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everything you need to know about Takaful insurance contracts

Legal and regulatory frameworks, management model, processing of applications for approval or the control of Takaful insurance contracts…, the Authority’s officials scrutinized several important points during this meeting.

It must be said that after the publication of the implementing texts relating to Takaful insurance in October 2021, applications for approval were officially submitted to the Authority by companies interested in carrying out insurance operations and/ or Takaful reinsurance.

To speed up the processing of these requests, ACAPS had proactively undertaken the study of the first applications for approval, given that the duration of this type of processing can be up to 6 months. Thus, the approval was granted to three companies by the Council of the Authority during its meeting of December 10, 2021. Then, the approval was also granted to two other companies during the meeting of the Council of the Authority dated January 28, 2022.

Today, the decisions for obtaining approval of the 5 companies having submitted their applications are published in the BO. The last publication dates from May 2, 2002. It should also be noted that the Authority has prepared an instruction relating to the presentation of Takaful insurance operations by Takaful insurance intermediaries and other entities authorized for this purpose.

Focus on ACAPS reference models

During this Masterclass, ACAPS managers went back in depth to the types of contracts that currently exist on the market. Indeed, as part of the support for insurance companies for the operationalization of Takaful insurance and in order to facilitate the granting of the assent of the Superior Council of Ulemas (CSO), ACAPS has developed 7 models of reference that we can divide into three blocks.

The first block includes Takaful death/disability insurance contracts for crowdfunding, death/disability from all causes and death. Some differences remain between these three types of contracts. The first type of contract includes three guarantees, namely death, absolute and definitive disability (basic guarantees) and permanent partial disability (optional guarantee). The second type offers absolute and permanent death and disability guarantees. It is intended exclusively for customers of participating banks, while the latter only provides death cover.

The second block consists of “Takaful investment” and “Takaful-retirement investment” contracts. The purpose of these two contracts is to allow the participant, in return for the payment of periodic or additional contributions, to build up long or medium-term savings or to provide a basic or supplementary retirement pension. In addition, these contracts offer the participant the possibility of benefiting from the capital built up before the end of the contract via advance or redemption (total or partial), in compliance with the general regulations on redemption and advance (RGAR ) applicable to Takaful insurance or Takaful investment contracts (see below).

Finally, the third block includes Takaful multi-risk building insurance contracts and Takaful multi-risk building insurance contracts for crowdfunding. They are intended to cover buildings that have been the subject of crowdfunding and other buildings against fire risks and related risks; water damage; glass breakage and catastrophic events.

RGAR framework: What you need to know

In order to enable the Shariah Committee for Participatory Finance to issue its assent regarding the general regulations, ACAPS has developed a reference framework for these regulations relating to Takaful insurance or Takaful investment, which has been updated. the provision of Takaful insurance companies in order to absorb it.

With regard to redemption operations, the participant may claim at any time the total or partial redemption of his capital. The latter cannot be granted, during the life of the contract, more than 4 times for Takaful-retirement investment contracts or 2 times for other Takaful investment contracts. It should be noted that this prohibition does not preclude the right to a total redemption. At the same time, the partial surrender value cannot be less than the amount resulting from the application of the rate indicated in the contract (which cannot exceed 5%) to the calculation base. It cannot be more than 50% of this base.

With regard to the advance, it cannot be granted during the life of the contract more than the number of times indicated in the insurance contract, which cannot exceed 3 times, and this for an amount lower than the value indicated in insurance contract, which cannot exceed 5% of the calculation base and before the expiry of the duration indicated in the insurance contract which, in turn, cannot be less than 5 years of the life of the contract.

It should be noted that the amount of the advance must not exceed 80% of the redemption value and that the advance is granted for the duration indicated in the insurance contract (ie 5 years). After this period, the insurer systematically considers the advance granted as a partial surrender of the contract.

Other provisions relating to advance transactions: no advance may be granted to the participant before the reimbursement of the advances which have already been granted to him. The amount of the advance is deducted from the capital constituted on the date of its granting. Subsequent reimbursement of the advance cannot give rise to any costs or interest for the participant.

In the end, the operationalization of Takaful insurance will make it possible to meet the needs of a segment of the population with regard to insurance coverage and will contribute to the promotion of the products of the participating banks via Takaful death/disability insurance, for crowdfunding, and multi-risk building insurance, for crowdfunding. It will also contribute to the development of the financial inclusion of an important category of citizens who were reluctant in relation to the services offered by this sector mainly for religious reasons.

51 contracts validated by the CSO

The insurance companies have drawn up their insurance contracts according to the reference models, which are the subject of the assent of the CSO mentioned above, by making a few modifications specific to each of the insurance companies. In this context, ACAPS received 51 Takaful insurance contracts from the four companies. This large number of contracts drawn up on the basis of the 7 reference models is explained by the desire of insurance companies to diversify their offers in order to be able to meet the needs of their customers and partners (participating banks and others).

After examining these contracts and RGAR, ACAPS submitted these documents, in accordance with article 247-1 of the insurance code, to the CSO and presented them to the Sharia Committee for Participatory Finance for the granting of its conform opinions.


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