Takaful Insurance Schemes (TIS) and Performance of Takaful Operators in Nigeria

Abstract

This study examines the impact of Takaful Insurance Schemes (TIS) on the performance of Takaful operators in Nigeria using an ex-post facto research design. A census approach was adopted to include all twelve licensed Takaful operators registered by the National Insurance Commission (NAICOM). Secondary data covering 2018–2024 were sourced from operators’ annual reports, NAICOM publications, and internal financial records. TIS was operationalized through the diversity and adoption of Takaful products, while performance was measured using four key indicators: Takaful Business Turnover (TBT), profitability (TBP), solvency (TBS), and cost of production (TBC). The study employed the Ordinary Least Squares (OLS) regression technique to assess the predictive influence of TIS on each performance outcome. Findings revealed that TIS has a positive and statistically significant impact on Takaful Business Turnover, as shown by a correlation coefficient of 0.582 and an R² value of 0.339, indicating that 33.9% of changes in turnover are explained by variations in TIS. The p-value of 0.00 (p < 0.05) confirms the significance of this relationship, leading to the rejection of the first hypothesis. Similar trends were observed across profitability, solvency, and cost indicators, where TIS contributed meaningfully to performance outcomes, although the magnitude varied across measures. Overall, the study establishes that well-structured and diverse Takaful schemes enhance the financial strength, operational efficiency, and overall sustainability of Takaful operators in Nigeria. The study recommends that Takaful operators deepen product innovation and expand scheme adoption to improve competitiveness and strengthen market performance within the Nigerian Islamic insurance landscape.