Article Review on Takaful

Article Review

This report discussed the revision of the article Shariah Scholars’ View Point on the Practice of Underwriting and Risk Rating for Family Takaful Model by Sheila Nu Nu Htay, Mohammad Khalid Jawahir and Syed Ahmed Salman which published by Canadian Center of Science and Education. At the beginning of this article review, there will be a brief discussion focused on the topic “underwriting and risk rating”, its definition and the issue highlighted in the article which related to it. Next, this article review will focused on the solution of the issue arisen in the article.

In insurance, regardless of conventional or the Islamic one, to conclude the contract between the insurer and the applicants of the policy there must be the first step which is underwrites the risk or risk rating. In this article that we reviewed, the step of underwriting is defined as the process an insurer uses to determine if and on what basis it will accept applicants. Meanwhile, according to the book “Basic Takaful Practices” by IBFIM, takaful underwriting is the process of classification, rating and selection of risk which its’ primary purpose is to analyze risk, evaluate the type of exposures that each risk poses to the Takaful Operator and establish a contribution for those risks and exposure. The process of underwriting involves a series of assessment and examination to determine the individuals’ risk, thus classify and select the applicants whom to be insured into groups or classes. In each class, there will be the individuals whom pose the same level of risk. The members of same class will pay the same amount of premium as their share the same level of risk.

The main issue that highlighted in the articles is the Malaysian Shariah scholars’ view point of this underwriting topic. From the research done by the authors, it is found that many of these scholars whom also the Shariah advisors of the takaful companies did not being well exposed to the underwriting and risk...