Value-Based Intermediation
For Takaful (VBIT) Framework
About VBIT Framework
About VBIT Framework
The framework aims to encourage industry players towards achieving growth that is sustainable and meaningful for all stakeholders. In the effort to create a positive socio-economic impact, Takaful Operators (TOs) aspire to become a major influence on the realisation of prosperity and Maqasid Shariah.
The framework operates as a guideline for Takaful Operators in their implementation of Value-based Intermediation for Takaful (VBIT) by outlining the best conduct and practices in the industry. The framework is comprehensive and relevant to Family Takaful, General Takaful and Retakaful Operators.
A clear understanding of how Takaful Operators can embrace VBIT will drive the industry to the next level.
Underpinning Thrusts
A set of clear underpinning thrusts is developed to guide the adoption of VBIT by all TOs in Malaysia to create positive value and sustainable impacts for the respective stakeholders. This integrated set of thrusts serves as a compass for TOs in the journey of implementing VBIT.
The underpinning thrusts include:
Financial Resilience
Ability to bounce back from the financial shock
Community Empowerment
Process of enabling people to gain control over the factors and decisions that shape their lives
Good Self-Governance
Ability to effectively exercise all necessary functions of regulation
Best Conduct
Practice that is deemed to be most superior because it leads to the best results
Guiding Principle
The implementation of VBIT begins with Corporate Value Intent (CVI) in delivering Shariah propositions through Takaful business activities – operations, practices, conduct and offerings.
Articulates the TO’s institutional
intent or commitment
Integrates the key underpinning
thrusts of VBIT
Basis for formulation of
business strategies
Reflected in the
organization’s culture
Align with Maqasid
Shariah and ESGs
Acts as a voice for the aspirations of the TO’s leadership
CVI is beyond the company’s slogan. It expresses the specific desirable future that the TO is committed to achieving – a goal which balances the creation of value for all stakeholders.
Key Implementation Strategies
The execution of VBIT by TOs may be conducted by focusing on identified key implementation strategies. The way the institution delivers its CVI and implements its value-based strategies shall be based on four (4) interlinked areas of focus.
Inclusive Stakeholder Engagement
Effective communication to achieve the objective of CVI
Value-driven Solutions
Offerings, business practices and infrastructure that provide meaningful and valuable experiences
Impact-based Assessment
Analysis of potential impacts from all perspectives
Constructive Collaboration
Strategic alliances in delivering value-driven solutions
Performance Measurement
A comprehensive measurement that assesses the progress and effectiveness of the VBIT initiatives implemented by TOs. It will address both financial and non-financial indicators under the four underpinning thrusts of VBIT.
It is important because:
For quantifiable measurement - indicate the progress of VBIT implementation.
To guide TOs - identify whether they are progressing in line with their respective CVI.
Create atmosphere of learning and innovation for the TOs.
Act as an effective tool - promote workforce motivation and job satisfaction.
Shape positive and proactive behaviour among industry players.
Enhanced Disclosure
The enhanced disclosures will demonstrate TOs’ accountability towards VBIT commitment and in delivering sustainability values. It reflects the progress and effectiveness of the VBIT initiatives in deliberating relevant impact-focused information. The disclosure shall include consistency, reliability, comparability and meaningfulness of each VBIT initiatives.
It is important because:
Enhance the understanding of stakeholders of the role of the Takaful industry.
More Informed decision making by stakeholders.
Better understanding on TO's strategic intent and VBIT initiatives.
Value Creation
Benefits for Society
- Receive better quality of Takaful offerings
- Fair and better transparency to build strong confidence in TOs
- Better awareness and preventing negative outputs
Benefits for Regulators & Government Authorities
- Better alignment of business focus with the national agenda
- Greater integration and effective collaboration
- Strengthen financial stability
Benefits for Takaful Operators (TOs)
- Enhance operational efficiency
- Unlock business opportunities in the underserved & unserved markets
- Increase penetration in new target segments
- Increase competitiveness among TOs
- Effective Takaful ecosystem
- Enhance corporate image in the local and global markets
Future Landscape of Takaful
Driven by shared prosperity & value - "Takaful for all"
Performance measurement & disclosure of financial returns and value
Innovation of products & services to cater for distinct needs, lifestyles & social classes of consumers
Qualitative measurement of company’s involvement that creates a positive impact on stakeholders
Meaningful involvement and contribution from all key stakeholders in different focus areas
VBI & VBIT
VBI & VBIT
Bank Negara Malaysia with the founding members of Value-based Intermediation (VBI) Community of Practitioners (CoP) have introduced Value-based Intermediation Strategy Paper that strengthens the roles and impact of Islamic banking institutions.
