of Perceived Fairness on Trust and Loyalty.pdf