A licensed takaful operator carrying on takaful business has the duty to manage the takaful operations in accordance with Shariah and in the best interest of the takaful participants. This includes operating the business in a sound and prudent manner.
The Takaful Operational Framework (TOF) outlines the parameters that govern the operational requirements relating to the management of takaful funds and shareholders fund. TOF aims to achieve operational efficiency of takaful business and sustainability of takaful funds, thereby safeguarding the best interest of the takaful participants.
The requirements in this policy document are developed in accordance with the Islamic Financial Services Act 2013 (IFSA), whereby the licensed takaful operator acts as the manager and administrator of the takaful funds on behalf of the takaful participants. Based on this takaful business model, this policy document outlines the operational requirements on the application of wakalah (agency-based) and mudarabah (profit sharing) contracts, the two Shariah contracts currently being used by the industry to govern the relationship between the licensed takaful operator and takaful participants. Notwithstanding this, the licensed takaful operator may adopt other policy documents on Shariah contracts issued by the Bank beyond wakalah and mudarabah, or, subject to prior approval of the Shariah Advisory Council and the Bank, explore new Shariah contracts for its takaful business model.
The Bank also recognises that in response to the changing operating environment and advancements in technology, the licensed takaful operator may rethink the takaful business model in order to respond to the needs of takaful participants and compete more effectively. In this regard, the licensed takaful operator may explore a new business model which extends beyond the existing role of the licensed takaful operator as the manager and administrator of takaful business. Subject to prior approval of the Shariah Advisory Council and the Bank, the licensed takaful operator may adopt any new takaful business model.
This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking
