The Muamalat Newsletter Vol. 2 2024

FEM eNewsletter | December 2024 68 Malaysian Takaful Industry in the Age of Technological Advancement Nor Haziah Hashim, Wan RasyidahWan Nawang, Intan Fatimah Anwar Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia 2022, the takaful fund asset stands at RM55.7 billion, an increase of 11.6 percent from the previous year. In terms of market penetration rate, based on total population, the industry reaches 20.06 percent (MTA Report, 2023). Globally, Malaysian takaful industry stands in third among the top countries in takaful assets (at US$13 billion), coming behind only to Iran and Saudi Arabia (ICD Report, 2023). The growth of takaful in Malaysia reflects broader trends in the Islamic financial system, with technological innovations, regulatory frameworks, and expanding consumer awareness all contributing to its prominence. As the takaful industry matured, the integration of technology became increasingly important in enhancing operational efficiency, improving customer experience, and expanding the reach of takaful products (Ahmad et al., 2023). The rise of digital platforms and mobile technology has transformed the way takaful companies interact with their customers. The growing demand for digital services in the broader Introduction The Malaysian Takaful industry plays a pivotal role in the nation’s Islamic finance ecosystem. Takaful, a form of Islamic insurance based on principles of mutual cooperation and shared responsibility, has evolved significantly in Malaysia since its inception in 1984. Rooted in Shariah (Islamic law), takaful provides an alternative to conventional insurance, which is often considered incompatible to Shariah principles due to its reliance on interest (riba), uncertainty (gharar), and gambling (maysir). In Malaysia, the development of takaful has been shaped by the demand from those who are religion-sensitive and more inclined to engage with financial institutions that comply with Shariah rules (Nomran et al., 2018). Today, after 40 years in the market with only one operator, the industry now home to 19 operators, including Islamic windows. The industry has witnessed a tremendous growth with a yearly double-digit growth. In