The takaful industry holds immense promise for the future, but its success hinges on industry leaders moving beyond mere rhetoric and embracing practical actions. By translating intentions into tangible experiences for customers, takaful can truly embody the ethical principles enshrined in Maqasid Al Shariah. Some of the research areas to consider are as below, but there may be others the industry needs to explore such as in the AI, Blockchain and tokenization domains.

01

Behavioural
Insights

To investigate consumer behaviour and motivations related to takaful adoption. Understanding customer preferences can inform better product design and marketing strategies.

02

Performance
Metrics

To assess both financial and nonfinancial performance metrics for takaful operators. This includes stability, efficiency, and customer satisfaction.

03

Innovative
Models

To explore novel takaful models that enhance risk-sharing mechanisms and cater to diverse market needs. Innovation is key to sustainable growth.

04

Governance and
Human Resources:

To study effective governance structures and skilled human resources. Strong governance ensures transparency and ethical practices.

1. Rationalization of takaful systems and models:

Takaful is essentially a cooperative and mutual system. But this mutuality and cooperativeness is not understood by customers and certainly not felt by them; their experience of a takaful product and service invariably ends up the same as conventional insurance.

  • Do you agree with this statement?
  • What more do you think should be done?


    Takaful Models:

    There are several operational models, such as wakala, mudaraba, hybrid wakala mudaraba, waqf and others. All these models followed the existing recognized Shariah structures of mudaraba, wakala, waqf, etc. But in practice each proved to have an issue, such as risk surplus is not allowed for shareholders in pure wakala model, resulting in additional loading in wakala fee to generate returns for shareholders.

    • Would you like to express your views about this?
    • Is there a better Shariah compliant model with universal appeal?


      2. Risk Sharing v Risk Transfer:

      Is risk transfer disguised as risk sharing? The case of “sharing of risk” becoming “transfer of risk” becomes questionable when takaful risk is ceded (reinsured) with conventional reinsurance companies under the dispensation of Dharurah (temporary arrangement until a retakaful option is available). There can be other areas of concern regarding this.

      • What are your views about this?


        3. Windows:

        • Are takaful and retakaful windows a good thing for promotion and development of takaful?
        • If takaful windows are allowed, should such conventional companies with takaful windows be allowed to continue to offer conventional insurance in Muslim countries?


          4. Wakala Pools:

          A Wakala Pool, akin to Underwriting Benches in conventional insurance, has the potential to serve multiple takaful companies, leading to economies of scale of outsourcing. The overall operational cost for each Wakala Pool is lower than the individual operational cost of a takaful company carrying out underwriting and claims inhouse.

          • What are views about this?


            5. Takaful Townhalls:

            There is a dire need to spread awareness of the purpose driven system of takaful: This can be done through AGM-C (Annual General Meeting with Customers), of both existing and prospective customers and stakeholders.

            • What are views about this?
            • What are practical issues, problems and challenges associated with this?


              6. Parametric Takaful:

              Parametric Takaful also known as index insurance, covers the probability of a predefined event happening instead of indemnifying actual loss incurred.

              • Is this type of cover available in your market?
              • If you need support to offer this type of product, please contact us.


                7. P2P Takaful:

                P2P conventional insurance is available in developed markets of EU, UK and elsewhere, and it works almost similar to takaful as it enables a group of people with common interests or connections to pool their premiums together to share risks. If this is done on Shariah complaint basis, then P2P takaful can easily be introduced in various developed markets, thereby increasing the presence of takaful globally.

                • What are views about this?


                  8. Telematics:

                  This is about data analytics to monitor user behaviour in order to mitigate risks in advance.

                  • Is this type of cover available in your market?
                  • If you need support to offer this type of product, please contact us.


                    9. Smart Loss Prevention Takaful:

                    The use of smart devices in insurance loss prevention is a way of applying Internet of Things to takaful offerings. For example, in property, smart leak detectors can help homeowners and businesses to actively prevent losses. Takaful companies can offer price reductions for certain smart home devices with discounts. There are various other ways in which smart devices can help to mitigate risks,

                    • Is this type of cover available to you or in your market?
                    • If you need support to offer this type of product, please contact us.


                      10. Swift Relief Takaful:

                      This enables instant payment or part payment of claims in the digital takaful domain.

                      • What are views about this?
                      • If you need support to offer this type of product, please contact us.