DOES THE MUTUALITY CONCEPT UPHOLD IN THE PRACTICES OF TAKAFUL INDUSTRY?

Abstract

Even though the development of takaful industry is very encouraging
and variety of takaful models have been implemented, the industry
still faces a lot of issues and challenges especially in the Shari’ah
and operational matters. This paper discusses the current
development of takaful industry in Malaysia and highlights the major
issues and challenges in developing a resilient takaful market
especially in upholding the mutuality and cooperative concept.
Interviews with several experts from the takaful industry and
academician from several universities have been conducted to study
their views on the discussed matters. The study found that existing
takaful models inclined towards more business oriented in order to
fulfill the expectation of shareholders. Various issues in existing
practices such as wakalah fee, tabbaru’ issue, ownership of return
and underwriting surplus issues were among the issues that lessened
the spirit of mutuality in takaful. This paper also found that the major
issues in existing takaful models derived from juristic difference
among scholars. There are also efforts taken by several parties to
harmonize these by going back to the basic of takaful, which are
brotherhood, mutual assistance and cooperation.