The global takaful market is estimated by market analysts to reach a premium of U.S. $ 12.5 billion by 2015. Malaysia is considered the second largest takaful in the world with total asset of US$ 3.2 billion. One of the new innovations of takaful and insurance in Malaysia is Perbadanan Insurance Deposit Malaysia (PIDM) which is also known internationally as the Malaysia Deposit Insurance Corporation (MDIC). The role of MDIC is to provide protection to owners of takaful certificate and to ensure the stability and confidence in the market by protecting policy holder (takaful certificate). Therefore, this study investigates the extent to which MDIC is relevant to takaful operators. Personal interviews are carried out with shariah advisers of takaful operators to deduce the actual practice, the ideal role and to gain access to the field of MDIC and its implications in Malaysia. The findings of this research indicate that MDIC is relevant to takaful operators and part of the regulations that should be supported and encouraged. Furthermore, the study also found that Shariah advisers suggest Wakalah bi ajras an alternative of kafalah-bi al-ajrby shifting the scheme to tabarru' model. In addition, the study found that the contribution paid should be charged to the participants' fund; this is because the protection provided by MDIC is for the fund that belongs to the participants and takaful operators deemed to be wakeel (agent) only.

The establishment of the Takaful and Insurance Benefits Protection System (TIPS) in Malaysia is a statutory requirement. TIPS aims to ensure financial stability, soundness and public confidence. Perbadanan Insurans Deposit Malaysia (PIDM), known internationally as the Malaysia Deposit Insurance Corporation, is the sole regulatory body entrusted with the mandate to regulate deposit insurance across the country. At the outset, its mandate was confined to banking institutions. Since 2010, however, PIDM’s role has been extended to include takaful and conventional insurance institutions. With regard to takaful, the operation of the Takaful Benefits Protection System (TBPS) and the relationship between PIDM and its takaful members pose major concerns that have been raised by the industry in Malaysia. The concerns are related to contractual relationships, sources of premiums, the subject matter of the contract, and the services and guarantee that PIDM provides for takaful participants. This research aims to provide critical Shari'ah analysis and evaluation of the current model of Takaful benefits protection system. It examines the existing model to ascertain to what extent it accomplishes the statury mandate and to what extent it meets Shari'ah requirements. Adherence to regulatory requirements is a must. The takaful industry faces some major challenges in trying to realise the interests of the takaful participants and its shareholders while satisfying the regulators. Thus, it is imperative to conduct an investigation that resolves these thorny issues in a win-win manner.