The document discusses Takaful (Islamic insurance) in Malaysia, focusing on two operators - Takaful Malaysia and Etiqa Takaful. It compares their models, products, and accounting practices. Both companies use modified Mudarabah and Wakalah models. Their family products have different profit-sharing ratios. The document also reviews compliance with Shariah and accounting standards, finding that both companies adhere to requirements. Overall, the document provides an overview of the Malaysian Takaful industry and compares two major players.

3.  Introduction on Takaful & Takaful Industry
 Introduction on Takaful Malaysia and Takaful
Etiqa
 Takaful Malaysia
 Takaful Etiqa
 Comparisons on model
 Comparisons on accounting
 Suggestions
 Conclusion

5.  Originates from the Arabic word Kafalah,
which means "guaranteeing each other" or
"joint guarantee“.
 Takaful is commonly referred to as Islamic
insurance.
 Based on principles of mutuality and co-
operation, encompassing the elements of
shared responsibility, joint indemnity,
common interest and solidarity.

6.  Takaful system employs several Islamic
elements such as;
 Ta’awun (mutual help),
 Tabarru’at (willingly relinquish individual
rights over the contributions paid, for
collective benefits)
 Losses are divided and liabilities spread
according to the community pooling system.
 It does not seek to derive advantage at the
cost of others.

7.  Involves the elements of excessive
uncertainty (gharar);
 Gambling (maysir) as the consequences of
the presence of excessive uncertainty that
rely on future outcomes;
 Interest (riba) in the investment activities of
the conventional insurance companies;

8.  Conventional insurance companies are
motivated by the desire for profit for the
shareholders;
 Conventional system of insurance can be
subject to exploitation. For example, it is
possible to charge high premium (especially
in monopolistic situations) with the full
benefit of such over-pricing going to the
company.

10.  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.
 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.

11.  More than 40 takaful operators worlwide.
 It is estimated that the combined total assets
of the operators stand at around USD1 billion.
 The contributions (premium) of the operators
stand at around USD500 million.
 Possesses high potential to expand because
the insurance and takaful penetration in
Muslims countries is less than 1% of GDP.
 In Malaysia, the insurance penetration rate is
around 30% of GDP.

13. The descriptions on products, models and
sales illustration.
SYARIKAT TAKAFUL MALAYSIA BERHAD (STMB)

14.  Syarikat Takaful Malaysia Berhad (Takaful
Malaysia) was incorporated on the 29th of
November 1984.
 The current authorised capital of Takaful
Malaysia is RM500 million and paid-up capital
is RM162.817 million.
 It commenced operation on the 22nd of July,
1985 prior to its official launching on the 2nd of
August 1985 by the then Prime Minister of
Malaysia, Tun Dr. Mahathir Mohamed.

15.  The incorporation of Takaful Malaysia was based
on the recommendation of the “Task Force on the
Study for the Establishment of an Islamic
Insurance Company in Malaysia” (Task Force) set
up by the Government of Malaysia in 1981.
 Takaful Malaysia was transformed into a public
limited company on the 30th of July 1996.
 BIMB Holdings Berhad is the major shareholder
with 65.22% stake in Takaful Malaysia.

17. •MYMEDICARE
•MYRAWAT
•MYSISWA
•MYSINAR
•MYIMPIA
N
•FUND
•MYINVEST
•MYGRADUA
N

18. •BAITUL
SAA’DAH
•FIRE
•HOUSEOWNER
’S &
HOUSEHOLDER
’S
•MOTOR
•PERSONAL
ACCIDENT
•RUMAH DESA

19.  The first Takaful Company in Malaysia, Syarikat
Takaful Malaysia(STM) was established in 1985
as composite operation. It used the Mudharabah
contract as the basis of its Takaful Model.
 The idea was based on the contractual
relationship between the ‘capital provider’ and
the ‘entrepreneur’ in the Mudharabah contract.
The participant (policyholder) was designated as
the capital provider while the shareholders of the
Takaful company was defined as
the‘entrepreneur’.

