The Islamic Perspective on the Underwriting of Health Takaful Products: A Study of Selected Takaful Operators in Malaysia

Abstract

Abstract Purpose – This chapter examines whether the underwriting processes of takaful operators for health takaful products conform to shariah. Methodology/approach – A qualitative research method has been used for this study. Data have been collected from primary sources through interviews and from secondary sources by examining relevant documentation. Interviews were conducted with underwriters from takaful operators A, B, C and D. Interviews were also conducted with the shariah executives of these takaful operators and with shariah experts from two institutions – University A and Research Institute B – for their opinions on the underwriting process. This selection of respondents from those responsible for the underwriting process and from experts in shariah has assisted us in locating data for our research, based on their experience and the practices in which they are involved. Findings – The study found that the underwriting process used by takaful operators was in accordance with Islamic principles. Research limitations/implications – The study is limited to four takaful operators in Malaysia who have received awards for best operators; this study focuses on health takaful products. Originality/value – This study provides a view about the process of risk selection which determines the contribution rate and whether a risk will be acceptable or not to the company.