Noor Takaful

Briefly, takaful illustrates the act of a group of people who agree to reciprocally guarantee each other against certain loss or damage that may be inflicted upon any one of them. Every participant contributes a sum of money to a common takaful fund. By contributing to the fund the participant undertakes a contract (a’qad) to become one of the takaful participants by agreeing to mutually help each other, should any of the participants suffer a loss as covered under the takaful contract. The operational framework of Takaful is free from elements of Riba (interest or usury), Gharar (unknown or ambiguity in the contract) and Maysir (gambling), the three main reasons why Muslim scholars regard conventional insurance as being against the principles of Shari’ah.

Noor Takaful’s business model is founded based on the Shari’ah principles of wakalah. Noor Takaful, as a scheme manager, acts as an agent (wakeel) in managing the takaful operations on behalf of the participants. Noor Takaful will administer the process of participation, manage collection of the takaful contribution and process the claims according to the contract agreed with the participants. In return, Noor Takaful is entitled to a fee (wakalah fee) which is deducted up front as a percentage of the contributions paid by the participants. All Noor Takaful’s administration and management expenses such as marketing and promotions, sales agency commission, brokerage fee, staff salary, rentals etc. are paid from the wakalah fee.

In addition to the above, Noor Takaful also acts as a trustee who invests the fund in Islamic-compliant avenues to generate return on the contribution paid. As a fund manager, Noor Takaful is entitled to a profit sharing from the return on investment based on the percentage agreed in the takaful contract.

The salient features of Noor Takaful business model are summarized as follows:-

• 1. Togetherness in striving for common good: Participants agree to reciprocally guarantee each other against certain loss or damage that may be inflicted upon any of them. This embodies the principle of mutuality, solidarity and brotherhood among the participants in striving for common good.


• 2. Performing good deeds through joint contribution to help the needy: Participants pay takaful contribution to a common takaful fund and agree that part of the contribution is taken as tabarru’ (donation) to help the needy in the event of misfortune or catastrophe.


• 3. Wakalah fee: A small fee will be charged to the participants from the takaful contribution paid as wakalah fee to pay the Company’s operational expenses, marketing expenses and other acquisition costs e.g. sales incentives or commissions to sales intermediaries such as agents, brokers etc. The wakalah fee will be stated clearly in the Takaful Certificate (policy contract) to avoid gharar.


• 4. Shari’a compliant investment: All investments of the fund shall be managed and invested in Shari’a-compliant avenues. The sharing of profit from the investment between the participants and Noor Takaful will be stated clearly in the Takaful Certificate (policy contract).


• 5. Distribution of surplus: If there is net surplus in the fund after deducting expenses such as claims, retakaful, technical reserves etc., the Company is entitled to take up to 40% of the same as an incentive fee in consideration for the professional services rendered by the Company in managing the operations of the takaful fund which resulted to such surplus and the balance 60% to be distributed to the eligible participants as provided in the terms and conditions of the Takaful Certificate.