20.  For nearly 10 years STM was the only Takaful
Company operating in Malaysia.
 This monopoly helped in easing competitive
pressure on pricing (tend to be higher on this
model) as it only had to compete with
conventional insurance companies.
 The Mudharabah Model worked well for General
Takaful (as ‘profit’ was realised yearly) but did
not do show immediate results for the Family
Takaful.
 The Takaful Operator has a strong incentive to
generate ‘profits’ as otherwise expenses are not
covered and their efforts will go unrewarded.
 The model has its detractors as surplus is not
profit as intended under the Mudharabah
contract.

22. STMB MUDHARABAH MODEL (CONT’D)
General Takaful Operation
40 % of Profit
60 % of Profit
Qard Hassan
to cover deficit
Investment
income
Grossprofit
(ifany)
Gross profit
(if any)
participant
Shareholder Fund (SF)
+ Share of profits (if any)
+ Investment income of
SF
- Actual Management
expensess

23.  The Wakalah model will allow STMB act as the agent (or
Wakil) to manage Takaful funds on the behalf of
participants.
 The participant as a party to the wakalah contract agrees
that the takaful operator may take a portion of the
contribution as remuneration for services provided:
 Wakalah Fee;
 Performance Fee (if any);
 The fee scale must be transparent and agreed to at the time
of participation.

24. 24
Wakalah for family takaful –one model
Contribut
ion
Investment
Account
Participant
Expenses
Risk
Account
Profit
Investment
Account
Risk
Account
Surplus
100%
Wakalah
Fee
Takaful
Operator
% Net Assets
% Revenue

25.  There are three funds;
 Family Takaful Fund under the Family Takaful
Business; and
 General Takaful Fund under the General Takaful
Business.
These Takaful funds are kept separate from the
Shareholders' Fund which was originally funded
wholly by the paid-up capital.

26. ETIQA TAKAFUL BERHAD (266243-D)
(formerly known as Takaful Nasional Sdn Bhd)
(Incorporated in Malaysia)

27.  Founded: 1993
 Background
 Registered under 1984 Act of Malaysia, its
structured is that of a Modified Takaful whereby
the surplus from its operation are divided 80%
policyholder and 20% shareholder for life
operations and 50% each for non-life products
 BOD: Malaysian National Insurance Company +
Malaysia Islamic Economic Development
Foundation

28.  Provides individual life, group life, fire, motor,
marine and aviation products through banking
cooperative, agents and direct distribution.
 The company made charitable donations as well
as a number of community based projects
including sponsoring school newspapers, covering
the costs of books for poor student through the
National Book Development Foundation and
building mosques and hotels for orphans.

29.  Change name
 On 31 October 2007, the Company's status was
changed from a private limited liability Company
to a public Company. Accordingly, its name was
changed from Takaful Nasional Sdn Bhd to Takaful
Nasional Berhad.
 On 15 November 2007, the Mayban Fortis
Holdings Berhad ("MFHB") Group rebranded the
organisation under a new name and identity that
symbolises the Group's efforts to humanise
takaful operational process. In conjunction with
this new branding exercise, the Company
changed its name to Etiqa Takaful Berhad on 12
November 2007.

30.  The Shariah Committee
• Tan Sri Dato'
Seri (Dr) Haji
Harussani bin
Haji Zakaria
Chairman
• Dr
Mohammad
Deen bin
Mohd Napiah
Assistant
Professor
• Dr. Ismail bin
Mohd @ Abu
Hassan
Assistant
Professor
• Dr. Ahcene
Lahsasna

31. HEALTH - Medic Save Rider
SAVINGS - Mesra + Warisan
EDUCATION - Sarjana
PROTECTION – Prima + Ehsan +
Sakinah + Personal Accident +
Femina Special
HOME – Homeowner / Householder
CAR – Private Car Takaful
PERSONAL
RETAIL SHOP
SERVICES
MANUFACTURING
CONSTRUCTION
COMMUNICATION
ENERGY
TRANSPORTATION
AGRICULTURE
CORPORATE

32. THE PRODUCTS

33.  Features :
 All in-patient hospitalisation and surgical benefits
 Emergency out-patient treatment benefits.
 Choice of extension of coverage.
 A medical card for hassle-free admission to panel
hospitals.
 Affordable contribution rates on excellent benefits
 Guaranteed renewable up to age 75.
 Free and convenient auto-debit of
monthly/quarterly/semi-annually or yearly
contributions from your Maybank Current/Savings
account or credit card.
TAKAFUL
MEDIRIDER

