Premiums are voluntary contributions (Tabarru) to collectively insure the participants
Policyholders (Participants) collectively own the Takaful Fund/Risk pool (TF) to cover losses. The National Insurance Company (Watania) manages the pool according to Wakala model and receive fees
Payment of Premiums to Risk Pool are voluntary for mutual assistance without individual monetary gain
Investments are directed towards acceptable businesses/ industries and returns are Riba free
Policyholders are owners of the Risk Pool and entitled to its profits
Committed to channeling funds to industries, businesses and activities that are good for society and environment
Surplus or loss arises in TF depending on the number and amount of claims paid on collective basis and on investment performance of assets where in TF is invested.
Watania may put aside part of this surplus as reserve to strengthen the claim paying ability of TF.
Any surplus after company charges arising on pro rata basis related to contributions paid, accrues to the policy and payable at expiry of the term
Any claim paid under the policy is taken into account. The surplus may not be payable if the claim paid under that policy exceeds the Contribution made.
If there is overall loss in TF, Watania finances such loss on interest free basis until TF turns into surplus and its loan is paid back as top priority.
Watania is entitled to receive a share in underwriting surplus as performance fee provided some minimum level is earmarked for participants first.
As Watania is acting as Manager of TF it must receive a defined amount as its fee/charges. This is expressed as:
a percentage of Gross Contribution as upfront Wakala Fee
a percentage of policyholders investment income
a percentage of underwriting surplus as performance fee after accruing minimum percentage of (1) as above
Watania Fee shall not exceed maximum limits as agreed with its Shariahh Committee beginning of every year.