Issues on Takaful Affecting the Choice of Accounting Policies: A Case Study of Two Takaful Companies in Malaysia

Abstract

The paper adopts a descriptive case study method to examine the impact of juristic views on the operations of two Malaysian takaful companies. In order to achieve this objective, the annual financial reports of both companies were analysed. Interviews with each company's finance managers and with a member of the Malaysian Shariah Advisory Council were undertaken for a more in-depth coverage. Also a written correspondence with a senior official of the central bank was accomplished. Similarities and differences between the two companies were identified and it is concluded that the differences are serious enough to warrant interventions from the regulators in the form of mandatory disclosures in the annual reports.

Charting a Course on the Islamic Finance Ocean: A Survey of Islamic Insurance Literatures

“…Another issue of focus was about the operational models of agency and investment. These models have been criticised and blamed for all inconsistences and considered as wrong basis of establishing Islamic insurance contracts (Alpen Capital, 2010;Annuar & Abu Bakar, 2010;Standard & Poor's Financial Services LLC, 2011;Best, 2013). Likewise, Olorogun (2013b) evaluated the diffusion of agency theory into Islamic insurance agency operational model and found that the agency contract was just a claim.…”

“…Furthermore, tenacious criticisms from the markets' reporters about the Islamic insurance industry practices and regulation disparities across regions were common. Even Annuar and Abu Bakar (2010) found disparity of accounting and auditing policies among Islamic insurance companies in Malaysia. It is clear at this point that Islamic insurance proponents have asserted many efforts; nevertheless, it is not enough.…”

“…Since the inception of Islamic insurance was over 40 years ago, however, the industry is still far away from standardisation. The stakeholders, such as Annuar and Abu Bakar (2010), Bhatty (2010), Standard & Poor's Financial Services LLC (2011), Swiss Reinsurance (2011), Visser (2012, Middle East Insurance Review (2011), Islamic Finance News (2012), Best (2013), and Olorogun (2013a), commonly reported lack of standardised practices and regulations across the regions. In addition, the operational issues, such as underwriting and rating (pricing), have attracted limited or no attention of the academics and practitioners alike (Olorogun, 2013b).…”

“…These recent discussions have explored various aspects of Islamic insurance, such as its scope and definition, fundamental concepts, benefits, mechanisms, and models, as for example, agency, investment, or a combination of both (Yusof, 1991;Billah, 2003;Maysamia & Williams, 2006;Abdul Wahab, Lewis, & Hassan, 2007;Rashid, 2007;Khan & Joseph, 2008;Loo, 2010;Hassan, 2009;Abdul al-Hamid, 2009;Al-Qurradaghi, 2009;Al-Shubayli, 2009;Mohd Noor, 2009;Asmak, 2009;Azman, 2009;Abdul Kader, Adams, & Hardwick 2010;Annuar & Abu Bakar, 2010;Khan, Alam, Ahmad, Iqbal, & Ali, 2011;Fauzilah & Abdul Razak, 2011).…”

A proposed contribution model for general Islamic insurance industry

“…Alpen Capital, Middle East Insurance Review (MEIR), The World Takaful Report (WTR) and Islamic Finance News (IFN). For the sake of brevity, the information are more detailed in these business and academic magazines, thus for more details kindly refer to Alpen Capital ( mudharabah (Billah, 2003;Maysamia, & Williams 2006;Abdul Wahab, Lewis & Hassan, 2007;Al-Qurradaghi, 2009;Al-Shubayli, 2009;Abdul Kader, Adams, & Hardwick 2010;Annuar & Abu Bakar 2010;Khan, et al 2011). The recent enactment aimed to eliminate or minimise excesses in the process of making and arriving at legal rulings on Islamic finance products (Malaysian Government 2013).…”