By Mohamed Redouane Riad, Rusni Hassan, Syed Ahmed Salman & Adnan Yusoff
Abstract
The inception and rapid growth of the Takaful industry
in Malaysia during the 1980s was driven by Muslim communities’ dire need to
have a Shariah-compliant alternate for existing conventional insurance. It was
also to assist the operations of the Islamic Banks established in 1983. The
need for Takaful was heightened when the Malaysian National Fatwa Committee
ruled that conventional life insurance is against Shariah principles as it
entails elements of uncertainty, interest, and gambling. The government in 1982
set up a Special Task Force to study the feasibility of establishing Islamic
insurance in Malaysia. Based on the results, a Takaful Act was passed in 1984.
And in November 1984, Malaysia incorporated its first takaful operator. Using
the library research method, the study looks into the Malaysian takaful
industry to examine its overall development. The results show that the industry
has been rapidly growing. The number of players multiplied significantly. And
an industry that once had only one operator has
become an integral part of the financial system. Bank
Negara Malaysia’s continuous efforts and the takaful operators in developing a
dynamic, resilient, and efficient takaful industry have successfully brought
the industry to where it stands today.
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