Takaful companies and products in

Malaysia

picture for takaful

Overview

Insurance

Takaful

History and Background

Characteristics of Takaful

Need of Takaful

Difference between Takaful and Conventional Insurance

Products of Takaful

Models of Takaful

Role of Takaful in Islamic Economic System

Issues & Challenges

Suggested Measures

Conclusion

INSURANCE
Islamic Insurance

Conventional

INSURANCE

A contract in which an individual receives financial protection

against losses from an insurance company. The company pools
clients' risks to make payments more affordable for the insured.

The Takaful industry is poised for significant growth as

demand increases and industry enablers are further aligned ...
Supply

Demand

Economic growth
Increase in GDP per capita
Youthful demography
Increasing awareness of Takaful
Greater desire for Sharia
compliant offerings
Increase in asset based, Sharia
compliant financing

The Global Takaful

Industry

Compulsory protection
Licensing and increased competition
Better regulation
Greater role for private sector participation
Increased market-led initiatives
Facilitation

Fragmented landscape
Undercapitalised
Limited reTakaful capacity
Problematic asset
management
Local solution offerings
Local distribution channels

What is Takaful?

Takaful (Islamic insurance) is a

financial transaction of a
mutual co-operation between
two parties towards providing a
financial security for one of
them against an unexpected
material risk.

Thakaful is

Social scheme

Arabic word

Legally binding agreement

Common good

Contributions

Losses & liabilities

Uncertainty removes

Fair distribution of surplus

n says
a
r
u
in
Q
The
other
n
a
e
n
ye o
y, but
t
p
e
l
i
e
p
H
d

n
ness a other in sin
s
u
e
o
t
an
righ
ot one
n
ah Alr
e
u
y
S
l
(
p
e
.
h
ncour
)
and ra dah verse:2
i
Ma

Reference Al Quran:

Help (taawan) one another in

furthering virtue (birr) and Allah
consciousness (taqwa) and do not help
one another in furthering evil and
enmity. Al Maidah: verse 2 (5:2).
Takaful is a form of mutual help
(taawun) in furthering good/virtue by
helping others who are in need / in
hardship .

The Prophet Muhammad (P.B.U.H) said:

The believers, in their affection, mercy and sympathy to
each other, are like the body, if one of its organs suffer and
complains, the entire body responds with insomnia and
fever (Muslim)

&
Background

Historical Examples of Takaful

Takaful has been practiced in various forms for over 1400 years.

Takaful originated within the ancient Arab tribes as a pooled liability that
obliged those who committed offences against members of a different tribe to
pay compensation to the victims or their heirs which is called Diyyah .

This principle later extended to many walks of life, including sea trade, in
which participants contributed to a fund to cover anyone in a group who
suffered mishaps on sea voyages.

Dawania-Mutual indemnification amongst officers working in the same

department during the rule of Umar Ibn Al Khattab (the 2nd Caliph)

Takaful Pioneers

Takaful started some 30 years ago in the Middle East with the launching
of two companies in 1979:
The Islamic Arab Insurance Co. (IAIC) in the UAE and
The Islamic Insurance Co. of Sudan

But it took some time for the movement to take shape.

Later in 1984, Malaysia played a pioneering role in setting the first Legal
framework specific to Takaful (Takaful Act Malaysia).
This was instrumental in the successful launching of the Takaful
movement in Malaysia and in other countries of South East Asia.

Other Islamic/ Takaful Legislations

Other markets such as the Sudan and Iran have Islamic regulatory
environments and became naturally Takaful markets.

In Pakistan Takaful Act is enacted in 2005.

In the Gulf countries specific Takaful legislations are coming through in

Bahrain and in Saudi Arabia

Takaful Today
From a handful of operators two decades ago
the Takaful movement has blossomed into a
fast growing phenomenon in many Muslim
countries with very promising prospects in
other countries with a large Muslim
community.

Why Conventional Insurance is

unacceptable in Islam???
Scholars view the insurance contract as an exchange
contract money is being exchanged for money over time.
Insurance is a buy and sell agreement.
Elements of:
Uncertainty Gharrar
Gambling Maisir
Interest Riba
Profit distribution
Investment of funds
Nature of capital

 GHARAR-Uncertanity
Gharar is forbidden in Islam because it is
not showing the full knowledge , disclosure
and transparency.
Gharar describe RISK..

In insurance Gharar exist in three forms:

Gharar in the outcomes
Ghaarr in the results of exchange
Gharar in contract period

Maiser-Gambling
Maisir resembled with Risk taking whereby insured get a huge amount
without any equivalent input.
Insurance include Maisir where insured makes a bet on the happening of
loss and insurer also do it.

 Riba-Interest:
Allah has permitted trading and forbidden riba (Al
Baqarah 2 : 275).
Every profit must be based on liability and risk
otherwise it is Riba according to Islam.
Conventional insurance companies normally
place the insurer fund in interest bearing instruments like loans and bonds.

Investment Of Funds
Insurance companies invest in such type of assets that are totally prohibited in Islam such as
alcohol, gambeling, bonds etc. while the Takaful companies invest in interest free funds that
are halal-o-haram.

 Nature of Contract:
In Takaful every policyholder has the right to know .???
How their money is used?
How the surrender value is calculated?
& the Takaful policyholders must be careful that the funds are used for halal
purposes.
Insurance contract based on interest.

Profit Distribution
In Takaful every policy holder has the right to know about the distribution
of profit among partners but in conventional insurance there is no hard
and fast rule about that, its totally depend upon management of company

Type of personal Takaful Malaysia

TAKAFUL myPA CARE.

FIRE TAKAFUL.

HOUSEOWNER'S & HOUSEHOLDER'S TAKAFUL.

MOTOR TAKAFUL.

PERSONAL ACCIDENT TAKAFUL.

 TAKAFUL myPA CARE

Introducing the comprehensive Personal Accident Takaful plan that allows you to enjoy the
magnificent feature of an additional 15% No Claim Rebate* from as low as RM0.16 per
day.
1. Enjoy Protection + 15% No Claim Rebate* or cash back.
2. Comprehensive protection at an affordable contribution rate, with 24 hours worldwide
coverage.
3. New coverage benefits, e.g. Snatch Injury, Ambulance Fees, Repatriation Expenses &
Purchase of Orthopaedic Equipment.
4. Simple application process with no medical examination required.
5. Wide Personal Accident coverage including Riot, Strike, Civil Commotion and
Hijacking.
.Rebate is payable if no claim during the period of coverage and is dependent on the
Companys performance.

 FIRE TAKAFUL
Covering the lost and damage due to fire, lightning or domestic gas explosion, one will never have
to worry should the worst is to happen. Our Fire Takaful Plan will compensate your building, and
household content to ensure a complete coverage for your assets.
If that is not good enough for you, under this plan, we also offer additional coverage for losses
caused by :
1.

riot, strike or malicious damage.

2.

explosion.

3.

impact damage.

4.

bursting or overflowing of water tanks or pipes.

5.

earthquake or volcanic eruption.

6.

flood.

7.

aircraft damage.

8.

windstorm.

 HOUSEOWNER'S & HOUSEHOLDER'S TAKAFUL

Special plan to protect your home, belongings and assets from loss or damage. Scope of cover of this plan are :
1. Fire, Lightning, Thunderbolt, Subterranean Fire
2. Explosion
3. Aircraft and other aerial device and/or articles dropped wherefrom
4. Impact with any of the buildings by any road vehicles, animals not belonging to or under the control of the
participant or his family.
5. Bursting or Overflowing of Domestic Water Tanks, Apparatus or Pipes
6. Theft by violent and forcible entry into building.
7. Hurricane, cyclone, typhoon, windstorm
8. Earthquake, Volcanic Eruption
9. Flood
10. Third party liability
11. Loss of rental
This plan is eligible to all houseowners.

MOTOR TAKAFUL
For more extensive coverage, you might want to consider our COMPREHENSIVE type of cover.
Not only you will get everything that we offer in the THIRD PARTY type of cover, you will also
get indemnity for the loss or damage to your vehicle or its spare parts arising out of the following
events:
1.

accidental collision or overturning.

2.

collision or overturning caused by mechanical breakdown.

3.

collision or overturning caused by wear and tear.

4.

impact damage caused by falling objects provided not resulted from convulsion of nature.

5.

fire explosion or lightning.

6.

burglary, housebreaking or theft.

7.

malicious act.

8.

while in transit.

 Cont..
You can also apply for additional coverage which include :
1. windscreen
2. accessories
3. additional authorized driver
4. MPA (Motorist Personal Accident)
A step to heighten the efficiency of service to our participants, the
Tele Bantuan programed provides FREE TOWING SERVICE from the
point of accident to the nearest Takaful Malaysia panel workshop, 24
hours daily, anywhere in Malaysia

PERSONAL ACCIDENT TAKAFUL

Accident is the worst nightmare for everyone. This plan may help you to prepare
anything worst that could have happened in your life. This comprehensive personal
accident plan :
1.

Covers individual for any incident happened upon death or permanent disability.

2.

Protect yourself from any tragedy 24 hours a day, domestically or internationally.

3.

Based on the Islamic profit sharing, Al-Mudharabah which is can be HALAL.

4.

Eligible for participants from age 18 to 60 years old.

CORPORATE/ORGANIZATION
TAKAFUL mySME
The Takaful mySME plan offers your organization more than just comprehensive protection but peace
of mind whilst you focus to grow your business. With Takaful mySME, you can now enjoy the best
of savings while simultaneously, increase business productivity and gain better cash flow
management.
Protection + 15% No Claim Rebate
1. Enjoy Protection + 15% No Claim Rebate or cash back (i.e. if no claims incurred during the
coverage period and is dependent on the companys performance).
2. Safeguard your business with the protection coverage that you truly need with the best rates in
town.
3. Experience a tailor made plan that addresses your business needs or sector and enjoy great
savings to elevate your business to the next level, i.e. heightened productivity and improved cash
flow.
4. Main Sectors
*Light Manufacturing
*Retail
*Food & Beverages
*Office & Services

 Ence the need to specifically define the items to be covered.

BURGLARY TAKAFUL

A plan that provides cover against loss of or damage to the subject matter due to
theft whilst contained in the business or trade premises. This plan will also cover the
damage to your premises due to forcible entry or exit accompanied the event of theft.
However, you as the business owner should already have participated in our Fire
Takaful Plan before applying for this plan.

 BUSINESS INTERRUPTION (LOSS OF PROFIT)TAKAFUL

This plan is designed to complement our Fire Takaful's limitation. The plan provides indemnity
in the event of loss of the following :
Net profit.
Standing charges i.e. expenses which continue to exist as usual level even though business had
been interrupted due to the destruction or damage of premise, machinery or plant by fire e.g.
Motor Vehicle expense, Depreciation etc.
Increased cost of working e.g. overtime, rental of alternative premises or machinery etc.
EMPLOYER'S LIABILITY TAKAFUL

Similar to the WORKMEN'S COMPENSATION TAKAFUL , liability may be attached to you as

an employer should injury or disease caused by accident to your employee occurred during the
course of employment.

FIDELITY GUARANTEE TAKAFUL

In the normal course of business transaction, you as an employer invariably has to entrust
money, securities, goods etc. to your employee or delegate monetary responsability to the
employee. In the event that employee is dishonest, you would most certainly suffer financial
loss. To protect this from happening, this is the plan for you. Minimum takaful contribution is
RM100.

FOREIGN WORKER COMPENSATION TAKAFUL

This plan is definitely for you if you are an employer with foreign workers working under your
administration. Under the plan, foreign workers will be financially compensated in the events
of accident resulting in death or bodily injury.
In addition, the plan also provides coverage for Repatriation Expenses and Personal Accidents
outside working hours.


GROUP PERSONAL ACCIDENT TAKAFUL
Derived from our PERSONAL ACCIDENT , we have come out with a product, GROUP
PERSONAL ACCIDENT TAKAFUL , to cater for the different needs and demands of the market.
This plan compensates a group of individuals including yourself should you suffer bodily injury
caused by violent, accidental, external and visible means. If the injury results in death or
disablement then we will compensate according to the Table of Benefits as outlined in the
certificate, This plan is suitable for business or social organization and even for college students.

MONEY TAKAFUL
Suitable for business owner running high cash transaction, this plan covers against loss of money
whilst in transit and also money kept in premises. In the event of the money is lost, destroyed or
damaged as a result of theft, Takaful Malaysia will indemnify you in respect of such loss,
destruction or damage.

PROFFESSIONAL INDEMNITY TAKAFUL

A plan designed to suit lawyers, architects, engineers, surveyors in accountants etc. for
coverage against liability caused by professional malpractice.

PUBLIC LIABILITY TAKAFUL

This plan is designed to protect you as the owner of your business against your legal liability to
pay compensation for accidental bodily injury to or accidental damage to the property of the
public caused by or through your negligence or the negligence of your employees. The liability
mentioned also includes legal charges and expenses.

 OTHER TYPES OF TAKAFUL

SCHOOL CHILDREN PERSONAL ACCIDENT TAKAFUL

WORKMEN'S COMPENSATION TAKAFUL
BOILERS & PRESSURE VESSEL TAKAFUL
CONTRACTOR'S ALL RISKS TAKAFUL
ELECTRONIC EQUIPMENT TAKAFUL
ERECTION ALL RISKS TAKAFUL
LOSS OF PROFITS (MACHINERY) TAKAFUL
MACHINERY BREAKDOWN TAKAFUL
MARINE CARGO TAKAFUL
PLATE GLASS TAKAFUL
STORAGE TANKS TAKAFUL
FIRE AND ALLIED PERILS TAKAFUL

 Here we need to add another example for another company working

under takaful system ex. Etiqa .
*note you can used the power point that I send it

I left some empty slides to use I expect that you can find products for one
company and example and the elaborate

Go to slide 20 and next

TAKAFUL MODELS
There are three main different Takaful Models use today.

Takaful
Models

Mudharabah

Wakalah

Wakala -waqf
model

Mudaraba Model
THE SURPLUS IS SHARED
BETWEEN THE
PARTICIPANTS WITH A
TAKAFUL OPERATOR. THE
SHARING OF SUCH PROFIT
(SURPLUS) MAY BE IN A
RATIO 5:5 , 6:4 ETC. AS
MUTUALLY AGREED
BETWEEN THE
CONTRACTING PARTIES.
GENERALLY, THESE RISK
SHARING ARRANGEMENTS
ALLOW THE TAKAFUL
OPERATOR TO SHARE IN
THE UNDERWRITING
RESULTS FROM
OPERATIONS AS WELL AS
THE FAVOURABLE
PERFORMANCE RETURNS
ON INVESTED PREMIUMS.

Wakala Model

Wakala -Waqf Model

It is a WAKALAH model with a separate legal entity

COOPERATIVE RISK
of WAQF in-between.
SHARING OCCURS AMONG
The relationship of the participants and the
PARTICIPANTS WHERE A
operator is directly with the WAQF fund. The
TAKAFUL OPERATOR EARNS
operator is the Wakeel of the fund and the
A FEE FOR SERVICES (AS A
participants pay contribution to the WAQF fund by
WAKEEL OR AGENT) AND
way of Tabarru
DOES NOT PARTICIPATE OR The contributions received would also be a part of
SHARE IN ANY
this fund and the combined amount will be used
UNDERWRITING RESULTS
for investment and the profits earned would again
AS THESE BELONG TO
be deposited into the same fund which also
eliminates the issue of Gharar.
PARTICIPANTS AS SURPLUS
OR DEFICIT. UNDER THE
AL- WAKALA MODEL, THE Losses to the participant are paid by the company
from the same fund.
OPERATOR MAY ALSO
CHARGE A FUND
Operational expenses that are incurred for
MANAGEMENT FEE AND
providing Takaful services are also met from the
PERFORMANCE INCENTIVE
same fund.
FEE.

Issues
&
challenges
faced by
Takaful

1. Development Of
Human Resource
TAKAFUL IS OBSTACLE BY LESS HUMAN
RESOURCES.
LACK OF TALENTED, SKILLED AND
EXPERIENCED PEOPLE.
IT IS GOOD TO TEACH PEOPLE TAKAFUL
CONCEPT.

2. Lack of
Awareness
ISLAMIC

FINANCIAL INSTITUTIONS ARE NOT PUTTING TOO MUCH

EFFORT IN DEVELOPING TAKAFUL.
IT

IS CRUCIAL FOR MARKETERS TO ENHANCE THE INDUSTRY AND

THE INNOVATION OF NEW PRODUCTS.
FINANCIAL

MARKETS MUST UNDERSTAND THE NEEDS AND

WANTS OF CUSTOMER .
MANY

CONSUMERS ARE STILL STICK TO CONVENTIONAL

INSURANCE.
IT

IS IMPORTANT TO ADDRESS EDUCATIONAL ISSUES AND TO

DEVELOP CONSUMER AWARENESS.

3. Regulatory Framework
OFTEN,

SCHOLARS ARE NOT AGREE

EACH OTHER TO ESTABLISH A
FRAMEWORK FOR TAKAFUL.
THE

ISSUE OF DIFFERENT REGIONS I.E

MALAYSIA AND MIDDLE EAST
COUNTRIES.
MODEL

OF TAKAFUL IS BEING
PRACTICED BY SPECIFIC REGION.

4. Cooperate Governance
QUITE

SELF INTEREST BETWEEN

SHARIAH SUPERVISORY BOARD AND
THE BOARD OF DIRECTORS OF THE
TAKAFUL.
THERE

IS NO CLEAR MISSION AND

RESPONSIBILITY OF SHARIAH
BOARD.
AT

PRESENT, THERE ARE NO

MANUAL AND STANDARD TERMS OF
REFERENCE.

5. Shortage of Shariahcompliant assets

THE

LACK OF
APPROPRIATE
INVESTMENT VEHICLES,
ESPECIALLY WITH THE
LONG TERM DURATION.
THE

LIMITED RANGE OF
SHARIAH COMPLIANT
ASSET COULD BE THE
RESULT OF ASSET RISK.

6. Distribution channel
MICRO
LIFE

INSURANCE

7. Lack of standardization
KIND

OF MODEL OF TAKAFUL

EVERY

NATION HAS ITS OWN MODEL OF TAKAFUL.

TERMS

OF STANDARDIZATION IS MAINLY BASED ON

DIFFERENT REGIONS.
THE

LACK OF STANDARDIZATION WILL HARM THE

DEVELOPMENT OF TAKAFUL.

Conclusion

DESPITE THE CHALLENGES FACING THIS

NEW INDUSTRY, EXCITING TIMES ARE
AHEAD ONCE THE LATENT POTENTIAL IS
UNLEASHED.

THE SUCCESS OF TAKAFUL LARGELY DEPENDS

ON THAT OF ISLAMIC FINANCIAL
INSTITUTIONS ON A GLOBAL BASIS.

INSTEAD OF BEING TAKAFOOL, WE NEED TO

PUT OUR EFFORTS TO MAKE IT TAKAFULL, IN
WHICH IS FULL OF ATTRACTIONS AND
JUSTICE TO PEOPLE.

UNIVERSITI UTARA MALAYSIA

Group Members
Mohammad AL-shuaibi
Ibrahim Siam
Tia Latha
Valarmathi Subramaniam

815350
816839
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