Applicability

Licensed takaful operators (including professional retakaful operators) under the Islamic Financial Services Act 2013

Summary

The Shariah Advisory Council (SAC) of Bank Negara Malaysia at its 226^th meeting on 26 October 2022 ruled that item (ii) of the SAC ruling at the 113th meeting dated 23 June 2011 and 114th meeting dated 28 July 2011 on “Takaful Semula dengan Syarikat Insurans dan Insurans Semula Konvensional” (the Existing Ruling) is revised as follows:

(ii) A licensed takaful operator (including a licensed professional retakaful operator) is not allowed to distribute takaful risks through a ceding out arrangement to an insurer (including a licensed professional reinsurer), except under the following circumstances:

i. existing licensed takaful operators do not accept or are not able to accept the risk;

ii. existing licensed takaful operators do not have the capacity or expertise to accept the risk; or

iii. a ceding out arrangement with another licensed takaful operator causes or may cause detrimental effect to the takaful funds of the licensed takaful operators.

This ruling supersedes item (ii) of the Existing Ruling, while the remaining part of the Existing Ruling would continue to apply.

This ruling comes into effect immediately upon its publication on Bank Negara Malaysia’s website on 5 January 2024.

Issuance Date
5 January 2024

Effective Date
5 January 2024

Issuing Department
Jabatan Sistem Kewangan Islam

Document

• The Shariah Advisory Council of Bank Negara Malaysia (SAC) Ruling on Ceding Out of Takaful Risk to Insurance Companies Under Hardship Situation