Takaful 131
At around the same time, Malaysia developed the Takaful Act, 1984
leading to the establishment of Syarikat Takaful Malaysia Berhad as the
firsttakafulcompany in Malaysia and the Far East region.
Currently Malaysia has the most mature Islamic financial system with
many established Shari’a-compliant banks andtakafulbusinesses operating
alongside conventional banking and insurers. ItsShari’a-compliantfinancial
companies offer price-competitive products and due to this have a market
appeal to non-Muslim as well asthe Muslim population.
Key stakeholders
The key stakeholders in a moderntakafuloperation are the:
- Policyholders – the customers of the takaful business. They pay
contributions to obtaina Shari’a-compliantinsurance policy;
- Shareholders – the people who operate the business on behalf of the
policyholdersandprovidetheinitialmoneytostartrunningthebusiness;
and
- Shari’a board – the Islamic scholars who opine on whether the products
and operations of thetakafulbusiness are Shari’a-compliant
Policyholders
The policyholders pay contributions to cover them for a Shari’a-compliant
insurable loss (eg. damage to their car in an accident). As in a mutual
insurance company, the policyholders pool their contributions in a “policy-
holder fund” and use these pooled contributions to pay all the insurance
claims of the company, as well as brokerage fees andreinsurance fees.
The policyholders also share in the profit and the loss of thetakaful
business. For example, if at the end of a financial year the policyholder fund
makes a surplus after deducting all expenses, claims (including setting up
reserves to pay potential future claims), this surplus is shared amongst the
policyholders.
If at the end of the financial year the participant fund makes a loss, this
deficit is funded by aqard al-hassan(a benevolent loan, one where interest
is not charged and repayment is not implicit) from the shareholders. The
shareholders are then repaid the loan from any future surpluses of the
policyholders fund. The shareholders cannot access the capital from the
policyholders fund, except when theqard al-hasanis being repaid.
The distribution of surpluses to policyholders canoccur in several ways:
- It can be distributed to all the participants, depending on the percentage
of their contribution to the total contributions received;
- It can be distributed to whomever did not make any claim during their
