Financial Planning Through Maqasid Shari ah Engineering: A Study on the Takaful Products Development

Transcription

1 Financial Planning Through Maqasid Shari ah Engineering: A Study on the Takaful Products Development Wan Nazjmi Mohamed Fisol 1, Yusuf Haji-Othman 2, Mohammadtahir Cheumar 3, and Anassuzastri Ahmad 4 1, 2 Senior Lecturer, 3 PhD. Candidate, Kulliyyah Muamalat and Management Sciences, and 4 Lecturer, PUPUK, Sultan Abdul Halim Mua dzam Shah International Islamic University, Kuala Ketil, Kedah, Malaysia. Abstract In fact, takaful products constitutes one important area of Islamic financial planning which in line with the Maqasid Shari ah perspective. Therefore, this research explore on the takaful products development as sustainable financial planning based on the Maqasid Shari ah principles. Qualitative method has been used which based on the library research such as books, articles, journals review and any other related materials. Finding of this research show that there are several products development in takaful institutions are in conformity with the Maqasid Shari ah perspective as sustainable of financial planning which bring the social welfare and justice for the public interest (maslahah). As conclusion, the development of the takaful products should be based on the preservation of five necessities (daruriyyah al-khamsah), namely, the preservation of religion (din), the preservation of life (nafs), the preservation of intellect ( aql), the preservation of progeny (nasl) and the preservation of wealth (mal). Keywords: Takaful products, Maqasid Shari ah, Financial Planning, public interest (maslahah) Introduction The Malaysian takaful industry has experienced encouraging growth since its inception in Takaful is one of the driven on the financial planning sustainability which bring the social welfare and justice for the public interest (maslahah). The concept of takaful or Islamic insurance was first introduced in Sudan in 1979, inspired by the growing needs of the Muslim consumers for an insurance protection that in conformity with the Shari ah principles. However, 1

2 the development of the takaful industry in Malaysia started in the 1980s when the need of the Muslim consumers for an alternative to the conventional life insurance prevailed as the result of a fatwa (decree) issued by the Malaysian National Fatwa Committee which ruled that conventional life insurance is a void contract due to the presence of the elements of gambling (maisir), uncertainty (gharar) and usury (riba) 1. In conjunction with this fatwa, the Takaful Act was enacted in 1984 and Syarikat Takaful Malaysia Berhad has been established in 1985, which based on brotherhood, solidarity and mutual assistance in order to provide for mutual financial aid and assistance to the participants in case of need whereby the participants mutually agree to contribute for the purpose. Until end of the 2017, Takaful products have a net contribution of RM6.3 billion or 13% of market share, while the conventional insurance segment posted RM42.5 billion. 2 Takaful industry also witnesses impressive growth in the Malaysian financial market in In order for Sustainable profit and growing takaful industry in Malaysia, all takaful operators should be registered with Malaysian Takaful Association (MTA) under Inter- Takaful Operator Agreement (ITA) which officially signed on May The implementation of the ITA was with the objective to make the industry stronger in terms of streamlining market practices among operators in takaful industry. Currently MTA consist of 15 members of takaful and re-takaful operators companies as shown in Table 1. Table 1: MTA Members NO COMPANY 1 Syarikat Takaful Malaysia Berhad 2 Takaful Ikhlas Berhad 3 ACR Retakaful Berhad 4 AIA PUBLIC Takaful Bhd. 5 AmMetLife Takaful Berhad 6 Etiqa Takaful Berhad 7 Great Eastern Takaful Berhad 8 Hong Leong MSIG Takaful Berhad 9 HSBC Amanah Takaful (Malaysia) Berhad 10 Zurich Takaful Malaysia Berhad 11 Munich Re Retakaful 12 Prudential BSN Takaful Berhad 13 Sun Life Malaysia Takaful Berhad 14 Swiss Re Retakaful 15 Malaysian Re 1 Takaful Annual Report, , Central Bank of Malaysia