34. Co-Takaful :
 Co-takaful is the sharing of medical charges. For
Takaful MediRider, co-takaful is 10%. This means
you only pay 10% of your medical bills; the
remaining 90% will be paid directly to the
hospital when you are discharged.
 E.g.: If you have taken up Takaful MediRider 100
and your Room & Board expenses are within
coverage, you only pay 10% of the eligible
medical expenses.
 Total amount of hospital bill : RM 9050
Payment by Takaful Operator: RM8,245 ( 90 % )
Payment by Participant: RM805 (10 % )
TAKAFUL
MEDIRIDER

35. Co-Payment :
 If you choose to be hospitalised at a Room &
Board rate higher than your eligible benefit, co-
payment requires you to pay only 20% of your
medical bills. Co-takaful is also applicable to the
remaining 80% of the outstanding medical bills.
In total, you pay 28% of your medical bills.
 E.g.: If you have taken up Takaful MediRider 100
but you choose to upgrade to Room & Board
expenses of RM300, co-payment is applicable.
 Total amount of hospital bill : RM 10,200
Payment by Takaful Operator: RM6,184 ( 72 % )
Payment by Participant: RM4,016 ( 28 % )
TAKAFUL
MEDIRIDER

36. Wakalah Fee
 A fixed proportion of the contribution will be
deducted as Wakalah Fee as follows:
Certificate Year Wakalah fee
 1st year 35 %
 2nd year onwards 15 %
 Surplus Sharing
 Surplus arising (if any) at the end of each financial
year will be shared between you and Etiqa Takaful
Berhad at a 20%:80% ratio. The surplus will be
payable only upon death or maturity, whichever is
earlier, subject to no claim.
TAKAFUL
MEDIRIDER

37. Takaful Participants
Takaful Funds
Takaful Operator
Investment Pay Claims
Donation
Manage
Contracts
•Mudarabah
•Wakalah
•Ji’alah
•Wadi’ah yad
damanah
BASIC OPERATIONAL
MODEL

38.  Mudharabah
 Wakalah

43. Similarities:
 Both takaful are using modified Wakalah
Model for Family Product for example
MyMedicare offered by TM while Takaful
Medirider from TE.

44. Participants
Surplus (RM290)
Claim (RM700)
Investment Profits
(RM90)
RM900
Contribution
___________
Fee
RM100Takaful Operator
RM900
Contribution
___________
Fee
RM90
Eg: 50%=RM145
Wakalah
Management
Tabarru’
Eg: 50%=RM145 (As
Performance Fee)
(Profit sharing
ratio e.g:
50:50)
Fee

45. SIMPLE PURE
WAKALAH MODEL
Participants
Surplus (RM290)
Claim (RM700)
Investment Profits
(RM90)
RM900
Contribution
___________
Fee
RM100Takaful Operator
RM900
Contribution
___________
Fee
RM90
Fee
Wakalah
Management
100% (Profit sharing
ratio e.g:
50:50)
Tabarru’

46. Similarities:
 Both takaful are using modified Mudharabah
Model for general Product for example
Personal (Baitul Saadah Fire and Houseowner
Plan), Community, Engineering and Corporate
organization Takaful from TM while Takaful
Medirider from TE.

47. Contributio
n
($1,000)
Contributio
n + Profit
($1,000 +
$70)
Claims
($700)
Surplus
($370)
Mudharabah
Investment
Profit = RM100
(PSR: 70:30)
Takaful
Operato
r
Participants
(Profit sharing
ratio e.g:
70:30)
Surplus
100%
Tabarru’
Eg: 70%=RM70
Claim
s
Eg: 30%=RM30
PURE MUDHARABAH
MODEL

48. Contributio
n
($1,000)
Contributio
n + Profit
($1,000 +
$100)
Claims
($700)
Surplus
($400)
Mudharabah
Investment
Profit
($100)
Takaful
Operato
r
Participants
Tabarru’
Eg: 70% (RM280)
Eg: 30% (RM120)
(Profit sharing
ratio e.g:
70:30)

