Car Insurance Literature Review

Car Insurance (Takaful) in U.A.E

Literature Review

I. INTRODUCTION

Insurance is the reasonable transfer of the risk of a loss from one body to another in trade for payment. It is a form of risk management mainly used to attach against the risk of a group uncertain loss. An insurer is a company selling the insurance and policy holder is the person who is buying the insurance policy. The sum of money to be charged for a certain amount of insurance coverage is known as the premium. This study is an attempt to investigate about conventional car insurance and Takaful, for this purpose a literature review has been taken into account. It has found that takaful playing significant role in today’s market but there is a synergy among the development

Cars were relatively fast and risky by that stage, yet there was still no compulsory form of car insurance anywhere in the world. This meant that injured victims would not often get any reward in an accident and drivers often faced significant costs for harm to their car and property. In 1930, according to the road traffic act in United Kingdom a required car insurance scheme was first introduced. In Germany endorsed similar rule/act in 1939. Methods for shifting or distribute risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC (Vaughan, E. J., 1997). The first life insurance policy were taken out in the early 18th century later on in 19th century, accident insurance was introduced, that has operated same as modern disability insurance operates (Encarta, Health Insurance, 2009). Railway Passengers Assurance Company was the first company that offers accident insurance, established in 1848 in England to insure against the increasing number of losses on the emerging railway

Auto insurance sector contributes as the largest sector with highest net premium known as auto takaful sector among the general takaful sector (Ab-Rahman et al. 2008). Authors have concluded from their research findings that half of current university undergraduate students owned or using vehicles and parents still have control on the choice of the auto takaful. The number of undergraduate students who have purchased their own auto takaful is quite considerable. Most of undergraduate students prefer to have auto insurance instead of auto takaful as their parents choose as well. According to authors findings their study is useful for insurance operators to start seeing undergraduate students as a good target market as their future customers because undergraduates will probably own car and they will have full decision making authority concerning the choice of auto