Takaful 2.0 has been a popular topic lately. Malaysia is well established as a leader in the Takaful world, but where do we go from here? In the recent Takaful Rendezvous a number of suggestions were given on how to move Takaful in Malaysia beyond the initial goal of having basic Takaful products in the market, such as Takaful mortgage term to cover Islamic bank loans, group term Takaful for companies, personal general Takaful lines such as motor, fire and PA, and health Takaful either on its own or as part of unit linked plans.
The role of regulations was highlighted in the rendezvous in that if regulations are very similar to conventional insurance then it should be no surprise that Takaful adopts the same look and feel as conventional insurance.
There is a tsunami facing Takaful operators in Malaysia though, among the issues faced are:
- The splitting of family and general operations which will increase capital requirements and expenses
- The ongoing detariff which will take away surplus sharing as a competitive feature of Takaful
- The life and family Takaful framework which will cause challenges due to the minimum allocation rates for unit linked plans.
The open question to the industry is: what are the unique selling propositions of Takaful, and how do we promote this rather than simply saying that we are Islamic? Perhaps a new type of Takaful is needed in the market, such as a discretionary mutual concept which is available in some western countries.