49. Modified Mudharabah
Modified Wakalah Vs Mudharabah Model
Contributio
n
($1,000)
Contributio
n + Profit
($1,000 +
$100)
Claims
($700)
Surplus
($400)
Mudharabah
Investment
Profit
($100)
Takaful
Operato
r
Participants
Tabarru’
Eg: 50% (RM200)
Eg: 50% (RM200)
(Profit sharing
ratio e.g:
50:50)

50. Participants
Surplus (RM290)
Claim (RM700)
Investment Profits
(RM90)
RM900
Contribution
___________
Fee
RM100Takaful Operator
RM900
Contribution
___________
Fee
RM90
Eg: 50%=RM145
Wakalah
Management
Tabarru’
Eg: 50%=RM145 (As
Performance Fee)
(Profit sharing
ratio e.g:
50:50)
Fee

51. Differences:
1. Profit Sharing Ratio
2. Plan & Benefits

52.  TM vs TE: 60:40 , 80:20 (Product
MyMedicare:MediRider)
Comparison On Profit Sharing : TM vs TE

53. Comparison On Product & It’s Benefit: Family Plan

56. TAKAFUL MALAYSIA

59. ETIQA TAKAFUL

63. TAKAFUL MALAYSIA

65. ETIQA TAKAFUL

67. DOES THIS TWO COMPANIES COMPLY
WITH ABOVE STANDARDS?

68.  Compliance with FRS are legislated under
Financial Reporting Act 1997 [Section 26D]
 MASB approved Accounting Standards for
entities other than private entities
 For insurance contracts - Financial Reporting
Standard 4 (FRS4)
 Both Takaful Malaysia and Etiqa Takaful
comply with this standards

69.  Shariah Standards for Islamic Insurance and
Reinsurance
 Contractual relationships
 Musharaka, Wakalah, Mudarabah
 Form of reinsurance
 Selective risk or comprehensive reinsurance
 Both Takaful Malaysia and Etiqa Takaful
mentioned the contractual relationship and
the proportion for reinsurance

70.  Accounting Standards for Islamic Insurance
companies
 General Presentation and Disclosure in Financial
Statement
 Disclosure of Bases for Determining and
Allocating Surplus of Deficit
 Provisions and Reserves
 Contributions
 Takaful Malaysia and Etiqa Takaful comply
with the requirements of FRS4 enacted by
BNM, but they does not fully applies AAOIFI
Standards

71. •LIQUIDITY RATIO
•PROFITABILITY RATIO (OPERATING PROFIT
MARGIN)
•DIVIDEN PAYOUT RATIO

72. TAKAFUL MALAYSIA
• Group
[4047299/3711264
= 1.09]
• Company
[3796260/2467430
= 1.09]
ETIQA TAKAFUL
• [5033318/4757675
= 1.05]

73. TAKAFUL
MALAYSIA
•Group
[37910/1121650
= 3.37%]
•Company
[46119/927694
= 4.97%]
ETIQA TAKAFUL
•[83095/1156969
= 7.18%]

74. TAKAFUL
MALAYSIA
•Group
[2.61/18.7
= 13.96%]
ETIQA
TAKAFUL
•60.3 cent

75. IS IT BENEFICIAL TO OPERATOR OR
PARTICIPANTS?

76.  The high liquidity ratio means the company
able to meet its financial obligation
 The lower dividend payout ratio indicates
that the company injects some portion out of
the profits generated for its grow activities
needs
 Hence, the operator is said to be more
beneficial from these accounting perspective
 Takaful Malaysia rewards operators

77.  The higher ratio of operating profit margin,
the better
 Earning per share is based on net profit
divided by unit of shares issued
 Higher earnings received by the participants
indicates that company actively operate the
capital to generate lucrative revenue
 Thus, Etiqa Takaful rewards participants

80.  Increase promotion activities through
effective and interesting methods.

81.  The World Takaful Conference scheduled
on 12 & 13 April 2010 should be fully
utilized in structuring or restructuring
takaful products as well as promoting
takaful industry.

82.  Instead of being TAKAFOOL, we need to put
our efforts to make it TAKAFULL, in which is
full of attractions and justice to people.