Malaysia
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Philippines
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Malaysia’s takaful industry is gearing up for significant growth, bolstered by the nation’s economic momentum and strengthened commitment to sustainable financial inclusion, said Deputy Bank Negara Malaysia (BNM) Governor Adnan Zaylani Mohamad Zahid. Speaking at the recent Hijrah27 event by the Malaysian Takaful Association, Adnan highlighted the potential for takaful to advance both economic stability and social equity.
Growing Demand and Economic Resilience
The deputy governor revealed that takaful net contributions climbed to RM17.3 billion in 2023, marking a notable 6% increase from the previous year. This rise, he said, underscores the industry’s resilience and the increasing public demand for inclusive, syariah-compliant financial products.
Despite global challenges, Malaysia’s economy remains on solid footing, with projected growth reaching the upper end of the 4-5% range for 2024. “With structural reforms, robust demand, and subsidy rationalisations, we have remarkable opportunities to elevate takaful’s role in financial inclusion,” Adnan stated, calling on industry leaders to accelerate growth.
Addressing Protection Gaps and Climate Risks
Adnan noted the critical need to address coverage gaps, particularly for vulnerable groups and climate-related risks. He emphasized that the Makasid Shariah Scorecard (MSS)—a newly issued tool—can help takaful providers ensure alignment with core values of fairness, transparency, and inclusivity. “MSS is more than a tool; it’s a commitment to Islamic finance that prioritizes community welfare,” he added.
The scorecard will allow takaful operators to assess their progress in promoting social takaful and delivering on their ethical promise to Malaysian communities.
Strengthening the Industry Through Retakaful
To enhance Malaysia’s takaful capacity, Adnan advocated for retakaful, a risk-sharing model that enables industry players to scale and diversify their coverage. This model, he explained, aligns with Islamic finance principles and positions Malaysia as a potential regional hub for takaful in Southeast Asia.
He further emphasized the importance of collaboration within ASEAN as Malaysia prepares to assume the bloc’s leadership. “Next year is a pivotal moment for Malaysia to guide ASEAN in regional takaful initiatives that can benefit communities across the region,” he said.
Innovation and Digital Takaful
In line with the growing need for innovation, Bank Negara Malaysia recently issued a draft proposal to encourage diverse syariah contracts in takaful models. This move will pave the way for digital takaful operators, offering flexible solutions for underserved communities.
Adnan expressed optimism about the industry’s future in leveraging technology to address evolving societal needs: “Digital advancements in takaful will boost financial inclusion, ensuring underserved communities can access meaningful coverage.”
Budget 2025 Support for Blended Takaful Solutions
Furthering innovation, Budget 2025 has allocated grants to support blended takaful solutions, which blend private and public funding to maximize social impact. Takaful providers are encouraged to strategize and capitalize on these grants to develop impactful insurance initiatives across Malaysia.
“By embracing innovation, expanding coverage, and championing social takaful, we can position Malaysia as a pioneer of sustainable, syariah-compliant financial services in the region,” Adnan stated, urging the industry to take advantage of upcoming opportunities to drive regional integration and social well-being.
A Roadmap for Sustainable Growth
As the takaful industry aligns with Malaysia’s broader goals of economic resilience and sustainable finance, the sector stands ready to play an integral role in Malaysia’s economic landscape. Through digital transformation, international collaboration, and focused initiatives, the takaful industry is set to thrive, reinforcing its position as a cornerstone of Islamic finance and economic equity for the years to come.