Diversification of Islamic Financial Instruments
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Table 73: General and Family Takaful Contract
Products Contract Among Participants
Contracts Between
Participants and
Takaful Operation
General
Takaful
Tabarru’ (donation) Wakala
Waqf (endowment) Mudarabah
Family
Takaful
One portion for Tabarru’ and another portion
for investment.
Wakala and Mudarabah
All portions for Tabarru’ Wakala
Source: Created by Author
Development of the Takaful Industry in Malaysia
The regulatory framework has witnessed evolution and development that position the Takaful
market in Malaysia as a vibrant market supported with sound regulatory framework
foundation and robust infrastructure market.
In 2012 Takaful Operational Framework & the revised Shariah Governance Framework was
introduced to strengthen the governance and transparency and determine the reporting line to
ensure clear responsibilities, in 2013 the new Islamic Financial Services Act 2013 was
introduced to shift the market to next level as IFSA 2013 was a significant mile stone thathad a
significant impact on the market operations especially Islamic banking and Takaful. In 2014
Risk Based Capital for Takaful was implemented to set the stage for prudent requirement and
risk management, in 2015 Appointed Actuary & Goods & Services Tax (GST) was introduced, in
2016 Financial Condition Reports & Operationalization of Financial Ombudsman Scheme was
introduced, in 2017 LIFE Framework & Phased Liberalization of Motor and Fire Tariffs was
introduced, and next year 2018 Conversion to Single Takaful Business, where no more
composite license is allowed, this will change the landscape of the market and have impact on
the Takaful market in term of governance and operation, share services, and other aspects.
Malaysian Takaful industry Performance in 2016
The Malaysian Takaful industry performance in 2016 showed total RM 26.96 billion assets (i.e.
only for takaful funds’ total assets), which included RM 2.41 billion of General Takaful
contributions, as per the MTA Takaful Annual Report 2016.
General Takaful had a gross contribution of 2.41 billion with penetration rate of 14.61% for
Family Takaful, with 76,332 Registered Takaful agents in the Takaful market.
Malaysian Family Takaful Market Performance in 2016
The family Takaful certificate stood at RM 4.63 Million, versus business in force amounted to
RM 3.88 billion, as for the new business it represents RM 3.95 billion was recorded as
compared to 3.64 billion in 2015, representing a growth of 8.6%.
Distribution Channels: Family Takaful New Business
Takaful Family products are distributed in the market via different channels to ensure wide
coverage and reach in the market, especially Family Takaful still has low penetration in the
market.
The annual gross contributions are mainly generated from agents (88.3%) followed by
bancassurance (8.2%), brokers (0.7%) and other channels (2.9%). As for the single gross