Development of Social Cost and Benefit Analysis (SCBA) in the Maqāṣid Shariah Framework: Narratives on the Use of Drones for Takaful Operators

Abstract

Takaful operators are part of the Islamic financial institutions that are expected to achieve the commercial and social objectives by their stakeholders particularly the takaful participants (policyholders). First, this study aims to postulate a new framework to measure cost effectiveness by including the social and economic benefits of drone-assisted technology in the context of maqāṣid Shariah. Second, the study intends to investigate how the takaful industry can benefit from the drone-assisted technology, particularly in terms of cost reduction. This paper presents an early finding that forms part of a bigger research project which is focusing on the use of drone for disaster victim identification (DVI). This study employs thematic analysis of qualitative research method by engaging key informants who are Shariah expert, drone practitioner and accounting expert. In the context of emerging economies like Malaysia, the adoption of drone is sporadic when some industries such as military and agriculture are quite experienced with it; but for the takaful sector is almost none. This study provides preliminary findings that suggests there is potential of cost effectiveness for drone usage from the perspectives of SCBA in the maqāṣid Shariah framework. The main contributions from this paper are: (1) the new SCBA framework derived from the maqāṣid Shariah perspective and, (2) the application of this framework in examining the cost effectiveness on the use of drones by the takaful operators especially during disaster.

Realising the Corporate Social Performance (CSP) of Takaful (Islamic Insurance) Operators through Drone-Assisted Disaster Victim Identification (DVI)

“…A resemblance to the humanitarian missions in China and Japan also took place in the United States in 2005 for S&R operations when Hurricane Katrina hit the country, and drones were flown to identify the victims and rescue them, and even to assess the damages by the insurance companies to quantify their losses for compensation [26,27].…”

“…Ref. [26] described that, currently, drones are not being used by takaful operators globally, even in mature takaful markets such as Malaysia, Indonesia, and the Gulf Cooperation Council countries (GCC). Yet, in developed countries such as the United States (US), the United Kingdom (UK), and the European Union (EU), the insurance companies there have used drones in their operations for quite some time [31][32][33].…”

“…Ref. [26] in their preliminary findings informed that such actions by the takaful operators are parallel with the maqasid of Shariah that rally on the good deeds and prohibit wrong-doings, which formed the basis for takaful operators.…”

How Far Takaful Efficiency Has Been Researched?

“…Efficiency in the context of the takaful industry is not just about achieving optimal financial results, but also involves broader aspects such as corporate governance, product innovation, customer service, and social impact. (Muhamat et al, 2021). Research on takaful efficiency has become an important topic for academics, practitioners, as well as policy makers in order to address the various challenges faced by the industry (Zarunnaim et al, 2023).…”

Exploring contributions of drones towards Industry 4.0

“…Branger and Pang (2015);Liu et al (2020aLiu et al ( , 2020b;Fu et al (2021),Muhamat et al (2021) 18Environmentally friendly Drones are an environmentally friendly alternative to substantial delivery trucks. In a couple of seconds, drones can refresh their navigational data, making it easier to reach their destination.…”