For many companies a feasibility study is the first step in the establishment of a takaful operation. Actuarial Partners can provide studies on the market potential for the company as well as an analysis of the risks such as the potential cannibalization of traditional business if a parallel takaful company is established by an existing conventional insurer.
Setting up a takaful company is a complex process, and in many ways is more complex than setting up a conventional insurance company. There are many aspects which can have a significant influence on how takaful should be implemented. As an example, whereas for conventional insurers the product pricing is fairly standardized, in takaful there are a wide variety there are a wide variety of operating models to chose from. You must consider the most appropriate operating models, be it mudharaba (profit sharing), wakala (agency), musharaka (partnership) which will affect the pricing basis, to the interaction of English Law and Shariah (Islamic) Law and principles and avoidance of riba (usury) and gharar (risk).
The shariah council members who are responsible for approval of the takaful products are most concerned with the adherence to these rules and principles. Actuarial Partners consultants can provide guidance with developing your model and identifying how your Takaful model adheres to these principles while maintaining business viability.
Our consultants can assist from the initial planning which includes conceptualisation of these takaful models to implement until product launch, with our services grouped into three areas:
- Financial model development:
- Determining appropriate distribution channels and types of products sold
- Determining the necessary capital and other statutory requirements
- Determining the model to use
- Developing the charges, compensation and reinsurance quotes (including sample projections)
- Shariah Council, assistance:
- Preparing submissions to the Shariah council for approval of the takaful model
- Developing brochures, underwriting forms, sales illustration and claim forms
- Modelling charges and compensations structure
- Operations and Regulatory assistance:
- Preparing submissions to the Regulators for approval for the model and basic concepts / structure of the operations
- Submissions to the Regulators for approval for all products, forms and other operational aspects
- Assistance in testing of the system based on the final product design and wakala charges