Insurance has become an essential and significant part of people's everyday lives around the world

as a result of rapid growth in the field of international trade and commerce. As insurance contains
gharar, maysir and riba elements, the Takaful industry was established in Malaysia in the early
1980s. Malaysian Muslims requires a Shari'ah-compliant alternative to conventional insurance due
to certain prohibitions in Islam regarding conventional insurance. (Rahman, 2020).

On 15 June 1972, the Fatwa Committee of the National Council for Islamic Religious Affairs Malaysia
addressed and resolved the issue of life insurance at its meeting and decided that the insurance
issued by the insurance companies is voidable because it violates Islamic business principles as the
contract containing the elements of gharar, maysir and riba. The government established a special
task force in 1982 to look into the possibility of establishing an Islamic insurance company in
Malaysia. (Sherif & Shaairi, 2013). Following the task force's recommendations, Malaysia passed the
Takaful Act 1984, and the country's first Takaful operator was created. The takaful Act 1984, which
was passed in November 1984, marked the beginning of the takaful industry in Malaysia. In 1984,
the Takaful Act 1984 was enacted, and the first Takaful company, namely Syarikat Takaful Malaysia
Bhd, was formed.

The Takaful Act 1984, which had been in effect for nearly three decades, has now been replaced and
repealed by the Islamic Financial Services Act 2013. (IFSA). The Malaysian Parliament passed the IFSA
on 22 March 2013, and it was published in the Malaysian Gazette. The IFSA 2013 is a Malaysian
banking law that regulates and supervises Islamic finance institutions' banking activities. The Islamic
Banking Act 1983 (IBA), the Takaful Act 1984, the Payment System Act 2003, and the Exchange
Control Act 1953 are all repealed by IFSA 2013 (Lujia, Hassan & Oseni, 2016).

In 2012, the Takaful Operational Framework was implemented, as well as the revised Shari'ah
Governance Framework. In 2015, Bank Negara Malaysia (BNM) released a blueprint for overhauling
the life insurance and Family Takaful (LIFE) System. The LIFE scheme is intended to help life
insurance and family takaful prosper in the long run. All of these developments have transformed
Malaysia to the forefront of Southeast Asia's Takaful industry.

In the Islamic financial sector, the IFSA puts a heavy focus on Shariah compliance and governance,
creating a robust legal framework that is fully compatible with Shariah in all fields of regulation and
oversight, from licencing to institution closure. The purpose of enacting this act is to introduce a
more risk-focused and structured framework for financial institution regulation and supervision to
protect financial stability, provide a Shariah-compliant legal system for all areas of enforcement and
supervision, ensure that the money market, foreign exchange market, payment processes, and
payment instruments are all operating correctly and enhance consumer protection in financial
products and services.

Rahman, M. S. A. (2020). At the Hands of Fate: the Political Economy of Islamic Insurance. Hilmia
Press/Primedia eLaunch LLC.

Sherif, M., & Shaairi, N. A. (2013). Determinants of demand on family Takaful in Malaysia. Journal of
Islamic Accounting and Business Research.

Lujja, S., Mohammad, M. O., Hassan, R. B., & Oseni, U. A. (2016). The feasibility of adopting Islamic
Banking system under the existing laws in Uganda. International Journal of Islamic and Middle
Eastern Finance and Management.

Comment
The IFSA does not specify clearly the roles of Shariah committee as the role of board of director
under Company Law Act.