MTA and INCEIF University Collaborate to Develop Maqasid-based Scorecard for the Malaysian Takaful industry
Kuala Lumpur, Wednesday, 7 December 2022 – The Malaysian Takaful Association (MTA) today announces the launch of pioneering industry-driven research in collaboration with INCEIF University, to develop a Maqasid-based scorecard for the Malaysian Takaful industry.
MTA and INCEIF University, through its research arm ISRA Research Management Centre, will develop a Maqasid al-Shariah Scorecard (MSS) that has workable and measurable performance indicators, taking into consideration the industry’s pain point. These indicators would be use to chart the progress and impact of the industry’s growth and development.
At the event to launch the MSS collaboration held at INCEIF, MTA Chairman Mr Elmie Aman Najas said 2022 was a significant year for the industry as it embraced the launch of Bank Negara Malaysia’s Financial Sector Blueprint (FSB) 2022-2026 in January, and the industry’s Value Based Intermediation for Takaful (VBIT) Roadmap in October. Both frameworks set out the strategic direction, aspirations and initiatives to be achieved by the industry within the next two to five years.
In his speech, Mr Elmie said the scorecard could be “the first of its kind in the world developed for an industry”. Disclosing that while all the initiatives identified by the VBIT Roadmap would bring benefit to the industry, society and country, MTA acknowledged that “there was a distinct need to connect all these initiatives to the spiritual aspect of VBIT.
“This connection is critical as the acceptance of Takaful as an alternative to conventional insurance is predominantly due to it being Shariah-compliant in nature, which by default, suggests its compliance to Maqasid al-Shariah,” he added.
INCEIF University Board of Directors Chairman Tan Sri Azman Mokhtar said INCEIF’s strategic collaboration with MTA would offer the Takaful industry with a much-needed instrument in realising the true spirit of Maqasid al-Shariah.
“In particular, the development of the first-of-its-kind scorecard will help to identify the key performance indicators and their desired outcomes in line with the intrinsic values of Islamic finance as outlined by BNM. This will further enhance the impact measurement instruments needed by the Takaful industry in Malaysia.”
For the Takaful and Retakaful operators, the scorecard will benefit them in many ways including facilitating the achievement of Maqasid compliance through strategic planning, enhanced decision-making, advanced reporting and full transparency. The scorecard is a measurement tool to demonstrate and validate VBIT based on Maqasid al-Shariah and set a clear distinction between conventional insurance and Takaful in terms of value proposition and product differentiation.
This in turn would enhance the stakeholders’ confidence and satisfaction in Takaful/Retakaful value proposition, ensuring that the operators are able to handle financial shocks and remain resilient. Also, of importance, the initiative would showcase Malaysia as a global leader in operationalising Maqasid in Takaful and Retakaful products and services.
MTA envisions that the MSS would enable the Takaful industry to accurately measure their business and non-business performance based on well-defined KPIs, clear targets and timelines. It would also facilitate Maqasid al-Shariah compliance and enhance decision-making, strategic planning, advanced reporting and better transparency.
As such, this research specifically aims to:
develop a scorecard to measure VBIT in light of Maqasid al-Shariah;
identify the key performance indicators (KPIs) for the scorecard;
introduce risk-weighted indicators underlying the scorecard for Takaful; and eventually
measure the impact of the Maqasid al-Shariah based VBIT scorecard on selective Takaful business lines, offerings and products.
The joint effort will support the VBIT aspirations that accompany the potential growth of the Takaful industry in Malaysia. In this regard, the scorecard goes beyond measuring successful initiatives, rather it would elevate the measures to identify the impact of such initiatives including how well the initiatives are carried out and to what extent they have helped vulnerable communities.
The scorecard aims to ensure that the initiatives should, as much as possible, bring the benefits of Maqasid al-Shariah to the communities they serve. The MSS is also hoped to build a clear demarcation between conventional insurance and Takaful in terms of value proposition, product differentiation and real impact, thereby enhancing stakeholders’ confidence, perception and satisfaction in the industry and its offerings.
INCEIF University has always strives to be the bridge between academia and industry, be it in its teaching, research, and executive training programmes, to translate the knowledge gained in classrooms and gleaned from textbooks into real, adaptable industry-focussed solutions.