Malaysia's regulator, Bank Negara Malaysia (BNM,) has issued the 'Policy Document on Broader Application of Ta'awun in Takaful', which sets out the Shariah and regulatory requirements to unlock the full potential of takaful in promoting financial resilience as well as financial inclusion, in line with the objectives of Shariah (maqasid Shariah).
The scope of the broader application of ta’awun includes encouraging takaful operators to explore and develop innovative takaful business and operational models that may involve the application of more diverse Shariah contracts.
The Policy Document has taken effect since 28 November 2025.
BNM said, “Mutual assistance (ta’awun) is a fundamental Islamic value that promotes cooperation in pursuit of good causes and righteousness, while prohibiting actions associated with sin, injustice or transgression. Ta’awun reflects the ethical obligation of individuals and societies to support one another, upholding the values of solidarity and collective responsibility.”
The central bank added, “In the context of the takaful industry, a broader application of ta’awun encourages licensed takaful operators to adopt business practices that are responsible and beneficial to society at large, fostering a stronger culture of empathy and support, which is essential for achieving the socio-economic objectives.”
Requirements
The requirements in the Policy Document aim to facilitate a smooth and effective broader application of ta’awun in the takaful business by setting out the following:
(a) scope of a broader application of ta’awun encompassing the sources of funds that can be utilised.
(b) Shariah requirements in preserving the rights and ensuring fair treatment of existing takaful participants, particularly when the broader application of ta’awun also benefits third parties beyond the existing takaful participants.
(c) regulatory requirements to support prudent and innovative implementation of a broader application of ta’awun, encompassing the introduction of new and/or enhanced requirements on governance and oversight, market conduct, as well as transparency and disclosure.
(d) guiding principles to facilitate the exploration and development of new takaful operational models to support an effective implementation of the broader application of ta’awun.
Regulatory approach
BNM said that it would adopt a balanced and proportionate regulatory approach in ensuring the regulatory framework remains accommodative and facilitative for the continuous development of sound, progressive and inclusive takaful industry, while prioritising the financial soundness of licensed takaful operators and safeguarding the interests of takaful participants.