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5.2.8. Minimal Efforts in Research and Development
In terms of product development, the Takaful sector seems to be lagging. It is expected that
existing Takaful companies will dedicate some funds for research and development (R&D) to
spur innovations in the industry. Market research needs to be conducted through collaborations
with academic institutions to identify participants’ requirements and needs to structure
products that meet such needs. Such efforts in R&D may be mandated by the regulatory and
supervisory authority through a policy directive to ensure all TOs allocate a minimum amount
of funds in every financial year. Alternatively, or in addition, the regulatory and supervisory
authority may proactively commission such R&D projects to deepen its Takaful sector.
5.3. Future of Takaful: Policy Steps towards Overcoming the Challenges
Takaful is established upon the notions of ta’awun (mutual cooperation), tabarru' (donation),
mutual security and guarantee (tadamun), mutual protection and assurance (Takaful). These
basic principles underlying Takaful have been used to construct various Takaful models and
structures. Nevertheless, these Takaful models have encountered substantial issues and
disagreements. It has produced a tremendous number of Takaful models ranging from plain
mudarabah model to the creation of hybrid wakalah or waqf model; all are done to find the ideal
Takaful model. Indeed, it becomes a continuous struggle and efforts for the Shari'ah scholars,
Takaful practitioners and regulators to research and innovate for a perfect model for Takaful,
taking into consideration of the commercial viability and practical aspects of Takaful operations
such as pricing, underwriting, actuary and the like.
In terms of markets and practices, it is observed that the offerings and diversity of Takaful
products are lacking, as compared to conventional insurance, and that the Takaful business lacks
penetration, The TOs need to design and offer neat products and launch good strategies of
marketing in order to reach major markets and actively compete at the global level. Similarly,
Takaful companies need to adopt investment strategies to ensure positive and stable returns on
investment. Even though the offerings and diversity of such products are led by firms from
Malaysia, they are consistently imitated and implemented in the GCC and Middle East, many still
have concerns that the Takaful product offerings replicate trends and products in the
conventional insurance market. Besides, there is a recurring concern, which consists of the
absence of strategic investment in human capital and professional development, as pointed out
by practitioners and policymakers.
Regulatory challenge is another aspect of concern highlighted as being a major obstacle for the
development of the Takaful industry. The regulatory setup is an essential aspect of the
development, the implementation of which will consequently lead to a robust and dynamic
Takaful systemglobally. Malaysia continues to lead the Takaful market in terms of the regulatory
framework for Takaful . Being a home for 15 licensed TOs, Malaysia continuously enhances the
Takaful regulations by introducing specific policy documents to regulate the operation of
Takaful business, Shari'ah governance, Takaful pricing and reporting. Similarly, the GCC is also