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Abstract
The purpose of this paper is to investigate the factors that determine the profitability of insurance Takaful companies in Palestine; the study population consisted of insurance Companies listed at the Palestine Stock Exchange during the period (2018-2022). We collected the data from the reports of two Takaful Insurance companies for the period 2018-2022. The researcher used the multiple regression econometrics models. The study shows that profitability was usually expressed as a function of internal and external determinants. Results of the study confirm that liquidity, Leverage are the factors that significantly affect the profitability of Takaful insurance companies in Palestine. Size, Leverage, Tangibility of assets, Growth rate of GDP, and Inflation Rate affect the profitability positively, but liquidity has a negative effect on profitability. Size, Tangibility of assets, Growth rate of GDP, and Inflation Rate have insignificant impacts on ROE and ROA. The key implications of these findings suggest that Palestinian insurance companies should consider diversifying their portfolios beyond motor insurance to improve profitability. Additionally, it is recommended that companies explore merger opportunities to increase operational scale and achieve economies of scale. Furthermore, maintaining a high level of liquidity is crucial, as it allows companies to effectively secure bids and promptly settle claims, which not only enhances their reputation but also positively impacts profitability.
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Copyright (c) 2025 Adnan Qubbaja
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References
Al-Amri, K., & Hossain, M. Z. (2017). A survey of the Islamic insurance literature- Takaful. International Journal of Economic Research, 14(9), 173–185. https://www.researchgate.net/publication/319479147_A_survey_of_the_islamic_insurance_literature-Takaful
Alkhatib, K. (2012). The determinants of leverage of listed companies. International Journal of Business and Social Science, 3(24), 78–83. http://ijbssnet.com/journals/Vol_3_No_24_Special_Issue_December_2012/8.pdf
Arshad, N. C., Halim, N. A., & Irijanto, T. T. (2020). Measuring sustainability of Takaful performance in Malaysia. International Journal of Islamic Economics and Finance Research, 3(1), 2–13. https://doi.org/10.53840/ijiefer8
Berhe, T. A., & Kaur, J. (2017). Determinants of insurance companies’ profitability Analysis of insurance sector in Ethiopia. International Journal of Research in Finance and Marketing, 7(4), 124–137.
Chen, R., & Wong, K. A. (2004). The determinants of financial health of Asian insurance companies. Journal of Risk and Insurance, 71(3), 469–499. https://doi.org/10.1111/j.0022-4367.2004.00099.x
DOI: https://doi.org/10.1111/j.0022-4367.2004.00099.xHaerani, S. A., & Kholis, N. (2024). Effect of investment returns, risk-based capital, and underwriting results on the profit of Islamic life insurance company: A case study of PT. Takaful Keluarga 2017-2024. Journal of Islamic Economics Lariba, 10(2), 1115–1142. https://doi.org/10.20885/jielariba.vol10.iss2.art25
DOI: https://doi.org/10.20885/jielariba.vol10.iss2.art25Hamel, D., & Yousfi, I. (2022). The impact of underwriting size and retakaful on the profitability of Malaysian takaful companies: An empirical study. Economic Researcher Review, 10(1), 165–181. https://asjp.cerist.dz/en/downArticle/85/10/1/196657
DOI: https://doi.org/10.35391/1894-010-001-024Hifza, M. (2011). Determinants of insurance companies’ profitability in Pakistan. Journal of International Academic Research, 1(3), 315–320.
