Takaful News - Malaysia: Takaful Company Switches Operating Model
Source: Middle East Insurance Review | Mar 2007
Takaful Nasional, the leading takaful operator in Malaysia, is changing its takaful operating model from mudharaba to wakala, starting with general takaful products. Only new participants or renewals of general takaful certificates after 1 January 2007 will be involved with the model change. Family takaful products are expected to follow suit in the middle of this year.
Takaful Nasional’s CEO, Mr Mohd Tarmidzi Ahmad Nordin, says the shift is necessary because Mayban Takaful and Takaful Nasional, as sister companies, are operating on different models.
“Migrating the company’s operating model to wakala is necessary because eventually, we will only have one takaful company under Maybank Insurance and the takaful sector. Therefore, integration is inevitable,” he says.
He adds that the move will be advantageous for the company since it is looking at international expansion and the wakala is the most widely accepted model in the international takaful market where there are more than 60 takaful operators in 30 countries.
In mudharaba, a profit-sharing model, the policyholders get profit on their part of funds only if the takaful company makes a profit. However, liability for losses is borne by the participants.
In the wakala model, the takaful operator receives a payment for services provided, while liability for losses is borne by the participants.