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Questions and Answers
What is a primary reason insurance operators purchase reinsurance?
What is a primary reason insurance operators purchase reinsurance?
Which principle is NOT applicable to Retakaful contracts?
Which principle is NOT applicable to Retakaful contracts?
What initiates the termination of an agency contract?
What initiates the termination of an agency contract?
What role does Retakaful play in the Takaful industry?
What role does Retakaful play in the Takaful industry?
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Which factor does NOT lead to the termination of an agency relationship?
Which factor does NOT lead to the termination of an agency relationship?
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What is the primary function of Retakaful as defined in the Islamic Financial Service Act 2013?
What is the primary function of Retakaful as defined in the Islamic Financial Service Act 2013?
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Which of the following best describes the nature of the Retakaful contract?
Which of the following best describes the nature of the Retakaful contract?
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How does Retakaful contribute to the stability of takaful contribution pricing?
How does Retakaful contribute to the stability of takaful contribution pricing?
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Which of the following contracts is primarily used in establishing Retakaful relationships?
Which of the following contracts is primarily used in establishing Retakaful relationships?
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What role does Retakaful play in underwriting for takaful operators?
What role does Retakaful play in underwriting for takaful operators?
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What is one of the main duties of a Takaful agent?
What is one of the main duties of a Takaful agent?
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Who are the licensed intermediaries registered by the Malaysia Takaful Association?
Who are the licensed intermediaries registered by the Malaysia Takaful Association?
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Which entity regulates the registration of Takaful brokers?
Which entity regulates the registration of Takaful brokers?
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What does a Takaful agent NOT typically do?
What does a Takaful agent NOT typically do?
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What type of business activity is NOT considered a role of a Takaful operator?
What type of business activity is NOT considered a role of a Takaful operator?
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Which of the following best describes a Takaful broker's responsibilities?
Which of the following best describes a Takaful broker's responsibilities?
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What is a common requirement of the contract between a Takaful agent and the principal?
What is a common requirement of the contract between a Takaful agent and the principal?
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Which of the following is NOT a responsibility of a Takaful agent?
Which of the following is NOT a responsibility of a Takaful agent?
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What is the main role of a Takaful agent?
What is the main role of a Takaful agent?
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Which of the following best defines a Takaful broker according to IFSA 2013?
Which of the following best defines a Takaful broker according to IFSA 2013?
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What is a common way Takaful intermediaries are compensated?
What is a common way Takaful intermediaries are compensated?
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Which task is NOT typically performed by a Takaful broker?
Which task is NOT typically performed by a Takaful broker?
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What is a key duty of a financial adviser in Takaful?
What is a key duty of a financial adviser in Takaful?
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How do Takaful agents differ from financial advisers?
How do Takaful agents differ from financial advisers?
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Which of these statements about Takaful intermediaries is correct?
Which of these statements about Takaful intermediaries is correct?
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What is the primary function of a Takaful agent in relation to customers?
What is the primary function of a Takaful agent in relation to customers?
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What is the maximum fine for marketing Takaful products without being a licensed Takaful Operator?
What is the maximum fine for marketing Takaful products without being a licensed Takaful Operator?
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Which of the following rights does a Takaful agent have?
Which of the following rights does a Takaful agent have?
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Which statement is true about the obligations of the principal towards the agent?
Which statement is true about the obligations of the principal towards the agent?
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What should a Takaful agent do according to Section 140 of IFSA 2013 when marketing products?
What should a Takaful agent do according to Section 140 of IFSA 2013 when marketing products?
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What constitutes non-compliance for a Takaful agent under Section 136(4) of IFSA 2013?
What constitutes non-compliance for a Takaful agent under Section 136(4) of IFSA 2013?
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What is one way an agency can be terminated?
What is one way an agency can be terminated?
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What penalty can a non-compliant Takaful agent face aside from a fine?
What penalty can a non-compliant Takaful agent face aside from a fine?
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If an agent incurs expenses with express authority, what are they entitled to?
If an agent incurs expenses with express authority, what are they entitled to?
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What distinguishes treaty retakaful from facultative retakaful?
What distinguishes treaty retakaful from facultative retakaful?
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What is the role of the retakaful operator in an al-Mudharabah model?
What is the role of the retakaful operator in an al-Mudharabah model?
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What happens when there is a deficit in the retakaful funds?
What happens when there is a deficit in the retakaful funds?
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How is the profit shared in an al-Mudharabah retakaful contract?
How is the profit shared in an al-Mudharabah retakaful contract?
