The agent is the representative of the Takaful Operator
(Insurance Company) in relation to the principal, who is appointed according to
the prevailing laws. The main bond of the agent is its relationship with the
Takaful Operator, not with the Takaful participant.
A Takaful agent represents the Takaful Operator and its primary duty is to
promote the Takaful plan or product issued by the Takaful Operator it represents.
As a reward, agent
will receive a portion of the contribution as remuneration from takaful operators
for the services rendered.


Brokers generally do not have
contractual agreements with Takaful Operators and not bound by any Takaful Operator. Their relationship relies on
general / direct method to complete transactions with Takaful Operator. Takaful
Brokers provide a comprehensive range of professional Takaful broking services
to assist potential customers on how to make paid contributions / premiums more
cost effective and at the same time enjoying maximum coverage. Different with
agents, Takaful brokers represent customers and advise customers on the most
appropriate Takaful plan. Broker will receive brokerage fee in return for the services
rendered. All Insurance Brokers are licensed by Bank Negara Malaysia and are
registered with The Malaysian Insurance and Takaful Brokers Association


The Shari’ah
issues with regards to brokers and agents that need to be addressed as follows:

1.         Lack of knowledge in subject matter related Takaful

We have heard
the grievances made by the participants of takaful agent are the misconceptions
about providing takaful or unsatisfactory services. The Takaful Society of
Malaysia (MTA) also outlines some guidelines of conduct that must be adhered to
by any agent promoting takaful. In line with the Shari’ah requirements that
emphasize the rights of both parties to sign contracts, each agent needs to
provide accurate information about a product offered so that the needs of
takaful participants will be fulfilled. Agents and brokers need to equip
themselves with knowledge related to the concept of takaful and the importance
of financial planning. They need to know the whole takaful system itself,
including the internal processes of the takaful operator and the takaful plans
offered. This knowledge is important to ensure that they are more prepared to
deal with potential participants or participants on the appropriate products
and services.


Takaful agents and brokers need to be knowledgeable in subject matter and transparent. The failure of agents and brokers in understanding the concepts and products of Takaful will cause the products and services provided to customers not comply with Shari’ah compliant. There are still agents and brokers who use conventional insurance approaches in their marketing. They only focus on the information pertaining to the protection or benefits of takaful to be acquired such as insurance agents explaining insurance coverage and tend to over promise. In essence, takaful agents actually need to increase their knowledge of the ‘legality’ of contracts according to Islam. The takaful contract is not just a contract of tabarru ‘(welfare), but also has a mudharabah contract (business collaboration) element. The contract theory in Islam require to explain contractual content / objectives (muqtada al-‘aqd). The mistake of the agent clarifying the contract thorough and detailed will result in uncertainty in the contract. Brokers and agents of Takaful must have excellent and proper understanding in objective, concept and products of Takaful to ensure they able to fulfill their responsibility to market the Takaful products. 

2.       Agents and brokers have ethical problem

To achieve or increase sales
targets, agents and brokers often compete with each other. To increase their
sales, Takaful agents and brokers need to get new customers to avoid dismissal.
They will use different types methods to increase their sales and try to keep
their performance in the firm. They may promise any benefits
that are not in the contract or guarantee capital and investment profits and so
on. Unethical practices of Takaful
agents arise in order to increase their sales. They may act out of control to
maintain self-interest and may cause agent misconduct has been identified. Insurance agents have the
opportunity for ethical misconduct because the service provided is very
abstract and difficult for customers to fully understand.


3.          Agents unable to disclose the details of total charged to
the participant


Among the important issues for
takaful products is that agents or brokers unable to clearly explain to
participants of the commissions and service fees imposed by takaful operators
on each donation. To market their products, takaful operators have appointed
agents and brokers to carry out marketing work. Problems arising, participants
are not informed of the charges incurred on the contribution / payment made,
and sometimes there is no current statement sent to the customer indicating the
accumulated revenue in the investment account. The charges may vary depending
on the performance of the takaful operator and this may expose takaful
participants to the risk to bear high costs. This practice is clearly
contradictory to al dharar yuzal (kemudharatan
mesti dielakkan)and gharar (uncertainty).

An agent or broker must
disclose the details of the total cost charged to the participant and agreed by
the takaful participant. The total cost charged should be taken into account
how much is earned by the takaful agent, the amount obtained by the takaful
operator, and the amount of charges imposed by the investment fund manager or
the investment link. Although nowadays commissions paid to takaful agents are
included in management expenses (where these funds are derived from
participants’ contribution payments) but there are still issue regarding the amount of commission
should be paid to the agent for the services rendered.