The Malaysian Takaful Association (MTA), in collaboration with INCEIF University, is developing a Maqasid Shariah Scorecard (MSS) that would have workable and measurable performance indicators, which would be utilized to chart the progress and impact of the industry’s growth and development.
MTA envisions that the MSS would enable the Takaful industry to accurately measure their business and non-business performance based on well-defined key performance indicators (KPIs), clear targets and timelines.
It said that the scorecard would also facilitate Maqasid Shariah compliance and enhance decision-making, strategic planning, advanced reporting and better transparency.
“The development of the first-of-its-kind scorecard will help to identify the key performance indicators and their desired outcomes in line with the intrinsic values of Islamic finance as outlined by Bank Negara Malaysia (BNM). This will further enhance the impact measurement instruments needed by the Takaful industry in Malaysia,” INCEIF University Chairman Azman Mokhtar said at the launch of the MSS collaboration.
According to MTA Chairman Elmie Aman Najas, 2022 was a significant year for the Takaful industry in Malaysia as it saw the launch of BNM’s Financial Sector Blueprint 2022–2026 in January, and the industry’s Value Based Intermediation for Takaful (VBIT) Roadmap in October.
Both frameworks set out the strategic direction, aspirations and initiatives to be achieved by the industry within the next two to five years.
While noting that all the initiatives identified by the VBIT Roadmap would bring benefits to the industry, Elmie contended that there is a need to tie the initiatives back to Maqasid Shariah.
As such, Elmie noted that the scorecard would be a measurement tool to demonstrate and validate VBIT based on Maqasid Shariah and set a clear distinction between conventional insurance and Takaful in terms of value proposition and product differentiation.
For the first half of 2022, General Takaful in Malaysia continued its growth path, with gross direct contributions increasing by 19.8% over the same period in 2021 to RM2.23 billion (US$506.55 million), according to a market performance report by Insurance Services Malaysia. The motor business remains the most important line of business, making up 63.4% of the total Takaful contribution.
Currently, there are 15 Takaful operators in Malaysia, and three reTakaful companies. According to the latest data from the IFSB, Malaysia has maintained its position as one of the five countries generating a total of 91% in total global Takaful contributions, along with Iran, Saudi Arabia, Indonesia and the UAE.