Risk-sharing mechanisms in takaful, which entail greater participation of consumers in the scheme with possible rewards in the event of no claims, will appeal to many. The underlying mutuality principle allows for exploration of innovative business models that can constructively disrupt the existing risk-transfer modality. Value-adding services that complement the takaful offerings should also be optimised in designing solutions that are compatible and meaningful for consumers. The initiative this year to expand the application of value-based intermediation (VBI) to takaful is a positive step forward for the industry to promote good value solutions. The takaful industry in Malaysia has established the Task Force under the oversight of the Malaysian Takaful Association (MTA), to spearhead this development. Intuitively, we would already expect that takaful is consistently aligned with VBI. Nonetheless, we will be looking forward to the stewardship that the takaful industry can offer in innovating impactful financial protection solutions and developing framework of business practices that are solidly grounded in fairness and incorporate sustainability principles. Secondly, the takaful industry must optimise the use of technology and digital infrastructures to provide premier service quality to consumers. Globally, we do see the insurance and takaful sector as one of the sectors that can benefit the most from innovative technologies such as data analytics, robotics, artificial intelligence (AI), blockchain and cloud computing. App-based insurance platforms which leverage on AI have been established to identify interests of consumers in providing niche coverage.

Undoubtedly, it must compete and present a viable alternative to the conventional insurance. At the same time, it has a unique value proposition that can meet the Muslim demand and Shariah requirements. The sustained demand for takaful, especially among Muslims, has contributed towards the industry’s steady growth – from 3% market share a decade ago to almost 18% in 2018. The growth potential for takaful industry remains clear and promising. In 2018, almost half (45.8%) of the Malaysian population have yet to obtain protection. Based on a recent demand survey, 46% of Malaysian households and 48% of businesses responded that they are unaware about the comprehensive range of solutions that the takaful industry is able to offer. To reduce this gap, as an industry, takaful operators must collectively elevate the prominence of takaful and its capabilities to be a solution of choice for Malaysians. I wish to suggest three pathways for this aspiration to be realised: First, by offering good value solutions to customers; Second, by adopting innovative tools and effective distribution strategy; Third, by inculcating sound understanding of financial protection and prudent financial behaviours among Malaysians. Allow me to elaborate on these . Firstly, the takaful industry has the advantage of a business model that is grounded on the values of mutual assistance and solidarity. Unlike insurance, which is premised on the buying-and-selling of risks at a premium, takaful advocates 2/5  BIS central bankers' speeches  for value propositions that consumers are likely to find unique and take comfort in.