IFMP General Takaful Agents Certification (GTAC), Pakistan flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Tabarru'

A donation contributed by a participant to the mutual takaful fund. It is not a premium for a bilateral indemnity contract, and it is the mechanism that makes mutual risk sharing Shariah-permissible.

Wakala fee

A fixed agency fee paid to the takaful operator for managing the participants' fund, usually expressed as a percentage of contribution. It is agreed in advance and disclosed to participants.

Mudaraba share

A profit-sharing arrangement in which the operator receives an agreed ratio of the fund's investment profit as a partner. The operator's return depends on actual fund performance, not a fixed fee.

Qard hasan

An interest-free loan provided by the operator or its shareholders to the takaful fund when it faces a deficit. It is repaid from future surplus before any surplus is distributed to participants.

Riba

Any stipulated increase on a loan or an interest-based transaction. It is prohibited in takaful, so fund investments must avoid interest-bearing instruments and late payment charges are donated to charity.

Gharar

Excessive uncertainty in the essential terms of a contract. Takaful avoids it through clear certificate wording that defines contribution, coverage, exclusions and surplus treatment.

Surplus distribution

The underwriting and investment surplus of the participants' fund, declared only after adequate reserves including IBNR. It belongs to participants under the SSB-approved rule, not to shareholders.

Shariah Supervisory Board

An independent body of qualified scholars that reviews and approves takaful products, investment policy, surplus distribution and qard hasan terms. Its documented rulings govern Shariah compliance.

Retakaful

Reinsurance obtained by a takaful operator to cede large or catastrophic exposures. The arrangement must itself be Shariah-compliant, and recoveries accrue to the participants' fund.

Average clause

A property clause that reduces a claim proportionally when the sum insured is less than the value of the insured property. It penalises underinsurance and is applied at claim settlement.

Deductible

The amount of each loss borne by the participant before the takaful fund pays. It may apply per claim or per event and may be inclusive or exclusive of the sum insured.

Sum insured

The maximum amount payable under a certificate for a defined loss. For property it should reflect reinstatement or replacement value to avoid average at claim stage.

Material fact

Information that would influence an underwriter's decision to accept a risk or set its terms, such as prior claims or hazardous occupancy. Non-disclosure permits avoidance of the certificate.

Endorsement

A written amendment to a certificate that changes terms, sum insured or coverage mid-term. It requires the participant's agreement and usually a contribution adjustment.

Co-insurance

A clause under which the participant bears an agreed percentage of each loss alongside the fund. It aligns interests and reduces moral hazard in property and large risks.

Retention

The amount of risk the takaful fund keeps per risk or per event before ceding the excess to retakaful. It is set in the retakaful programme and checked before binding cover.

IBNR

Incurred but not reported claims reserve. It must be established before any surplus is declared, because claims already incurred may still be notified after the reporting date.

Subrogation

The operator's right to pursue third parties responsible for a loss after paying the claim. Recoveries accrue to the participants' fund and reduce its net loss.

Salvage

Remaining value of damaged property after a total or partial loss. It may be retained or sold, and the proceeds are credited to the participants' fund.

Loss adjuster

An independent specialist appointed for large or complex claims to investigate cause and extent and recommend settlement. The report supports but does not bind the operator's decision.

Repudiation letter

A written rejection of a claim that cites the certificate clause relied on, states the reasons, and informs the participant of the complaint and escalation route.

Case reserve

The estimated amount set aside for a notified claim, reviewed and adjusted at each reporting date. Case reserves plus IBNR form the total claims reserve of the fund.

KYC

Know Your Customer. Agents must verify identity, source of funds and beneficial ownership before placing cover, and retain the records for the required period.

AML reporting

The duty to report suspicious transactions to the operator's compliance officer without tipping off the customer. It applies to unusual payments and structures.

Agency agreement

The written appointment of an agent by the operator, specifying classes, territory and authority limits. Business placed outside it breaches the agreement and licensing rules.

Mis-selling

Recommending or placing cover that does not meet the customer's needs, or misrepresenting coverage, exclusions or Shariah compliance. It is a conduct breach subject to sanction.

Complaint escalation

The route from the operator's complaints cell to the grievance officer and then the regulator or ombudsman. Agents must not obstruct escalation and must meet handling timeframes.

Solvency margin

The capital buffer an operator must maintain, calculated separately for the takaful fund and shareholders' fund. Breach allows the regulator to direct corrective action.

Plain-language disclosure

Explaining contribution, coverage, exclusions, waiting periods and claim steps clearly before sale and at renewal. It supports fair treatment and reduces claim-time disputes.

Claim acknowledgement

Prompt written confirmation that a claim has been received, stating the documents required and the next steps. It starts the service clock for settlement.

Renewal review

Re-rating at renewal based on claims experience, changed occupancy or use, and updated sums insured. Any change in terms or contribution must be disclosed in writing.

Purification

The process of separating non-Shariah-compliant income and donating it to charity. It is documented and does not benefit participants or shareholders.