Regulation on the Domestic Insurance Industry (Dissertation Sample)

The Impact of Regulation on the Domestic Insurance Industry of Brunei Darussalam with Particular Reference to Islamic Insurance (Case study on Etiqa Insurance Company)
Haji Zakariah, Mona Haliza
Msc Insurance and Risk Management
Cass Business School
City University
United Kingdom
July 31, 2015
Abstract
The research paper evaluated and determined the challenges that result from regulations of the insurance industry with specific interest on Brunei Darussalam. Of particular interest was the Takaful industry that is the most recent introduction to the insurance market. Since regulations are mostly brought into play by the government or oversight authority that oversees a specific sector, most industry players think those currently in place are too stringent for fair business operations. Research results show that the strict regulations brought into play to curb irregularities that come with insurance issuance also result to challenges that make doing business in the insurance industry seem difficult. Considering the formation of BITA, that is the insurance regulatory body in Brunei Darussalam, most insurance companies had a level playing field and uniform terms to conduct business. The pricing and policy conditions that were introduced in the specific Takaful orders ensured that the life and non-life insurance industry changed excluding some players (conventional) and accommodating others (Takaful) favourably.
The Takaful field deals with covering of risks. Takaful insurance regulation is determined by several factors with religion playing a major role. This is because the law that is used by the insurance companies in risk repayment is Islamic. Considering all the players involved, the regulations have to be introduced regularly, in accordance to the changing economic times being experienced in Brunei Darussalam. In the process of regulations implementation, challenges have to be experienced. Regulatory challenges, therefore, have continuously been experienced in the insurance life and non-life fields due to the dynamic business environment and the changing government structures. The research undertaken determined the effect of regulations on the Takaful insurance market by BITA on non-life insurance and the extent to which it affects the insurance market in Brunei Darussalam either on the Takaful part or conventional part.
Declaration
While writing this paper, I have cited all published sources used as follows:
• Direct quotations are marked and their sources clearly documented
• Sources for summarised and paraphrased material are well documented.
• Documentation of the sources is provided in the reference list.
• I have used the Harvard author-date system of documentation.
Internet sources included have also been cited using the same manner.
I may have taken advice from others while writing, but the paper is my own original work and is neither copied from another source without proper acknowledgement, nor written for me by another person, in whole or in part.
Name: Haji Zakariah………………………… Mona Haliza………………………………….
Signed: ………………………………………….. Date: ……………………………………..
Acknowledgement
First of all I would like to thank the Almighty God for seeing me through my studies to the point I am right now.
I would like to express my heart felt gratitude towards my lecturer, Mr Derek Athkin who always showed us how it is done. To my family, friends, and colleagues, I am so grateful and have no words to dictate how I feel for the support you have been offering me up to this moment. Thank you so much and may God abundantly bless you.
Dedication
I would like to humbly dedicate my work to my family, friends, and colleagues. A special dedication goes to my parents who have brought me through despite the hustle.
I would also like to dedicate it to my school family i.e. the lecturers to the students and all other stakeholders that played any part in my research.
To my friends and colleagues kindly receive my special thanks for the support that you have been offering me.
Table of Contents
 TOC \o "1-3" \h \z \u  HYPERLINK \l "_Toc428022358"
Abstract  PAGEREF _Toc428022358 \h
2
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Declaration  PAGEREF _Toc428022359 \h
3
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Acknowledgement  PAGEREF _Toc428022360 \h
4
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Dedication  PAGEREF _Toc428022361 \h
5
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Table of Contents  PAGEREF _Toc428022362 \h
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Chapter One: Background and Introduction  PAGEREF _Toc428022363 \h
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Study Background  PAGEREF _Toc428022364 \h
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Problem Statement  PAGEREF _Toc428022365 \h
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Purpose of the study and research questions  PAGEREF _Toc428022366 \h
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Structure of report and conclusion of background  PAGEREF _Toc428022367 \h
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Chapter Two: Literature review  PAGEREF _Toc428022368 \h
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Introduction  PAGEREF _Toc428022369 \h
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Literature review  PAGEREF _Toc428022370 \h
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Chapter Three: Research Methodology  PAGEREF _Toc428022371 \h
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Introduction  PAGEREF _Toc428022372 \h
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Research Philosophy  PAGEREF _Toc428022373 \h
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Research design  PAGEREF _Toc428022374 \h
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Research Methodology  PAGEREF _Toc428022375 \h
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Data collection Techniques  PAGEREF _Toc428022376 \h
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Sampling technique  PAGEREF _Toc428022377 \h
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Chapter Four: Result, analysis and discussion  PAGEREF _Toc428022378 \h
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Introduction  PAGEREF _Toc428022379 \h
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Result presentation  PAGEREF _Toc428022380 \h
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Brunei Insurance Takaful Association formation and functions  PAGEREF _Toc428022381 \h
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Autoriti Monetari Brunei Darussalam  PAGEREF _Toc428022382 \h
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Insurance premium and economic effect trends in Takaful  PAGEREF _Toc428022383 \h
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Sample case study  PAGEREF _Toc428022384 \h
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Data analysis  PAGEREF _Toc428022385 \h
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Insurance Order 2006 and Takaful Order 2008  PAGEREF _Toc428022386 \h
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Data reliability and validity  PAGEREF _Toc428022387 \h
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Chapter Five: Conclusion and Recommendation  PAGEREF _Toc428022388 \h
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General Overview  PAGEREF _Toc428022389 \h
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Takaful regulation relevance  PAGEREF _Toc428022390 \h
37
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Limitations to the study  PAGEREF _Toc428022391 \h
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Recommendation for action  PAGEREF _Toc428022392 \h
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Brunei Darussalam  PAGEREF _Toc428022393 \h
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Recommendation for further research  PAGEREF _Toc428022394 \h
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References  PAGEREF _Toc428022395 \h
42

Chapter One: Background and Introduction
Study Background
According to Merkin & Steele (2013), insurance is an essential tool that is used internationally to provide safety and security to new and current risk takers. It is vital to a country’s economy too. It generates revenue for specific countries through taxation. According to Dionne (2013), it is a vital tool that also encourages the empowerment of a country’s nationals through various schemes such as savings and investments. According to Wilkofsky (2003), non-life insurance has its main benefits as assurance and risk aversion, while life insurance has its main benefit as investment and the assurance of a better future.
According to Ernst & Young (2015), the global insurance industry is an important industry in regard to economic development and stability. As the scope of risks and market co-integration increases due to globalization, insurance development and regulation have become a critical aspect of the process. According to Boggs (2011), global regulations, too, have been made more stringent on the companies providing insurance. This level of regulation is even beyond that imposed on conventional insurance regulators.
According to Kunreuther & Gowda (2012), regulation measures imposed on insurance companies are, at times, too strict to allow for a good business environment and for smooth operation. This poses challenges that can only be overcome through the global oversight authorities responsible. These factors have been propelled to recent times with the case study of Brunei Darussalam. The largely Muslim nation believes that when ‘Qadha’ or ‘Qadar’, i.e. a tragedy, happens, an individual ought to face the event with utmost faith and patience in the hop...