3 Overview of Takaful The word Takaful is derived from the Arabic verb "kafala" which simply means to take care of one's need. Takaful is a system of Islamic insurance based on the principle of mutual cooperation (ta awun) and donation (tabarru ), where the risk is shared collectively and voluntarily by the group of participants. It is an arrangement by a group of people with common interests to guarantee or protect each other from certain defined misfortunes such as premature death, disability and property damages 4. Under takaful schemes, participants mutually agree to guarantee and to protect each other against a defined loss or damage, by jointly providing financial assistance to any members suffering from a loss. Such financial assistance is made possible through the creation of a common pool contributed out of the participants resources as donations. Participants in a takaful scheme mutually agree to relinquish as donation, a certain proportion of their contributions, into a takaful fund, to provide financial assistance to any members of the group suffering from a loss. Under takaful contracts, each participant contributes a certain proportion of the full amount of his contribution as tabarru. The donations from all participants are accumulated into a common fund called tabarru fund or risk fund, from which compensation or indemnification is paid to participants suffering a defined loss 5. Hence, Takaful operators in Malaysia provides an extensive range of protection and investment plans to suit with diverse needs of people for public interest (maslahah). Therefore, the types of products offered by takaful companies can be divided into two categories, namely, general takaful and family takaful. For example is the development of Takaful Malaysia Berhad products as shown in table 2 6. Table 2: Takaful Product Development no company Family Products General Products 1 Takaful myterm: Takaful mymotor: Takaful Malaysia Berhad Protection for Family Future which provides a lump sum payout in the event of death provides cover to the vehicle against loss or damage Takaful mymortgage: For Home family protection Takaful myfire: Provides protection for losses to property such as buildings, contents, furniture, plant and machinery as well as stock. 4 Obaidullah, M., 2005, Islamic Financial Services, [ 5 Obaidullah, M., 2005, Islamic Financial Services, [

4 Takaful myhealth Protector: For Health family protection Group Credit Family Takaful: Protection to loan borrower. Takaful myhouseowners & Householders: It is a comprehensive scheme to protect your home, belongings and assets. Takaful myhome: It is a complete scheme protecting the owner household contents against any damage or loss caused by common perils such as fire, lightning, explosion, theft, hurricane, earthquake, flood and bursting of water tanks/pipes. Takaful Longterm Houseowners: It is a comprehensive long term scheme to protect your home from loss Takaful mytravel Partner: An annual travel Personal Accident plan with attractive additional benefits catering to the evolving needs of travellers today. Takaful myumrah: It is a travel coverage, will have a worry-free pilgrimage without worrying about medical expenses incurred as a result of an accident or illness due to pre-existing condition. Takaful mypa Care: Introducing the comprehensive Personal Accident Takaful plan that gives you protection as little as RM0.20 per day. Takaful myelite PA: It is a personal accident plan which provides compensation for you or your family in the event of injury, disability or death caused solely by accidental means. Takaful myhealth Plus: It is a comprehensive hospital income plan which pays daily hospital income in the event you are hospitalised at a local or overseas hospital. In the event you are hospitalized for 5 consecutive days or more, a lump sum payment of RM3, 000 will be paid to you. Below are the key benefits of this plan. 4

