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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > Business Standards > CA Capital Adequacy > CA-8 Takaful and Retakaful > CA-8.2 Basis of Operating a Takaful Business > Wakala Fee > CA-8.2.2B
  • Wakala Fee

    • CA-8.2.2A

      The Wakala fee must be a fixed upfront fee, which may be expressed as a percentage of contributions. The Wakala fee, once fixed, must not be adjusted during the reporting period, and must be clearly stated in the Takaful contract and agreed to by the participant.

      Added: April 2014

    • CA-8.2.2B

      The Wakala fee must cover the total sum of the following components:

      (a) The management expenses;
      (b) The distribution expenses including intermediaries' remuneration, agents' commission and other expenses involved in making Takaful products available to the public; and
      (c) A reasonable and appropriate margin of operational profit.
      Added: April 2014

    • CA-8.2.2C

      The Takaful operator must ensure that the management and distribution expenses referred to under Paragraph CA-8.2.2B are paid from the shareholders' fund and not from the participants' fund(s).

      Added: April 2014

    • CA-8.2.2D

      The Wakala fee must be certified by the Takaful firm'sG actuary (see Paragraph AA-4.3A.2) and must be considered and subsequently approved by the Shari'a Supervisory Board.

      Added: April 2014

    • CA-8.2.3

      The Takaful operators must establish an equitable basis for determining the consideration charged for managing Takaful business.

      Amended: April 2014
      Amended: October 2008
      Amended: January 2007

    • CA-8.2.3A

      In the case of general Takaful contracts, it would normally be expected that the fee would be the same for all contracts of a particular duration, risk and type. In the case of family TakafulG , contracts that may be in force for several years, it would normally be the case that the consideration in the initial years would be relatively high due to the costs of establishing the contract but be substantially lower in later years reflecting only the costs of maintaining the contract.

      Added: April 2014

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