Non - bank Financial Intermediation 219
authorization to operate in Qatar and hopes to launch its fi rst
Islamic annuity product in the course of this year, tapping into a
growing number of clients in the Middle East keen to add to their
state pensions. In December 2009, Generali, the Italian insurance
giant, announced it was entering into a strategic partnership with
Qatar Islamic Bank in order to access the GCC takaful market.■ (^) To raise the awareness of takaful and to promote full transpar-
ency, consumer education is also extremely important. In Europe,
CIMA (Chartered Institute of Management Accountants, based
in the UK) as well as the Universités de Dauphine and Strasbourg
have added Islamic Finance, including takaful, to their curricu-
lum. To achieve this, Bank Negara Malaysia has launched an ini-
tiative called “insurance info” which is basically the Consumer
Education Program (CEP) on insurance and takaful. A joint effort
between the banks, the insurance and the takaful industry, the
program is designed to provide educational information to enable
consumers to make well - informed decisions when purchasing.
Source: Jaffer (2010a) and (2010b)
There is no standard operating model for takaful companies, as each
country may decide on a particular model. Primarily, takaful models can be
mudarabah - based, wikala - based or a hybrid of the two.
Typically, implementation of takaful is carried out in the form of sol-
idarity mudarabah, where the participants agree to share their losses by
contributing periodic premiums in the form of investments. They are then
entitled to redeem the residual value of profi ts after fulfi lling the claims and
premiums.^8 One of the critical differences between contemporary insurance
models and takaful is the participant’s right to receive surplus profi ts. While
the participants in a given takaful mudarabah have the right to share the
surplus profi ts generated, at the same time they are liable for additional
amounts if the initial premiums paid during a period are not suffi cient to
meet all the losses and risks incurred during that period. Takaful compa-
nies can constitute reserves (like conventional mutual insurance companies),
which allow the need for the insured to make supplemental contributions
if claims exceed premiums. Figure 10.3 shows a takaful set - up based on a
mudarabah contract, the workings of which can be summarized as follows:
■ (^) A principal/agent agreement is established between the insurance opera-
tor (agent/manager) and the policyholders (principal) where policyhold-
ers are rabb - al - mal and insurance operator is mudarib to perform both
asset management and underwriting.