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investment funds in the contract. Under the new proposed model, when the TOs manage
additional funds, they must determine the policy required to establish and integrate those funds
taking into consideration the sustainability of the funds and fair treatment of Takaful
policyholders.
In conclusion, TOs may decide to offer internal transaction cross trading, which involves an
arrangement where the TOs offer simple products to underserved Malaysians particularly the
household from the bottom 40% (B40) group. Currently, there are ten insurers and TOs who
offer Perlindungan Tenang – affordable, accessible and simple Takaful products. For this unique
product, the contributions for the family Takaful product is between MYR 5 and MYR 13 per
month for the total sum insured between MYR 15,000 to MYR 33,000. Currently, more than
29,500 policies and certificates have been sold under Perlindungan Tenang products. After the
announcement from of Budget 2019, the cost of Perlindungan Tenang products is expected to
decrease when a two-year stamp duty exemption is enforced. In addition, the B40 groups also
have a long-term security and protection fund to protect and support them from the
insurance/Takaful market. The fund can also enable B40 groups who purchase the policy to
understand and experience insurance and Takaful.
TABLE 11: P ROPOSED ENHANCEMENTS TO THE TAKAFUL OPERATIONAL FRAMEWORK OF MALAYSIA
Dimension Existing requirements
Proposed enhancement to the
framework
Takaful model Solely premised on agency
contract while the TO plays the
role of a manager and
administrator of Takaful fund
Explicit flexibility to adopt new
Takaful models such as risk-sharing
arrangements
The requirement
for Takaful Specific
Shari'ah Contracts
Solely premised on agency
contract while the TO plays the
role of a manager and
administrator of Takaful fund
Outlines specifics of operational
requirements for the provision of
tabarru’, qard, hibah in product
structuring and legal documentation
Establishment and
management of
funds
No differentiation between
savings and investment funds
Provides clear demarcation between
savings and investment to reflect the
relevant Shari'ah contracts used for
each fund
Management of
additional funds
Limited policy expectations and
options for consolidation of
additional funds
Outlines policy requirement on the
establishment and consolidation of
additional funds, taking into
consideration the sustainability of the
funds and fair treatment to Takaful
participants
Inter-fund cross
trading
No specific requirements for
inter-fund cross trading
Set out the regulatory expectation for
internal controls and TO’s conduct on
inter-fund cross trading
Source: Financial Stability and Payment Report (2018)