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5. What are the measures that should be taken to improve the infrastructure in the
Takaful industry?
Over sixty per cent of the twelve experts interviewed agree that there is room for
improving the infrastructure of the Takaful industry. Two experts from Malaysia
suggest that one way would be for the government to encourage external foreign
partners to establish local Takaful to allow technology transfer and for the locals to learn
from foreign expertise. The two experts explained that a well-developed financial sector
infrastructure should comprise elements such as efficiency and independent judiciary;
comprehensive and well-defined accounting principles and rules that command wide
international acceptance; well-defined governance rules, and adequate supervision.
They also commented that laws governing the Takaful sector including insolvency,
contract and consumer protection must be developed and adequately enforced to
provide a mechanism for fair resolution of disputes. Once these laws are well-develop,
Takaful operators would be able to uphold their fiduciary duties and responsibilities to
the highest level. According to the three experts from Turkey, technological
infrastructure has become an indispensable part of everyday life and thus Takaful
companies should invest in related software to upscale their delivery. Furthermore, the
Turkish experts stated that legislation should be developed, product diversification
should be made and the theoretical structure of the system should be enhanced. The
calculation techniques, methods and programs that companies apply to generate
premium production and make investment and, follow up compensation and payment
processes should also be updated in accordance with the conditions of the day and
principles of Takaful. One expert from Saudi Arabia suggests that the most important
infrastructure of Takaful is Re-Takaful, which is still an infant industry in many
jurisdictions. There should hence be legislative arrangements to enhance Re-Takaful.
6. What should be done at the Market level to strengthen the competitiveness of the
Takaful Industry against its conventional counterpart?
All the experts agree that there is a need for strengthening the competitiveness of the
Takaful industry. Four experts from Malaysia are of the opinion that Takaful operators
need to be innovative and design their own products that are unique to the conventional
ones. The products should be simple to customers and easy to understand. Today
customers are sophisticated, well equipped and knowledgeable. The Malaysian experts
explained that the growth of Takaful in the country was faster than its conventional
counterpart. Nevertheless, they acknowledge that there is a need for educating the
public about the Takaful market, which should begin at the school level, the college right
up to the university. This view is also shared by two experts each from Turkey and Saudi
Arabia that there should be an emphasis on education in addition to training to
strengthen the competitiveness of the industry. The four experts from Malaysia
cautioned that the industry needs to go beyond the Shari'ah compliance strategy if it
were to enhance its competitiveness and the traditional Takaful markets need to update