Takaful industry embraces the concepts of VBI by adapting it into Value-based Intermediation for Takaful (VBIT) Framework. The issuance of the industry’s VBIT Framework serves as a guideline in implementing VBI within the sustainability ideals through its value-based agenda. The Framework is comprehensive and relevant to Family Takaful, General Takaful and Retakaful Operators.
The VBI agenda will propel the Takaful industry to integrate value-based concepts seamlessly into the respective business practices.
Both VBI and VBIT echo similar aspirations to ensure inclusive protection for each and every segment of the society.
VBI Strategy Paper |
VBIT Framework |
|
|---|---|---|
| Objective | To set out the definition and underpinning thrusts of value-based intermediation (VBI) as well as proposed implementation approach and strategies in advancing VBI as the next strategic direction for the Islamic banking industry. | As a guideline for Takaful and Retakaful Operators in implementing VBI agenda. The framework is in line with the objectives of achieving Maqasid Shariah to provide financial resilience, community empowerment, good self-governance and best conduct. |
| Industries Involve | Islamic banking industry | Takaful and Retakaful Operators |
| Underpinning Thrusts |
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| Key Strategies |
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| Beneficiaries |
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To learn more about VBI, please visit https://www.bnm.gov.my
Frequently Asked Questions (FAQ)
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What is VBIT?VBIT Framework serves as a guideline in implementing VBI within the sustainability ideals through its value-based agenda. The framework is comprehensive and relevant to Family Takaful, General Takaful, and Retakaful Operators.
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What are the goals of VBIT?VBIT reflects the industry’s aspiration to elevate Takaful to the next level by transforming the industry towards achieving meaningful sustainable growth whilst delivering impactful and measurable values to the customer and stakeholders. The objective is to deliver positive socio-economic impact whilst upholding the objectives of Shariah and sustaining positive financial returns for the relevant stakeholders.
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How does VBIT affect the stakeholders?It is good to note that during the development of the VBIT Framework, it is foreseen that the implementation of the VBIT initiatives will take place in stages. As the industry progresses through the adoption of the VBIT principles, it is hopeful that the discussion of VBIT ideals can encourage the stakeholders to embrace value-driven agenda and change their mind set to consider more meaningful propositions in delivering the intended outcome.
The VBIT conversations are expected to spur the TOs’ creativity and encourage them to innovate in delivering positive and meaningful impacts to their stakeholders. This will ideally lead to a better quality in TOs’ offerings for distinct market segments nationwide, with greater integration and effective collaboration between different stakeholders in transitioning towards a sustainable financial future for all. -
Bank Negara Malaysia has introduced Value-based Intermediation (VBI) in 2017, will the introduction of Value-based Intermediation Takaful (VBIT) be deemed as reinventing the wheel?VBIT is the extension of VBI, where VBI is focused more on adoption of the VBI principles by Islamic Banking in Malaysia. VBIT Framework provides a specific guide for Takaful practitioners on the awareness of and the process to transform the Takaful industry into an intentional and meaningful journey towards achieving the ultimate objectives of Shariah. It is also the first of such framework in the global Takaful landscape, where it explicitly mentions Maqasid Shariah and sustainability agenda in together.
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With the implementation of VBIT, what are the impacts on the Takaful offerings that the consumers can enjoy?Consumers can expect Takaful Operators to gradually offer a more customised and inclusive products and services that brings greater meaning and more valuable to them. It will be more thought through and the distinct feature would be more unique to specific communities and segments.
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What constitutes the success of the VBIT implementation by Takaful Industry?As the implementation of VBIT ideals provides the opportunity for the industry to focus on its unique value proposition – Shariah compliant, mutual benefit sharing and transparency; the key success factor is highly dependent on the continuous and concerted efforts and commitments from all respective stakeholders – the society, the industry and the regulators in the journey to unlock the full potential of Takaful industry.
Implementing VBIT involves:
