gif Takaful


edented success. In 2010 Takaful company Ikhlas was named the best Takaful provider at the Euromoney Islamic Financial Awards 2010 (the awards were organised by Global Islamic Financial Magazine).


Ikhlas Medical Assistance Takaful won “Best Takaful Product “by International Takaful Awards 2010, and Takaful Ikhlas moved to new corporate offices. The graph above shows the global Takaful market, which has increased the potential for employees, stu- dents and professionals who want to tap into the Islamic insurance industry. The


graph spans from the year of 2006, which shows a market for Takaful of US $2.10 bil- lion dollars; however, the demand for Taka- ful insurance has increased year by year and is expected to reach US $7.39 billion dollars by 2015 – provided that it maintains growth within the highly competitive financial insur- ance industry.


As of 2010, the takaful market is still in a formative stage, but however it has been reported that market projections estimate growth rates between 15 per cent and 20 per cent over the next ten years, and is set to


reach US $7.4 billion in premiums by 2015. With challenges around customer service and productivity, technology can enable this growing industry through its formative stage.


Different countries have varying markets for Takaful, and anyone considering a career in Takaful should be sure to investigate the po- tential market. Malaysia has the largest mar- ket for Takaful premiums, reaching 1,220, with Syria holding the smallest market. The chart below shows the Takaful potential for 2015 in selected countries around the world, in order to give a better idea of the emerging Islamic insurance market.


Introduction to (RE) Takaful Models There are several proposed models under which (RE)Takaful operations operate, each of which are in compliance with Shariah law. The four most commonly used models are:


Wakalah Model: This would see the operator acting as an agent and administering funds on behalf of the participants. for these services, the operator would receive a fee (over-rider) for operating expenses


Participants Wakalah Fee (eg 30%) Contribution Claims


Shariah Compliant Investments


Takaful Fund


Investment Profiles


Underwriting Profit


Surplus/ (Deficit)


100% Surplus


Charitable Donation


* Interest free loan


In case of a deficit in the fund to be repaid from surpluses in future years


Reinsurance/ Retakaful


Reserves Qard Hassan*


Shareholders’ Fund


Management Expenses


In September 2010, Malaysia made a Takaful breakthrough by is- suing new family Takaful licences. Malaysian Finance Minister Mohd Najib Abdul Razak, who is also the prime minister of the country, has approved the issuance of the four family Takaful licenses, pursuant to the Takaful Act of 1984, to joint ventures involving major insur- ance companies from the US, the UK and the Netherlands.


This brings the number of Takaful operators in Malaysia to 12. The other Takaful operators include CIMB Aviva Takaful Berhad, Etiqa Takaful Berhad, Hong Leong Tokio Marine Takaful Berhad, HSBC Amanah Takaful (Malaysia) Sdn Bhd, MAA Takaful Berhad, Pru- dential BSN Takaful Berhad, Sya- rikat Takaful Malaysia Berhad and Takaful Ikhlas Sdn. Bhd.


Mudharabah Profit sharing model. In this case the operator would act as a Mudarib (entrepreneur) and the participants would provide tha capital. Any losses suffered would be paid by the participants, with a profit-sharing agreement established from the outset.


Participants Contribution Claims


Shariah Compliant Investments


Takaful Fund


Investment Profiles


Underwriting Profit


Surplus/ (Deficit)


X% of Surplus


Charitable Donation


16 Global Islamic Finance February 2011 100X - X% of Surplus


Reinsurance/ Reseves


Reserves Qard Hassan


Shareholders Fund


Management Expenses


In addition, Malaysia has four Re- takaful operators: namely, ACR Retakaful SEA Berhad, MNRB Retakaful Berhad, Munchener Ruckversicherungs-Gesellschaft (Munich Re Retakaful) and Swiss Reinsurance Company Ltd. (Swiss Re Retakaful); it also has one In- ternational Takaful Operator in AIA Takaful International Bhd.


The Malaysian Takaful industry has seen impressive growth over the last five years, although when compared with the conventional sector it still lags far behind in terms of total insurance market penetration and share. The assets of Takaful funds, according to the latest figures from Bank Negara Malaysia, comprise only eight per cent of the total assets of the Ma- laysian insurance and Takaful in- dustry. This figure is up from 5.7


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