43
FIGURE 4: PURE WAKALAH MODEL
Notes: The figure presents two parties – Participants and TO. Takaful Fund and Shareholders’ Fund are both
managed by the TO. Source: Adapted from PwC (2008).
FIGURE 5: MODIFIED WAKALAH MODEL
Notes: The figure presents two parties – Participants and TO. Takaful Fund and Shareholders’ Fund are both
managed by the TO. Source: Adapted from PwC (2008).
In contrast, in the Modified Wakalah model, the TO claims a portion of the underwriting surplus
as an additional incentive for efficient performance (see Figure 5).
Participants
Surplus/Deficit
Re-Takaful
Reserves
Shari’ah-
compliant
Investments
Investment
Profits
Shareholders’
Fund
Qard Hasan
Management
Expenses
Claims
Takaful
Fund
Wakalah Fee
Contribution
Participants
Surplus/Deficit
Re-Takaful
Reserves
Shari’ah-
compliant
Investments
Shareholders’
Fund
Qard Hasan
Management
Expenses
Claims
Takaful
Fund
Wakalah Fee Contribution
Investment
Profits