Application of Maqasid al-Shariah Principles in Auto Takaful Underwriting Practices

The fundamental objective of Takaful services is the protection of human intellect, property and life, which are aligned with the doctrines laid down by the maqasid al-Shariah principles (objectives of Islamic law) that can be classified into five dimensions: (1) protection of religion; (2) protection of life; (3) protection of intellect; (4) protection of lineage; and (5) protection of property. Despite of the doctrines upholding the spirit of brotherhoods, the rapid growth in Takaful industries worldwide has brought in the escalating claim ratio, particularly in auto Takaful products. As a result, Takaful operators reacted in an undifferentiated manner as similar to conventional insurance towards the result by imposing strict acceptance rules on numerous adverse risks so-called non-standard risks. Although these responses are reckoned as a prudent risk management measures, it contradicts with the underlying principles in maqasid al-shariah. The aim of the paper is to conduct an insight market practice by Takaful operators in Malaysia, subsequently highlight the issue of disintegration of maqasid al-shariah principles in underwriting practices. The study suggests that Malaysian Takaful operators should take into consideration maqasid al-shariah when developing the underwriting rules.