5 The objectives of Shari ah (Maqasid al-shari ah) The fundamental objectives of the Shari ah or maqasid al-shari ah are to ensure the well-being and welfare of mankind (maslahah; Pl. masalih), both in this world and the hereafter. Maqasid are the key to better understand the Shari ah in its true perspective. Imam al-ghazali (d. 505 AH/1111 AC) defined maqasid by stressing that the Shari ah concerns with preservation of five objectives: The main objective of the Shari ah is to promote the public interest and the wellbeing of the people, which lies in preservation of their religion (din), their life (nafs), their intellect ( aql), their progeny (nasl) and their wealth (mal). Whatever ensures and covers the safeguarding of these five origions, and it is a public interest, and whatever leaves these five s, it is a harm and against public interest. 7 Therefore, the maqasid al-shari ah are the law s meanings and objectives as manifested in most or all of its rulings, or they may be said to be the objectives of the Shari ah and the hidden wisdom which the Lawgiver has placed within each of its rulings. 8 It is generally held that the Shari ah in all of its parts aims of seeking a benefit for the people or protecting them against corruption and evil. For example, the Qur an explained the main objective of the Prophethood of Muhammad is a mercy (rahmah) for the mankind ( alamin). 9 Elsewhere, Allah (swt) describes His purpose in the revelation of religion is not a means of imposing hardship, as He says: God never intends to impose hardship upon people. 10 Here the Lawgiver wishes to make things easy and to avoid imposing hardships on people and thus not obligate anyone more than his or her capacity, which Allah (swt) says: No one is charged with more than his capacity. 11 In principle, the main objective of Maqasid is seeking of benefit (manfa ah) and to repelling of harm (madarrah) for the public interest (maslahah) as directed by the Lawgiver. Examples are seeking and preserving of public welfare 12, justice 13, fairness 14, human brotherhood 15 and equally 16, in order to bring happiness to human beings. The interpretation of Maqasid should be based on three essential objectives, namely necessities objectives (maqasid daruriyyah), needs objectives (maqasid hajiyyah) and embellishments objectives (maqasid tahsiniyyah). From the objectives on necessities, it should 7 Al-Ghazali, M. (1998). al-mustasfa min ilm al-usul. Beirut: Dar al-kutub al- Islamiyyah. Vol. 1. pp 钨 钨钨门 ma门 R ma门 ϤR 门㸀 Τ Τ Σ R RϠ Τm R Τ 门门 Τ 门 Ϥ 㸀 Τ 门钨 ϓa R 钨钨 o ma门 门 R ΤϠ ϓa R 钨钨 R 钨门 R Τ Ϡ R 门钨 R ΤϠ 8 Zuhaili, W. (1996). Usul al-fiqh al-islami, Vol.2, Damascus: Dar al-fikr, pp The Qur an, 21: The Qur an, 5:6 ; 22:78 11 The Qur an, 2: The Prophet (saw) purchased a quantity of grain from a Jew on the basis of deferred payment and he pledged his armour by way of security. This Hadith shows that the Prophet (saw) did not prohibiting the transaction of deferred payment contract, even though the deferred price greater than cash price. See: Zuhaili, W. (2007). Al-Muamalat al-maliyah al-muasarah. 4 th ed. Damsyik: Dar al-fikr. pp The Quran, 16: 90; 5: 8; 57: 25; 6: The Prophet (saw) appointed a man as governor of Khaybar, who [later] presented him with an excellent type of dates (janib). The Prophet asked, Are all the dates of Khaybar like this? He replied, [No. but] we barter one sa of this (excellent type) for two sa of ours, or two sa of it for three of ours. Allah Apostle said, Do not do that [as it is a kind of usury]; rather, sell the mixed dates (of inferior quality) for money, and then buy the excellent dates with that money. See: Al-daruqatni. Sunan al-daruqatni. Al-Maktabah al-shamilah. Hadith no. 54. Vol. 3. pp. 17; Al-Muslim. Sahih al-muslim. Al-Maktabah al-shamilah. Hadith no Vol. 8. pp. 276; Al-Bukhari. Sahih al-bukhari. Al-Maktabah al-shamilah. Hadith no Vol. 7. pp The Quran, 49:13; O mankind! We created you from a single (pair) of male and female, and made you into nations and tribes, that ye may know each other (not that ye may despise (each other). Verily the most honored of you in the sight of Allah is (he who is) the most righteous of you. And Allah has full knowledge and is well acquainted (with all things). 16 The Quran, (al-nisa) 4: 58 5

