ISLAMIC INSURANCE (TAKAFUL): NON-ECONOMIC

DETERMINANTS INFLUENCING ITS CONSUMPTION IN

LAGOS METROPOLIS, NIGERIA

BY
SAMUEL, OLUWADAMILOLA R

MATRIC.: 120207055

BEING A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF

ACTUARIAL SCIENCE AND INSURANCE, FACULTY OF BUSINESS
ADMINISTRATION, UNIVERSITY OF LAGOS.
IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD
OF B.SC (HONS) DEGREE IN INSURANCE

JUNE, 2016
1

CERTIFICATION
This is to certify that this research project titled: Islamic Insurance (Takaful): Non-Economic
Determinants Influencing Its Consumption In Lagos Metropolis, Nigeria carried out by Samuel,
Oluwadamilola R. with the matriculation number 120207055 under my supervision

----------------------------------

----------------------Date

MR. SOGUNRO, A.B

(Project Supervisor)

---------------------------------Prof AYORINDE, R.A

(Head of Department)

----------------------Date

DEDICATION
This project is dedicated to the Almighty Allah for his goodness, mercy, love, and care for seeing
me through the course of my programme. To him be glory and honour for all eternity.

ACKNOWLEDGMENTS
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With gratitude to the Almighty God, who directed my path, gave me wisdom, knowledge &
understanding, throughout my academic journey and Success for the completion of this course to
the end.
I also say a big thank you to my wonderful, patient and understanding supervisor Mr. Sogunro A.B,
who despite his tight schedule took his time to treat and make corrections where necessary, I am
really grateful, thank you sir.
A beautiful thanks to my Parents, Mr & Mrs Emmanuel Mary Edokah,, for their relentless support
spiritually, financially, morally and otherwise.
Thanks to my siblings for their vital role in the pursuit of my dreams, with my unreserved
appreciation to my lovely brother and sisters, Edokah Daniel, Edokah Agnes, Edokah Anthonia, &
Edokah Mary For love, prayers and financial support and also making sure I attain my set goals.
God Bless You Richly.
I also want to thank my Beautiful friends in the Faculty of Business Administration and the
University at large, thanks for the wonderful and unforgettable years of friendship who has one
way or another influenced me positively,..; to mention a few. I love you all.

ABSTRACT
Islamic insurance is a substitute of conventional insurance. It is an option for people whose
religious belief has discouraged them to patronize risk management products that are
characterized with elements of uncertainty, interest rate and other non-religious complied
principles. The studys design is survey research in which the survey method is employed using
questionnaire as the means for collecting primary data of the study. The researchs sample size is
325 represent actual and potential customers of Takaful operators in Lagos Metropolis. The study
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has analyzed the data using chi-square statistical tool. The findings of the study indicate that all
the four (4) Null Hypothesis formulated are rejected. The results have discovered that the
independent variables: public awareness of Takaful services, public attitude, public
perception, public trust and confidence upon Takaful operators, have significant effect on the
dependent variable (Takaful services consumption) in Kano Metropolis. It is therefore
recommended: that all the stakeholders in Islamic insurance (Takaful) businesses shall put hands
together and harness the available resources to promote the business; that the stakeholders shall
embark on the attitudinal change campaign aims at making public to understand the need for
purchasing Takaful services as a means of employing risk management and that the existing
operators shall have to do a lot in creating a unique identity which can make the Takaful so
different from conventional insurance so as to establish favorable perception of the subject
matter; that there shall be needs for creating business trust and confidence between the
public and the operators; and the stakeholders in the industry shall provide the needed capital
investments which can enable the Takaful business to be well established and be capable in
winning more customers. This would make the Takaful operators capacity to be very strong and
strong capital base can enhance the competences of the players and their competitiveness in the
industry.

TABLE OF CONTENTS
Title Page

Certification

ii

Dedication

iii

Acknowledgment

iv

Abstract

v
5

Table of Contents

vi

CHAPTER ONE: INTRODUCTION

1.1

Background to the Study

1.2

Statement of the Problem

1.3

Objectives of the Study

1.4

Research Questions

1.5

Research Hypotheses

1.6

Significance of the Study

1.7

Scope and Limitations of the Study

1.8

Definition of Takaful Term

References

CHAPTER TWO: LITERATURE REVIEW

2.1

Introduction

2.2

Origin of the Islamic Insurance (Takaful)

2.3

Conceptual Framework

11

2.4

General Determinants of Product/Service Consumption

15

2.4.1

Empirical Evidences on Takaful Products Demand

18

2.4.2

Public Awareness of Takaful Services and Takaful Services.

21

2.4.3 Public Attitude of Takaful Services.

22

2.4.4

Public Perception of Takaful Services.

23

2.5

Challenges of adopting Takaful Insurance

24

2.6

Empirical literature review

26

References

29

CHAPTER THREE: RESEARCH METHODS

32

3.1

Introduction

32

3.2

Research design

32

3.3

Population of the Study

33

3.3.1

Sample Size and Sampling Technique

33

3.5

Research Instrument

33

3.5

Reliability and Validation of Data Collection Instrument

34

3.5.1

Reliability

34

3.5.2

Validation

34

3.6

Procedure for Data Collection

35

3.7

Method of Data Analysis

35

3.8

Limitation of the Methodology

35

References

37

CHAPTER FOUR: DATA ANALYSIS AND PRESENTATION OF RESULTS

38

4.1

Introduction

38

4.2

Analysis of Respondents According To Their Socio-Demographic Characteristics

38

4.3

Analysis of Questionnaire According to Research Question

41

4.4

Test of Hypotheses

50

CHAPTER FIVE:

SUMMARY, CONCLUSION AND RECOMMENDATIONS

54

5.0

Introduction

54

5.1

Summary of Findings

54

5.2

Conclusion

56

5.3

Recommendations

58

Bibliography

60

Appendix

63