2. risk to bear high costs. This


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.

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Another scenario is agent tend
to earn another commission from the existing participant.

Towards this purpose, agent
need to sell new policy to existing participants. Thus, there is a twisting
occur which the participants will be persuaded by the agent to replace the
existing purchased plan to another plan that need to contribute more. Takaful
operation might address this issue as it will affect the overall takaful
industry image.


Takaful agents act as a
trustee for takaful operator and participants of the takaful contributions.
Referring to Majallah, takaful agents must take into account any collected
takaful contributions and he must ensure that those contribution is submitted
to the takaful operator immediately. Failure to hand out the contributions
takaful operators timely can consider is a breach of agent’s duty and
embezzlement action.


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.


4.          Agent unable to disclose relavant informtion to the takaful

It is the responsibility of the agent to obtain the necessary information
from applicant and provide those relevant information to takaful operator. Takaful
operator will based on the applicant’s information provided by agent to
determine whether accept or reject the application. Those information will
become part of partial of the legal contract between takaful operator and
participant. Therefore, if an agent deliberately conceals any information or makes
any fraudulent statement,  then he is
consider commit in a serious offence.

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