Corporate Governance and Maqasid Shariah: An Empirical Study on Management Practices of Takaful Operators in Malaysia

The development of the takaful industry in Malaysia has seen tremendous growth since its inception and has emerged as an important component of the Islamic financial system in Malaysia. Being an Islamic institution, the takaful business has to adhere Islamic rules and regulations, incorporate maqasid shariah, uphold the Islamic corporate governance and at the same time achieve its business goals. This study looks into the current practices of governance of takaful in Malaysia and links it with maqasid Shariah by assessing the three main stakeholders namely, the takaful operators, the takaful agents and the policy holders. Data were elicited through interviews from the respective parties. From the study participants and agents accordingly viewed that takaful operators are handling their activities in accordance to maqasid of Shariah. The interviews also indicated that each takaful operator has its own processes, policies and procedures and are conforming their activities to Shariah. The basis of these policies are established in line with the Shariah Governance Framework and each process is done with the aim to achieve the maqasid of Shariah. It was also found there was a loose relationship between takaful operators and their agents. Takaful operators normally places their trust on their agencies to hire and to monitor their agents even though the agents will actually represent the takaful operators. Conformity to Shariah in every activity and transaction is indeed pertinent to a takaful operator. Hence in this respect a sound governance or rule must be established to strengthen the agent, agency and takaful operator relationships. Such action benefits stakeholders in protecting their interest hence achieving maqasid of Shariah.