6 be for the preservation on five necessities (daruriyyah al-khamsah), namely, the preservation of religion (din), the preservation of life (nafs), the preservation of intellect ( aql), the preservation of progeny (nasl) and the preservation of wealth (mal). These preservations include the preservation of the essential objectives of this world and in the hereafter. 17 Takaful Products and Maqasid Shari ah Basically, the takaful products development is considered as permissible (mubah) in Islam. This is based on the fiqh maxims (Qawaid Fiqhiyyah) which states The originality of things is permissibility (Al- aslu fi al-ashyaa al-ibahah). It is considered permissible as long as the use does not contradict with the Shariah law itself. Maqasid Shariah creates a balance in the development of takaful products so that the development is always on the balance sheet of goodness (maslahah) and avoid of any harm (mafsadah) either to individuals or society. Therefore, the financial planning through takaful products development should be based on essential objectives, namely necessities (daruriyyah), needs (hajiyyah) and embellishments (tahsiniyyah). From the necessities (daruriyyah), it should be preserving on five necessities (daruriyyah al-khamsah), such as religion (din), life (nafs), intellect ( aql) progeny (nasl) and wealth (mal). At the first level, the establishment of takaful industry is a necessities (daruriyyah), as the result of a fatwa (decree) issued by the Malaysian National Fatwa Committee which ruled that conventional life insurance is a void contract due to the presence of the elements of gambling (maisir), uncertainty (gharar) and usury (riba) 18. At this level, it is an obligatory to develop takaful products as a substitute for the insurance products since the preservation of religion is an obligatory on every Muslim. At the second level, the development of the takaful products are a needs (hajiyyah), if the daily life of human beings would be affected and causing difficulty for individuals or society in general. For example, one of the Takaful Malaysia Berhad product is Takaful myelite PA. It is a personal accident plan which provides compensation for participant and his or her family in the event of injury, disability or death caused solely by accidental means. This is in line with the objectives of the Shariah (maqasid al-shariah), which seeking the benefit or repelling the harm (jalb al-maslahah aw daf al-madarrah). It is also supported by the fiqh maxims (qawa'id alfiqhiyyah) which states "Need is treated as necessities, whether of a public or private nature." (Al-hajat: tunazzalu manzilatu al-darurah, ammah kanat aw khassah). 19 Therefore, the financial planning through development of takaful products becomes a needs (hajiyyah) that is included in the current necessities of general or specific activity. At the third level, the takaful development are an embellishments (tahsiniyyah) when the products offered in various forms beyond the requirements in daily activities. An example, Takaful Malaysia Berhad has been offered new online products through fintech technology such 17 Ibid, pp Takaful Annual Report, , Central Bank of Malaysia. 19 Sayuti (2005). Al-Ashbah wa al-nazair. Beirut: Dar al-kutub al- Ilmiyyah. Vol. 1. pp. 88 6

7 as Takaful myclick Motor, which protect participant from losses or damages due to accident, fire or theft as well as third party bodily injury, death and third party property losses or damages. Thus the Shari ah rulings (ahkam Shari ah) for each use depends on the purpose which also takes into account the preservation of five elements, namely the preservation of religion, the preservation of life, the preservation of intellect, the preservation of the progeny and the preservation of the wealth. Takaful Products with the Five Preservations of Maqasid Shar iah Takaful products as sustainable of financial planning should be based on essential objectives, namely necessities (daruriyyah), needs (hajiyyah) and embellishments (tahsiniyyah). From the necessities (daruriyyah), it should be preserving on five necessities (daruriyyah al-khamsah), such as religion (din), life (nafs), intellect ( aql) progeny (nasl) and wealth (mal). Preservation of religion is an obligatory when establishing a takaful company to be in line with sharia h compliant. Therefore, to ensure all the takaful companies are shari ah-compliant, then the government has formed the Takaful Act in 1984, strengthening with Islamic Financial Services Act (IFSA) in To ensure the preservation of religion, all established takaful companies are under Shariah Advisory Council of Bank Negara Malaysia (SAC), which was established in May 1997 as the highest Shariah authority in Islamic finance in Malaysia. Every takaful company should have a Shari ah Advisory Board (SAB). SAB is responsible for validating all takaful products development with to ensure their compatibility with the Shari ah principles. The example of the takaful product which preservation of religion is Takaful myumrah. This product is a travel coverage, will have a worry-free pilgrimage without worrying about medical expenses incurred as a result of an accident or illness due to pre-existing condition during performing umrah. Preservation of life should also be taken into account in developing takaful products. One of the product in takaful is Takaful myelite PA. This product is a personal accident plan which provides compensation for participant or his/her family in the event of injury, disability or death caused solely by accidental means. Furthermore, without any protection, an individual also can be disturbed by emotion and intellect which affect the physical and mental health of a person. As an example that preservation of intellect is Takaful myhealth Plus which provided by Takaful Malaysia Berhad. It is a comprehensive hospital income plan which pays daily hospital income in the event you are hospitalised at a local or overseas hospital. In the event you are hospitalized for 5 consecutive days or more, a lump sum payment of RM 3, 000 will be paid to participant. Through this product, participants have planned their financial well without compromising their intellect when facing any unexpectedly situation. 7

