november 2008 examination - The Malaysian Institute Of Certified ...

More documents

Recommendations

Info

FEATUREOverview of Takaful inMalaysiaThe concept of takaful (Islamic insurance) wasfirst introduced in Malaysia in 1985 when thefirst takaful operator was established to fulfilthe need of the general public to be protectedbased on the Islamic principles. The legal basis for theestablishment of takaful operators was the Takaful Actwhich came into effect in 1984.Insurance as a concept does not contradict thepractices and requirements of Shariah. In essence,insurance is synonymous to a system of mutual help.However, Muslim jurists are of the opinion that theoperation of conventional insurance does not conform tothe rules and requirements of Shariah as it involves theelements of uncertainty (Gharar) in the contract ofinsurance, gambling (Maisir) as the consequences of thepresence of uncertainty and interest (riba) in its investmentactivities.Takaful is an insurance concept in Shariah wherebya group of participants mutually agree among themselvesto guarantee each other against a defined loss or damagethat may inflict upon any of them by contributing astabarru’ or donation in the takaful funds. It emphasisesunity and co-operation among participants. Takaful is nota new concept as it had been practised by the Muhajirin ofMecca and the Ansar of Medina following the hijra of theProphet over 1400 years ago.Tabarru’ is the agreement by a participant torelinquish as donation, a certain proportion of the takafulcontribution that he agrees or undertakes to pay, thusenabling him to fulfil his obligation of mutual help andjoint guarantee should any of his fellow participants suffera defined loss. The concept of tabarru’ eliminates theelement of uncertainty in the takaful contract. The sharingof profit or surplus that may emerge from the operations oftakaful is made only after the obligation of assisting thefellow participants has been fulfilled. Thus, the operationof takaful may be envisaged as a profit sharing businessventure between the takaful operator and the individualmembers of a group of participants.Takaful operations are regulated and supervised byBNM since 1988 with the appointment of the BNMGovernor as the Director-General of Takaful. In October1995, the ASEAN Takaful Group (ATG), a grouping oftakaful operators in Brunei, Indonesia, Malaysia andSingapore was formed to enhance mutual co-operationand to facilitate the exchange of business among takafuloperators in ASEAN. In 1997, the Malaysian takafulindustry took a leap forward with the formation of ASEANRetakaful International (L) Ltd. (ARIL) as an offshoreretakaful company in Labuan. The establishment of ARILwas to create a vehicle for more dynamic retakafulexchanges among ATG members and provides additionalretakaful capacity to further reduce their dependence onconventional reinsurance.Types of businessThe takaful businesses carried on by the Malaysian takafuloperators are broadly divided into family takaful business(Islamic "life" insurance) and general takaful business(Islamic general insurance).10 | The Malaysian Accountant | August 2008 www.micpa.com.my
Muslim jurists are of the opinionthat the operation ofconventional insurance does notconform to the rules andrequirements of Shariah as itinvolves the elements ofuncertainty (Gharar) in thecontract of insurance, gambling(Maisir) as the consequences ofthe presence of uncertainty andinterest (riba) in its investmentactivities.Family Takaful BusinessIn general, a family takaful plan is a combination of longterminvestment and mutual financial assistance scheme.The objectives of this plan are: -• to save regularly over a fixed period of time;• to earn investment returns in accordance with Islamicprinciples; and• to obtain coverage in the event of death prior tomaturity from a mutual aid scheme.Each contribution paid by the participant is divided andcredited into two separate accounts, namely: -• The Participants' Special Account (PSA)A certain proportion of the contribution is creditedinto the PSA on the basis of tabarru'. The amountdepends on the age of the participant and the coverperiod.• The Participants' Account (PA)The balance goes into the PA which is meant forsavings and investments only.Examples of covers available under family takaful businessare as follows: -• Individual family takaful plans;• Takaful mortgage plans;• Takaful plans for education;• Group takaful plans; and• Health/Medical takaful.General Takaful BusinessThe general takaful scheme is purely for mutual financialhelp on a short-term basis, usually 12 months to compensateits participants for any material loss, damage or destructionthat any of them might suffer arising from a misfortunethat might inflict upon his properties or belongings. Thecontribution that a participant pays into the generaltakaful fund is wholly on the basis of tabarru'. If at the endof the period of takaful, there is a net surplus in the generaltakaful fund, the same shall be shared between theparticipant and the operator in accordance with theprinciple of al-Mudharabah, provided that the participanthas not incurred any claim and/or not received anybenefits under the general takaful certificate.The various types of general takaful scheme providedby the takaful operators include: -• Fire Takaful Scheme;• Motor Takaful Scheme;• Accident/Miscellaneous Takaful Scheme;• Marine Takaful Scheme; and• Engineering Takaful Scheme.Family Takaful:Individual planGroup planAnnuity- Mortgage- Health- Education- Travel- Family plan- Waqaf- Group family- Group medical- Employees Provident Fund- RetirementGeneral Takaful:MotorFireMarine, aviation and transitMiscellaneous Includes:- Personal accident- Workmen corporation- Liability- Engineering- House ownersRegistered Takaful Operators• CIMB Aviva Takaful Berhad• Hong Leong Tokio Marine Takaful Berhad• HSBC Amanah Takaful (Malaysia) Berhad• MAA Takaful Berhad• Prudential BSN Takaful Berhad• Syarikat Takaful Malaysia Berhad• Takaful Ikhlas Sdn Berhad• Takaful Nasional Sdn BerhadThis article is extracted from Bank Negara Malaysia’swebsite at www.bnm.com.mywww.micpa.com.myAugust 2008 | The Malaysian Accountant |11
Page 1: August 2008 www.micpa.com.my KDNPP
Page 4: PERSPECTIVEIt was a significant nig
Page 7 and 8: should be noted that hand phones wi
Page 9 and 10: FEATURECorporate Governance Analysi
Page 11: a company’s audit, remuneration a
Page 15 and 16: governance.The Takaful industry is
Page 17 and 18: occasion of the Institute’s 50th
Page 19 and 20: accountancy profession. This is cle
Page 21 and 22: Session three was on “Working Abr
Page 23 and 24: MAY 2008 EXAMINATION RESULTSCPA STU
Page 25 and 26: Career Fairs and ExhibitionsThe Ins
Page 28 and 29: PROFESSIONAL NEWSMASB UpdateMalaysi
Page 30 and 31: currently accounted for in accordan
Page 32 and 33: PROFESSIONAL NEWSIFAC UpdateNew IFA
Page 34 and 35: Arnold Schilder Named to Lead IFAC'
Page 36 and 37: visit its home page at http://www.i
Page 38 and 39: GLOBAL INSIGHTNEWSfrom Down UnderA
Page 40 and 41: GLOBAL INSIGHTWORLDNEWSEUROPEAN COM
Page 42: The unusual rainfall in Taiping has

november 2008 examination - The Malaysian Institute Of Certified ...

Create successful ePaper yourself

Delete template?

Save as template?