October 22, 2025

The Value-Based Intermediation for Takaful (VBIT) Framework in Malaysia

Introduction Malaysia has long been a pioneer in Islamic finance and takaful. Yet as the industry matured, regulators and industry leaders realised that focusing only on Shariah compliance was not…

Introduction

Malaysia has long been a pioneer in Islamic finance and takaful. Yet as the industry matured, regulators and industry leaders realised that focusing only on Shariah compliance was not enough. Financial products could meet all technical requirements and still fail to make a meaningful difference to society.

To bridge this gap, the Malaysian Takaful Association (MTA), together with Bank Negara Malaysia, launched the Value-Based Intermediation for Takaful (VBIT) Framework in 2021. A year later, the VBIT Roadmap was introduced to guide the industry on how to implement it in stages. Together, they mark a major shift toward an ethical, inclusive, and impact-driven takaful ecosystem.

What Is the VBIT Framework?

The VBIT Framework is a structured guide that helps takaful operators move from being merely Shariah-compliant to becoming Shariah-purposeful. In simple terms, it means the industry’s activities must not only avoid what is forbidden but also actively create positive outcomes for people, communities, and the environment.

The official definition describes VBIT as “an intermediation function that aims to deliver the intended outcomes of Shariah through the conduct, offerings, and practices of takaful—generating positive and sustainable impact for the economy, society, and environment while ensuring fair returns for stakeholders.”

This is the same spirit that underlies the maqasid al-Shariah (objectives of Islamic law): preserving faith, life, intellect, lineage, and wealth.

The Five Thrusts of VBIT

The framework rests on five key thrusts, each guiding a different dimension of a takaful operator’s operations and culture.

Financial Resilience
Operators are encouraged to build strong, sustainable business foundations while ensuring financial inclusion. This means designing products that help households and small businesses remain resilient during financial shocks, rather than focusing purely on profit or short-term growth.
Community Empowerment
Takaful is inherently cooperative, and VBIT strengthens this spirit. Operators are urged to develop initiatives that empower communities — such as micro-takaful for the B40 segment, financial literacy programs, or partnerships with local NGOs to address real protection gaps.
Good Self-Governance
Strong governance ensures integrity and accountability. This thrust promotes ethical decision-making at all levels, transparent reporting, and a leadership culture that values long-term societal impact as much as financial success.
Best Conduct
Every customer interaction matters. The “Best Conduct” thrust calls for fair marketing, honest advice, transparent contracts, and empathetic claims handling. Agents and intermediaries should act as advisors who genuinely protect participants’ interests.
Capacity Building
To make value-based intermediation a reality, operators must continuously invest in knowledge, training, and technology. Capacity building also includes developing the skills to measure impact, manage risks responsibly, and innovate products aligned with sustainability goals.

Implementation Principles

The VBIT Framework encourages takaful operators to embed its principles across three major areas of operation:

Value Creation for Stakeholders
Takaful should deliver tangible benefits not only to participants and shareholders, but also to employees, agents, communities, and the environment. Every new product or initiative should answer the question: How does this create real value for society?
Fair and Transparent Conduct
Operators must protect participants’ rights through clear communication, fair pricing, transparent surplus distribution, and accessible claims processes. Trust is the foundation of sustainable growth.
Sustainability and Positive Impact
Takaful operations should avoid activities that harm the environment or society. At the same time, they should support projects that contribute to sustainable development — such as renewable energy, healthcare, and education.

The VBIT Roadmap

To help the industry move from theory to practice, the Malaysian Takaful Association released the VBIT Roadmap in 2022. It outlines practical steps for takaful operators to assess their current maturity level and improve over time.

The roadmap encourages each operator to:

Conduct a self-assessment of how well their products, governance, and culture align with VBIT principles.
Set clear targets and milestones for adopting the five thrusts.
Publish impact reports that show how their activities create value beyond financial metrics.
Share best practices across the industry to build collective momentum.

Through the roadmap, VBIT becomes not just a concept, but a measurable journey toward higher ethical and social standards.

How the Framework Works in Practice

Product Design

Under VBIT, new products are developed with purpose. Examples include micro-takaful plans for underserved communities, green takaful that supports environmental sustainability, and family protection schemes that integrate charitable or educational benefits.

Distribution and Conduct

Agents and intermediaries are trained to adopt value-based selling — focusing on genuine advice, needs analysis, and customer welfare rather than aggressive sales targets.

Claims and Service

The claims process reflects compassion and fairness. Operators strive for timely settlement, clear communication, and additional support for customers facing hardship.

Governance and Operations

Boards and management are expected to align business strategies with the maqasid al-Shariah, ensuring that growth never comes at the expense of ethics or societal wellbeing.

Measurement and Reporting

Impact reporting goes beyond profits. Operators are encouraged to track and publish indicators such as the number of low-income families protected, speed of claims processing, or community initiatives funded.

Benefits of the VBIT Framework

For Society

VBIT broadens takaful’s social purpose. It expands coverage to those previously excluded, promotes financial literacy, and channels surplus funds or corporate initiatives into meaningful community programs.

For Takaful Operators

Implementing VBIT strengthens public trust and differentiates operators in a competitive market. It helps them innovate, reach new segments, and attract customers who value ethical and sustainable financial solutions.

For the Economy and Nation

A value-based takaful industry supports Malaysia’s national agenda for inclusive growth and sustainable finance. It positions Malaysia as a global model for responsible Islamic finance that balances profit with purpose.

Challenges and the Way Forward

Despite the positive momentum, implementing VBIT requires effort and commitment. Operators must overcome:

Cultural inertia, shifting mindsets from sales-driven to purpose-driven models.
Measurement challenges, as social impact is harder to quantify than financial results.
Resource limitations, especially for smaller operators adapting to new frameworks and reporting requirements.

Yet the rewards outweigh the hurdles. As more operators integrate the framework, consumers will increasingly recognise takaful as a system that genuinely uplifts society — not just another insurance product.

Conclusion

The launch of the VBIT Framework in Malaysia marks a major milestone in the evolution of the takaful industry. It is a call to return to the roots of Islamic finance — compassion, fairness, and mutual benefit — while embracing modern sustainability principles.

Through VBIT, every takaful product, policy, and interaction can become a tool for doing good. When fully realised, this framework will redefine what it means to be “protected”: not just financially secure, but also part of a community that thrives together in faith, fairness, and shared value.