8 The preservation of the progeny is an important thing to consider in every purpose of takaful products development. For example, one of the products offered in the market that takes into account the preservation of the progeny is Takaful myterm or affordable Protection for participant Family s Future. Through this product, participant can choose the level of sum covered between RM50, 0000 to RM500, 000. This product will help ease the financial strains on participant loved ones as Takaful myterm provides a lump sum payout in the event of death of participant. Lastly is the preservation of wealth. An example is Takaful myfire which provides protection for losses to participant property such as buildings, contents, furniture, plant and machinery as well as stock. Other than that is the product Takaful mymotor, which provides cover to the vehicle against loss or damage; Takaful myhouseowners & Householders, which a comprehensive scheme to protect participant home, belongings and assets; and Takaful myhome, which a complete scheme protecting the owner household contents against any damage or loss caused by common perils such as fire, lightning, explosion, theft, hurricane, earthquake, flood and bursting of water tanks/pipes. Conclusion In conclusion, most of the products offered in takaful institutions are in conformity with the Maqasid Shari ah perspective as sustainable of financial planning which bring to the social welfare and justice for the public interest (maslahah). Therefore, the takaful products development through takaful industry is falls under the category of necessities (daruriyyah), needs (hajiyyah) and embellishments (tahsiniyyah) by taking into consideration of five preservation, namely the preservation of religion (al-ddin), the preservation of life (al-nafs), the preservation of intellect (al- aql), the preservation of progeny (al-nasl) and the preservation of wealth (al-mal). This conclusion can be demonstrated through the following figure 1. 8

9 Necessities (Daruriyyah) Religion Life Needs (Hajiyyah) Intellect The takaful products development Based on the Maqasid al-shari ah Progeny Embellishments (Tahsiniyyah) Wealth Corresponding Author Wan Nazjmi Mohamed Fisol, Kulliyyah of Muamalat and Management Sciences, Sultan Abdul Halim Mu adzam Shah International Islamic University, Kuala Ketil, Kedah, Malaysia. Address: References Abd. Rahman, Z. (2014). Maqasid al-shari ah fi Ahkam al-buyu -Fiqh Kewangan Islam. Malaysia. PTS Islamika Sdh. Bhd. Abdul Ghani, N. A. R., Laluddin, H., and Mat Nor, A. H. (2011). Maslahah as a Source of Islamic Transactions (Mu c amalat). Islamiyyat 33 (2011): Ahmad, R. (2008). Metode Pentarjihan Maslahah dan Mafsadah Dalam Hukum Islam Semasa. Jurnal Shariah. Jil. 16. Bil. 1. pp Ahmed, H. (2011). Maqasid Al-Shari ah and Islamic Financial Products: A Framework for Assessment. Kuala Lumpur: ISRA International Journal of Islamic Finance. Vol. 3, Issue 1. Al-Amidi (1984). Al-Ihkam fi Usul al-ahkam, ed. Syed al-jamili. Beirut: Dar al-kutub al- Arabi. Al-Ghazali, M. (1998). al-mustasfa min ilm al-usul. Beirut: Dar al-kutub al- Islamiyyah. 9

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