Indra, F. S., Luthia, S. S., Rachmawati, A., Santoso, A. D., & Sup, D. F. A. (2022). The application of al-wakalah bil ujrah contract on unit link insurance according to DSN-MUI Fatwa No. 52 2006: A case study of PRULink Syariah Generasi Baru. Journal of Islamic Economics Lariba, 8(1), 242–254. https://doi.org/10.20885/jielariba.vol8.iss1.art15
DOI: https://doi.org/10.20885/jielariba.vol8.iss1.art15Kantakji, M. H., Abdul Hamid, B., & Alhabshi, S. O. (2020). What drives the financial performance of general takaful companies? Journal of Islamic Accounting and Business Research, 11(6), 1301–1322. https://doi.org/10.1108/JIABR-06-2018-0077
DOI: https://doi.org/10.1108/JIABR-06-2018-0077Kholis, N., & Afifah, Y. N. (2022). Measuring financial efficiency of insurance companies in Indonesia using stochastic frontier analysis approach: A comparison between Islamic and conventional insurances. Journal of Islamic Economics Lariba, 8(1), 196–212. https://doi.org/10.20885/jielariba.vol8.iss1.art12
DOI: https://doi.org/10.20885/jielariba.vol8.iss1.art12Kusmayadi, D., & Firmansyah, I. (2021). Assessing moderating effects of board of directors and Sharia committee in improving performance of Islamic insurance company. Review on Islamic Accounting, 1(1), Article 5. https://doi.org/10.58968/ria.v1i1.101
DOI: https://doi.org/10.58968/ria.v1i1.101Oshiole, S., Elamah, A., Fatai, & Amahalu, N. N. (2020). Effect of environmental cost disclosure on profitability of listed oil and gas firms in Nigeria. International Journal of Academic Research in Accounting, Finance and Management Sciences, 10(2), Pages 157-170. https://doi.org/10.6007/IJARAFMS/v10-i2/7405
DOI: https://doi.org/10.6007/IJARAFMS/v10-i2/7405Palestine Monetary Authority. (2024). Annual Report 2023. Palestine Monetary Authority. https://www.pma.ps/Portals/0/Users/002/02/2/Publications/English/Annual%20Reports/PMA%20Annual%20Reports/Annual%20Report%202023.pdf?ver=2024-09-09-154309-437×tamp=1725885992947
Prasaja, M., Setiawan, A., & Rahmawati, U. (2023). What drives the financial performance of Islamic insurance companies in Indonesia? Jurnal Akuntansi Dan Keuangan Islam, 11(1), 5–23. https://doi.org/10.35836/jakis.v11i1.378
DOI: https://doi.org/10.35836/jakis.v11i1.378Purnamasari, D. R., & Alam, A. (2020). Level of understanding and reasons customers choose Sharia insurance products. Airlangga International Journal of Islamic Economics and Finance, 3(1), 42–51. https://doi.org/10.20473/aijief.v3i1.19411
DOI: https://doi.org/10.20473/aijief.v3i1.19411Radianti, A., Rahmani, N. A. B., & Syarbaini, A. M. B. (2023). The influence of religiosity, service, and premium rates on customer satisfaction through the sharia insurance decision as an intervening variable at Askrida Syariah Insurance Company Medan Branch. Journal of Islamic Economics Lariba, 9(1), 221–238. https://doi.org/10.20885/jielariba.vol9.iss1.art13
DOI: https://doi.org/10.20885/jielariba.vol9.iss1.art13Rofika, H., & Meylianingrum, K. (2024). Factors that influence the profits of takaful companies in Indonesia and Malaysia. Journal of Islamic Economics and Finance Studies, 5(1), 99–116. https://doi.org/10.47700/jiefes.v5i1.7436
DOI: https://doi.org/10.47700/jiefes.v5i1.7436Romadhon, F. A., Rahma, T. I. F., & Syahriza, R. (2024). SWOT analysis of fire insurance product marketing strategy at PT Chubb Life Insurance Indonesia Medan Branch: An Islamic perspective. Journal of Islamic Economics Lariba, 10(1), 1–22. https://doi.org/10.20885/jielariba.vol10.iss1.art1
DOI: https://doi.org/10.20885/jielariba.vol10.iss1.art1Rosli, F. I., Mohd Noor, N. S., Ramli, M. A. R., Ab Jalil, M. A., & Arifin, J. (2023). The financial performance of life insurance and Takaful operators in Malaysia: A lesson from the health crisis for future development. International Journal of Academic Research in Accounting, Finance and Management Sciences, 13(4), 176–192. https://doi.org/10.6007/IJARAFMS/v13-i4/19057
DOI: https://doi.org/10.6007/IJARAFMS/v13-i4/19057Saleh, B. F., & Abida, M. (2024). Determinants of the profitability of commercial and Islamic insurance companies in Iraq: An applied study (Workers in Iraqi and national insurance companies). International Journal of Religion, 5(11), 3651–3659. https://doi.org/10.61707/pnx3z284
DOI: https://doi.org/10.61707/pnx3z284Saleha, S., Hasibuan, R. R. A., & Syafina, L. (2023). Strategy for settling claims for insurance company customers experiencing liquidity at AJB Bumiputera 1912 Medan Branch: Some notes from Islamic perspectives. Journal of Islamic Economics Lariba, 9(1), 131–148. https://doi.org/10.20885/jielariba.vol9.iss1.art8
DOI: https://doi.org/10.20885/jielariba.vol9.iss1.art8Sisay, D. (2017). The effect of financial risk on performance of insurance companies in Ethiopia. Addis Ababa University.
