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Is the high performance organization framework applicable to Takaful insurance companies?

Purpose – Islamic finance is an interesting field of research, as it represents an alternative to conventional finance for Muslims. It is a way of conducting finance based on the principles of Islam and prohibition of interest. Islamic finance can be divided into two areas: Islamic banking and Islamic insurance (Takaful). This paper aims to describe a research study on the applicability of the high-performance organization (HPO) framework on Takaful insurance companies and whether it can improve their performance in a sustainable way.

Design/methodology/approach – The factors and characteristics of the HPO framework are theoretically matched with the characteristics of the Takaful industry for evaluating whether these reinforce or weaken each other. The outcome of this matching process gives an indication of whether it is easier or more difficult for Takaful insurance companies, compared with conventional companies, to apply the HPO framework and transform themselves into HPOs.

Findings – It can be theoretically expected that, out of 35 HPO characteristics, 10 will be easier to strengthen in Takaful organizations compared with conventional organizations and 9 will be more difficult, and for 16 characteristics, there will be no difference. These results suggest that, most likely, it does not make a difference whether UAE Takaful organizations or conventional organizations implement the HPO framework, they will probably need roughly the same amount of effort to make a successful transition.

Research limitations/implications – In a follow-up study, the HPO framework will be applied at several Takaful insurance companies to evaluate the operation of the framework in practice.

Originality value – To date, no studies of the HPO framework and HPOs have been conducted at Takaful insurance companies in the UAE. Thus, by theoretically matching the HPO framework with Takaful organizations, the study fills a gap in the management literature regarding high-performance improvement techniques for Takaful organizations.

Keywords – United Arab Emirates, HPO, Takaful, High performance organizations, Insurance

Paper type – Research paper

Introduction: Is the high performance organization framework applicable to Takaful insurance companies?

The United Arab Emirates (UAE) is considered to be the largest and the most competitive insurance market in the Gulf Cooperation Council Step into another world - Takaful insurance(GCC) region. The insurance sector is highly correlated with the gross domestic product of the country, and over 60 firms are currently offering conventional and Islamic insurance (Alpen Capital, 2013). Islamic insurance, otherwise known as Takaful insurance, is insurance provided on an Islamic basis. It is based on the concept of helping one another, and it therefore constitutes a cooperative or mutual insurance. It is founded on mutual cooperation by a community that pools together resources so that members of the community can be assisted in times of need caused by casualty or loss. “Takaful”, derived from a verb, means that people provide support to one another, and hence, it entails ideas of interdependence, love for one another and solidarity in society. Farooq et al. (2010, p. 68) defined Takaful, from an economic point of view, as:

A mutual guarantee or assurance based on the principles of al-Aqd (i.e. contract) provided by a group of people living in the same society against a defined-risk or catastrophe befalling one’s life, property or any form of valuable thing.

Technically, the difference between Takaful and conventional insurance is…

Read the full research paper from Journal of Islamic Accounting and Business Research in PDF!

Marco Schreurs

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