ARTIFICIAL INTELLIGENCE IN DIGITAL TAKAFUL GOVERNANCE: A PATH TOWARD SHARIAH-COMPLIANT AI FRAMEWORKS
DOI:
https://doi.org/10.35631/AIJBES.829096Keywords:
Artificial Intelligence, Digital Takaful, Shariah Governance, Fintech, Shariah ComplianceAbstract
The digital transformation of the Takaful sector has created new opportunities for the use of Artificial Intelligence (AI), blockchain, and smart contracts, which have been gaining traction in the industry to enhance efficiency, transparency, and financial inclusion. This paper addresses the implications of AI on the governance of digital Takaful in relation to Shariah compliance and regulation in Malaysia. The purpose of this study is to examine the governance implications of AI in digital Takaful, with a particular focus on the role of AI in ensuring Shariah compliance and the regulatory landscape in Malaysia. This study adopts a narrative literature review to highlight the governance implications of AI in digital Takaful, particularly in relation to Shariah compliance and the regulatory landscape in Malaysia. Thematic analysis was conducted on the literature that was published mainly from 2020 to 2026 to highlight five key themes: AI for operational efficiency, blockchain and smart contracts, Shariah governance and algorithmic compliance, risks of implementing AI, and financial inclusion through Micro Takaful. These findings indicate the potential of AI to improve underwriting, claims management, fraud detection, customer engagement, and customer onboarding in the digital realm. However, the use of such technologies brings governance challenges relating to algorithmic bias, black-boxing of models, data governance, cybersecurity, and auditability of automated decision-making. Based on these observations, the study suggests an integrated governance model in terms of participation of Takaful Operators, Shariah Committees, technology governance roles and regulators' supervision. This may play a role in the development of Shariah-compliant AI systems, providing transparency, accountability, and safeguarding the participants.
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