takaful-ifrs17

THE TAKAFUL STRUCTURE

Takaful is Islamic mutual insurance:

• Participants contribute to a common fund (Participants' Risk Fund / Takaful Pool).
• Participants collectively bear the insurance risk (not the operator).
• The takaful operator manages the fund for a fee (wakala model) or profit share (mudaraba model).

This distinguishes takaful from conventional insurance: In conventional insurance: insurer takes premium, bears risk, keeps underwriting profit. In takaful: operator manages the fund, earns fee only, does not bear insurance risk.

THE THREE OPERATING MODELS

Wakala model: Operator earns a FIXED PERCENTAGE of contributions as a wakala fee (e.g., 25-35%). Operator does NOT share in underwriting surplus or bear underwriting risk. All surplus/deficit belongs to participants (and may be distributed to them or retained in fund).