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In which of the following models do takaful operators provide retakaful contributions to the risk fund?
In which of the following models do takaful operators provide retakaful contributions to the risk fund?
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What does the term 'tabarru' refer to in the context of retakaful?
What does the term 'tabarru' refer to in the context of retakaful?
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Which statement is true regarding the obligations of both takaful and retakaful operators under a facultative retakaful agreement?
Which statement is true regarding the obligations of both takaful and retakaful operators under a facultative retakaful agreement?
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How are contributions for retakaful funded?
How are contributions for retakaful funded?
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Study Notes
Takaful Intermediaries
- A Takaful intermediary is a professional who attracts clients to Takaful contracts.
- They are often known as Takaful agents, brokers, or Financial Advisers.
- Intermediaries receive commissions (or brokerage fees) for introducing customers to Takaful plans, usually a percentage of the clients’ contributions.
Types of Takaful Intermediaries
- Takaful Agent: Represents a Takaful operator, focuses on promoting their plans.
- Takaful Broker: An independent contractor who arranges Takaful and/or Retakaful brokerage.
- Financial Adviser: An independent party providing financial advisory services related to Takaful products.
Duties of Takaful Intermediaries
- Takaful Agent: Solicits proposals, negotiates and handles certificates, and manages other operations on behalf of a Takaful Operator related to issuing, renewing, or continuing certificates.
- Takaful Broker: Helps customers with obtaining and renewing Takaful coverage. Advises customers on suitable Takaful plans.
- Financial Adviser: Analyses financial needs related to Takaful products. Recommends appropriate plans and helps source those plans through licensed providers. Arranges contracts for takaful products. Manages other tasks related to financial services.
Takaful Agent in IFSA 2013
- Disclosure Requirement: Agents must inform clients that they are acting on behalf of a Takaful operator when promoting their products.
- Agent to Represent Operator: Agents can't market or promote Takaful products or services for a non-licensed operator or a person outside of the Takaful Operator. Violation can carry penalties.
Rights of a Takaful Agent
- Right to receive payment for services (usually a commission or fee).
- Reimbursement of any money used, as permitted by the Takaful principal.
- Right to perform duties in a way the agent finds suitable. Agents can refuse a principal's request to control their work.
Obligations of the Principal
- Obligated to pay remuneration and expenses as agreed. Default to customary or reasonable compensation.
- Indemnify the agent for legally performed duties.
Termination of Agency
- By revocation notice from the principal.
- By renunciation notice from the agent.
- By mutual agreement of both parties.
- By stipulated contract period expiration.
- By operation of law (e.g., death, bankruptcy, etc.).
Retakaful
- A form of insurance/reinsurance between takaful operators to pool/share takaful risks and obligations.
- Insurance operators need reinsurance to cover large risks or losses.
- The underlying processes and terms (e.g., indemnity, acceptable takaful interest, good faith) of primary takaful contracts also apply in Retakaful.
- Retakaful operates fundamentally as a risk-sharing mechanism amongst the takaful operators.
- Two types of Retakaful: Treaty Retakaful (standing agreement) and Facultative Retakaful (case-by-case basis).
- Different Takaful operators may contract to share their risks and losses through a Retakaful Risk Fund, based on principles like al-mudharabah or al-wakalah.
Importance of Retakaful
- Protecting solvency of the takaful operator and its participants.
- Providing underwriting flexibility for accepting high-risk situations.
- Stabilizing claims costs to provide more consistent pricing for contributions.
- Allowing operators to better utilize assets to better give coverage to customers.
Operational Mechanism of Retakaful
- Individual policyholders are not directly involved in retakaful contracts.
- Retakaful funds use contributions from Takaful participants.
- If retakaful funds lack sufficient funds to cover liability, the retakaful operators may inject capital (e.g., loan) into takaful funds.
- This injection is typically repaid with future surplus or subtracted from reimbursements.
- Retakaful operations can use models like al-mudharabah or al-wakalah.
Retakaful Operational Model
- Al-Mudharabah: Retakaful operator/entrepreneur manages assets while Takaful operators contribute to the fund in a sharing arrangement.
- Al-Wakalah: Retakaful operator manages assets on behalf of Takaful operators, with a predetermined fee, and the profits or losses are allocated according to the agreement.
List of Retakaful Companies
(A table of Retakaful companies is presented in the document)
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Description
This quiz covers the roles, types, and duties of Takaful intermediaries. Learn about Takaful agents, brokers, and financial advisers and how they facilitate Takaful contracts. Test your knowledge on their responsibilities and the differences between each type of intermediary.