Tamkeen. (2023). Tamkeen 2023 Annual Plan. Tamkeen. https://www.tamkeen.bh/wp-content/uploads/2023/10/2023-Annual-Plan-ENG-With-Updated-Priorities.pdf
The Business Research Company. (2024). Takaful Global Market Report 2024. The Business Research Company. https://www.thebusinessresearchcompany.com/report/takaful-global-market-report
References
Al-Amri, K., & Hossain, M. Z. (2017). A survey of the Islamic insurance literature- Takaful. International Journal of Economic Research, 14(9), 173–185. https://www.researchgate.net/publication/319479147_A_survey_of_the_islamic_insurance_literature-Takaful
Alkhatib, K. (2012). The determinants of leverage of listed companies. International Journal of Business and Social Science, 3(24), 78–83. http://ijbssnet.com/journals/Vol_3_No_24_Special_Issue_December_2012/8.pdf
Arshad, N. C., Halim, N. A., & Irijanto, T. T. (2020). Measuring sustainability of Takaful performance in Malaysia. International Journal of Islamic Economics and Finance Research, 3(1), 2–13. https://doi.org/10.53840/ijiefer8
Berhe, T. A., & Kaur, J. (2017). Determinants of insurance companies’ profitability Analysis of insurance sector in Ethiopia. International Journal of Research in Finance and Marketing, 7(4), 124–137.
Chen, R., & Wong, K. A. (2004). The determinants of financial health of Asian insurance companies. Journal of Risk and Insurance, 71(3), 469–499. https://doi.org/10.1111/j.0022-4367.2004.00099.x
DOI: https://doi.org/10.1111/j.0022-4367.2004.00099.xHaerani, S. A., & Kholis, N. (2024). Effect of investment returns, risk-based capital, and underwriting results on the profit of Islamic life insurance company: A case study of PT. Takaful Keluarga 2017-2024. Journal of Islamic Economics Lariba, 10(2), 1115–1142. https://doi.org/10.20885/jielariba.vol10.iss2.art25
DOI: https://doi.org/10.20885/jielariba.vol10.iss2.art25Hamel, D., & Yousfi, I. (2022). The impact of underwriting size and retakaful on the profitability of Malaysian takaful companies: An empirical study. Economic Researcher Review, 10(1), 165–181. https://asjp.cerist.dz/en/downArticle/85/10/1/196657
DOI: https://doi.org/10.35391/1894-010-001-024Hifza, M. (2011). Determinants of insurance companies’ profitability in Pakistan. Journal of International Academic Research, 1(3), 315–320.
Indra, F. S., Luthia, S. S., Rachmawati, A., Santoso, A. D., & Sup, D. F. A. (2022). The application of al-wakalah bil ujrah contract on unit link insurance according to DSN-MUI Fatwa No. 52 2006: A case study of PRULink Syariah Generasi Baru. Journal of Islamic Economics Lariba, 8(1), 242–254. https://doi.org/10.20885/jielariba.vol8.iss1.art15
DOI: https://doi.org/10.20885/jielariba.vol8.iss1.art15Kantakji, M. H., Abdul Hamid, B., & Alhabshi, S. O. (2020). What drives the financial performance of general takaful companies? Journal of Islamic Accounting and Business Research, 11(6), 1301–1322. https://doi.org/10.1108/JIABR-06-2018-0077
DOI: https://doi.org/10.1108/JIABR-06-2018-0077Kholis, N., & Afifah, Y. N. (2022). Measuring financial efficiency of insurance companies in Indonesia using stochastic frontier analysis approach: A comparison between Islamic and conventional insurances. Journal of Islamic Economics Lariba, 8(1), 196–212. https://doi.org/10.20885/jielariba.vol8.iss1.art12
DOI: https://doi.org/10.20885/jielariba.vol8.iss1.art12Kusmayadi, D., & Firmansyah, I. (2021). Assessing moderating effects of board of directors and Sharia committee in improving performance of Islamic insurance company. Review on Islamic Accounting, 1(1), Article 5. https://doi.org/10.58968/ria.v1i1.101
