PrecentiaTakaful

PrecentiaTakaful is a comprehensive Takaful administrative system that caters for Wakala, Mudharabah and hybrid models. It is a highly integrated system.

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The intrinsic attributes of the PrecentiaTakaful are:

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(a)       Flexibility

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It is structurally parameterized driven, thus giving the freedom for users to alter the governing criteria as and when necessary. It minimizes hard coding that leads to the likelihood of programming errors. Launching of new products where it used to be months away is now within a week. Each process is designed to be modular and object-driven. 

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(b)       Scalability

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It is highly scalable to accommodate business expansion and growth by introducing new distribution channels and product horizons.

• Web-based to penetrate e-market space in the immediate term.

• Strong infrastructure/foundation to operate mobile commerce capabilities.

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(c)       Reliability

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The PrecentiaTakaful system is based on PrecentiaLife architecture. It has been operational since the year 1999 and has undergone numerous enhancements to cater for the changing industrial needs. Its reliability has been proven since then with the successful installation in many companies in the Pacific region. The development of the Takaful component has been incorporated by a highly qualified and has extensive and in-depth business knowledge in Takaful. 

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(d)     Customer Centricity

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PrecentiaTakaful has the common client capability across all lines of product and distribution to achieve a customer-centric framework. It enables the users to perceive policies based on per customer. This essentially enables the system to be the customer-centric focus rather than certificate focus. 

 

Segregation of Fund Business

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The accounting funds structure in PrecentiaTakaful is divided into three (3) main funds; shareholders, ordinary family Takaful and investment-linked Takaful funds. The system can maintain a new fund if required, i.e. another main fund for the annuity.

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Shareholders’ Fund

 

Shareholders, i.e. Takaful operators, act as an agent to the participants to manage the operations of the family Takaful and investment-linked funds. Shareholders bear agency commissions and benefits and management expenses incurred in managing the funds. In return, the Takaful operator is entitled to earn wakalah fees and other charges. Hence the income plus investment income arising from the investment of the assets of the shareholders’ fund, and the associated expenses, are accounted for in the Shareholders’ Fund. 

 

Ordinary Family Takaful Fund

 

Participants’ contribution to ordinary family products at the initial stage is accounted for in Operating Fund and then allocated between investment and risk portions. Before allocation, shareholders’ wakalah fee is deducted upfront. Fund for investment is retained in Participants Investment Fund (PIF) for investment activities. Every month, a portion of the fund is dripped out as ‘Tabarru’ or donation to the Participants Risk Fund (PRF) for protection. Should the Takaful operator introduce ordinary family group products, a separate risk pool is accounted for in Group Risk Fund (GRF). The money in risk funds is also invested to maximise returns. Payments out of the participants' fund are restricted to direct claims and direct investment-related expenses only. The inter-fund journal is created upon each transaction that crosses funds. 

 

Investment-Linked (IL) Takaful Fund

 

Participants’ contribution to investment-linked products at the initial stage is accounted for in IL-Operating Fund. Before units are allocated, shareholders’ wakalah fee is deducted upfront. Upon creation of units, the contribution is allocated to the respective unit-linked funds. Net Asset Value (NAV) is calculated daily to determine the price per unit for unit creation and cancellation purposes and publication. On a monthly basis, a portion of the fund is dripped/cancelled out as ‘Tabarru’ or donation to the Participants Risk Fund (PRF), based on actuarial calculation, for protection. The money in risk funds is also invested to maximise returns. Payments from the participants' fund are restricted to direct claims and direct investment-related expenses only. The inter-fund journal is created upon each transaction that crosses funds.

 

Tabarru Fund Dripping

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Multiple Investment Accounts

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The system allows the Takaful Operators to create multiple funds for each Participant and product managed by the Operator.  It also gives flexibility on the crediting of investment returns to each Participant’s accounts based on the rate of return or amount to be pro-rated among the participants. Furthermore, there is flexibility on the Tabarru Fund dripping charges (see below) from these funds. Pricing and valuation module are available for each fund and account depending on the Takaful operators’ business model. As for the Participants, they can view the latest information on the accumulated amount available in each account or funds.

 

Tabarru Fund Dripping Process

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The system provides flexibility for the deduction of the donation or Tabarru charges into the Participant’s Risk Fund from the Participant’s Fund or Participant’s Investment Account. The flexibility is provided in the form of a user-defined Tabarru deduction schedule, namely on daily, monthly, quarterly, semi-annually, yearly or a lump sum based as defined by Takaful Operator at the product level following each Takaful’s Operator’s Takaful model.

 

The feature also caters for flexibility on the Tabarru amount to be deducted either defined as a percentage of the contribution, flat amount (table-based) or formula based. 

 

Furthermore, the Operator can also define from which Participant’s accounts were used to deduct the Tabarru charges for each product.  This is made possible as the system will allow for each participant at the product level to have multiple participants and participant’s investment accounts based on multiple investment arrangements such as funds being managed internally, funds being managed by external parties and funds invested based on specific investment objectives such as Equity only.