Bank Negara has issued a statement with regards to Takaful companies ceding out risks to insurance companies during hardship situation.
Referring Shariah Advisory Council at its 226th 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” it was revised whereby:
(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.
Bank Negara said the ruling comes into effect immediately upon its publication on its website on 5 January 2024.