DOI: https://doi.org/10.58968/ria.v1i1.101Oshiole, S., Elamah, A., Fatai, & Amahalu, N. N. (2020). Effect of environmental cost disclosure on profitability of listed oil and gas firms in Nigeria. International Journal of Academic Research in Accounting, Finance and Management Sciences, 10(2), Pages 157-170. https://doi.org/10.6007/IJARAFMS/v10-i2/7405
DOI: https://doi.org/10.6007/IJARAFMS/v10-i2/7405Palestine Monetary Authority. (2024). Annual Report 2023. Palestine Monetary Authority. https://www.pma.ps/Portals/0/Users/002/02/2/Publications/English/Annual%20Reports/PMA%20Annual%20Reports/Annual%20Report%202023.pdf?ver=2024-09-09-154309-437×tamp=1725885992947
Prasaja, M., Setiawan, A., & Rahmawati, U. (2023). What drives the financial performance of Islamic insurance companies in Indonesia? Jurnal Akuntansi Dan Keuangan Islam, 11(1), 5–23. https://doi.org/10.35836/jakis.v11i1.378
DOI: https://doi.org/10.35836/jakis.v11i1.378Purnamasari, D. R., & Alam, A. (2020). Level of understanding and reasons customers choose Sharia insurance products. Airlangga International Journal of Islamic Economics and Finance, 3(1), 42–51. https://doi.org/10.20473/aijief.v3i1.19411
DOI: https://doi.org/10.20473/aijief.v3i1.19411Radianti, A., Rahmani, N. A. B., & Syarbaini, A. M. B. (2023). The influence of religiosity, service, and premium rates on customer satisfaction through the sharia insurance decision as an intervening variable at Askrida Syariah Insurance Company Medan Branch. Journal of Islamic Economics Lariba, 9(1), 221–238. https://doi.org/10.20885/jielariba.vol9.iss1.art13
DOI: https://doi.org/10.20885/jielariba.vol9.iss1.art13Rofika, H., & Meylianingrum, K. (2024). Factors that influence the profits of takaful companies in Indonesia and Malaysia. Journal of Islamic Economics and Finance Studies, 5(1), 99–116. https://doi.org/10.47700/jiefes.v5i1.7436
DOI: https://doi.org/10.47700/jiefes.v5i1.7436Romadhon, F. A., Rahma, T. I. F., & Syahriza, R. (2024). SWOT analysis of fire insurance product marketing strategy at PT Chubb Life Insurance Indonesia Medan Branch: An Islamic perspective. Journal of Islamic Economics Lariba, 10(1), 1–22. https://doi.org/10.20885/jielariba.vol10.iss1.art1
DOI: https://doi.org/10.20885/jielariba.vol10.iss1.art1Rosli, F. I., Mohd Noor, N. S., Ramli, M. A. R., Ab Jalil, M. A., & Arifin, J. (2023). The financial performance of life insurance and Takaful operators in Malaysia: A lesson from the health crisis for future development. International Journal of Academic Research in Accounting, Finance and Management Sciences, 13(4), 176–192. https://doi.org/10.6007/IJARAFMS/v13-i4/19057
DOI: https://doi.org/10.6007/IJARAFMS/v13-i4/19057Saleh, B. F., & Abida, M. (2024). Determinants of the profitability of commercial and Islamic insurance companies in Iraq: An applied study (Workers in Iraqi and national insurance companies). International Journal of Religion, 5(11), 3651–3659. https://doi.org/10.61707/pnx3z284
DOI: https://doi.org/10.61707/pnx3z284Saleha, S., Hasibuan, R. R. A., & Syafina, L. (2023). Strategy for settling claims for insurance company customers experiencing liquidity at AJB Bumiputera 1912 Medan Branch: Some notes from Islamic perspectives. Journal of Islamic Economics Lariba, 9(1), 131–148. https://doi.org/10.20885/jielariba.vol9.iss1.art8
DOI: https://doi.org/10.20885/jielariba.vol9.iss1.art8Sisay, D. (2017). The effect of financial risk on performance of insurance companies in Ethiopia. Addis Ababa University.
Tamkeen. (2023). Tamkeen 2023 Annual Plan. Tamkeen. https://www.tamkeen.bh/wp-content/uploads/2023/10/2023-Annual-Plan-ENG-With-Updated-Priorities.pdf
The Business Research Company. (2024). Takaful Global Market Report 2024. The Business Research Company. https://www.thebusinessresearchcompany.com/report/takaful-global-market-report