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Unearned wakalah fee in the takaful industry in Malaysia: a critical analysis

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dc.contributor.authorSa'id Adekunle Mikail
dc.contributor.authorFares Djafri
dc.contributor.authorBurhanuddin Lukman
dc.contributor.authorMahadi Ahmad
dc.contributor.authorSa'id Adekunle Mikail
dc.contributor.authorFares Djafri
dc.date.accessioned2022-02-28T03:40:31Z
dc.date.available2022-02-28T03:40:31Z
dc.date.issued2021
dc.description.abstractThe issue of unearned wakalah fees (UWF) arises due to the statutory requirements in the Islamic Financial Services Act (IFSA 2013) that mandate takaful operators to refund any undue contribution with the corresponding wakaah fee in the event of surrender or termination of a takaful certificate. The relevant statutory provisions and Bank Negara Malaysia (BNM) guidelines on the valuation basis for liabilities of family and general takaful are open to more than one interpretation, and the exact definition and components of money not due are not clear. The implementation of the statutory provisions and regulatory guidelines on the refund of UWF has raised the following issues for the Malaysian takaful industry: 1. How to determine UWF and its components from money not due that must be refunded as stated in the statutory provisions and BNM guidelines? 2. What are the Shari'ah justifications, if any, to support the requirements for refund in the event of surrender? 3. How to resolve any Shari'ah and technical issues pertaining to the implementation of the refund of UWF due to lack of clarity regarding its definition and components? Accordingly, this paper delineates the concept and components of the wakalah contract, its salient features, contractual relationship, subject matter, including the wakalah fee, and juristic deliberations regarding it. It also examines the background and means of identifying UWF by explaining its subject and components, differences between earned and unearned wakalah fee, and the treatment of UWF. Further, it studies Shari'ah and technical issues related to recognition, calculation and refund of UWF and other surrender values.en_US
dc.identifier.citationMikail, S. A., Djafri, F., Ahmad, M., & Lukman, B. (2021). Unearned wakalah fee in the takaful industry in Malaysia: a critical analysis. Kuala Lumpur, Malaysia: ISRA.en_US
dc.identifier.urihttps://ikr.inceif.org/handle/INCEIF/3541
dc.languageEnglish
dc.language.isoengen_US
dc.publisherInternational Shari'ah Research Academy for Islamic Finance (ISRA)en_US
dc.rights2021. International Shari'ah Research Academy for Islamic Finance (ISRA)
dc.sourceSEDONA
dc.subjectUnearned wakalah feeen_US
dc.subjectSurrender valueen_US
dc.subjectTakaful contributionen_US
dc.subjectPayment frequencyen_US
dc.subjectUp-front wakalah feeen_US
dc.titleUnearned wakalah fee in the takaful industry in Malaysia: a critical analysisen_US
dc.typeResearch Monographen_US
dlc.maintopicMuamalat contractsen_US
dspace.entity.typePublication
ikr.doctypeScholarly Works
ikr.licenseAvailable in I-FIKR platform. Kindly email to kmc@inceif.org to access the item
ikr.topic.maintopicMuamalat contractsen_US
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