Preamble
First Article – Glossary
The following words and expression shall bear the meaning indicated beside each of them unless the context provides otherwise:
State The United Arab Emirates. Law Federal Law No. (6) of 2007 on Establishment of the Insurance Authority and Organization of the insurance Operations and its amendments. Executive Regulations The Executive Regulation of the Federal Law. Minister The Minister of Economy. Authority The Insurance Authority established by virtue of the provision of the Federal Law. Board Board of Directors of the Insurance Authority. Director General Director General of the Insurance Authority. The Company The Takaful operator, or foreign branch of a Takaful operator, licensed to carry out Takaful operations in the State, conducting its business according to the provisions of the Law, the Executive Regulations and the System of Regulations herein, whereas all its transactions are in conformity with the principles of Shari’a Law. Board of Directors Board of Directors of the Company or its equivalent in the governance structure of Foreign Takaful Operators. Takaful Insurance A collective contractual system aiming at attaining cooperation between a group of participants to face specific risks whereby each one of them pays a certain contribution that leads to formation of an account called the participants' account through which the due compensation will be paid to whomever the risks are realized in his respect. The Takaful operator will manage the account and invest the amounts collected therein against a specified remuneration. Participant The person associated with a membership contribution document and concluded Takaful insurance contract and obligated to pay the contribution, who has the right, or his legal heirs have the right, or those assigned thereto have the right, in cases an assignment is permitted, to receive the compensation or benefits offered by the participant's account with company. Contribution The amount which the participant undertakes to pay as an obligation to make donation against his contribution in Takaful insurance account with the company to compensate damages or pay benefits to whosoever deserve them. Takaful Insurance Policy The policy concluded by and between the company and the participant which embraces the terms of contract, the rights and obligations of the two parties and the beneficiaries of Takaful insurance and any endorsements thereto. Membership Contribution Document The document containing the fundamentals and principles of Takaful insurance as approved by the company in respect of the participants' relation therewith which the participant has to agree thereto upon his contribution. Property and Liability Takaful Insurance Property Takaful insurance and Third Party Liability Takaful insurance shall include the branches referred to in Article (5) of the Executive Regulations provided they contain no matter in violation of the principles of Shari’a Law. Takaful Insurance of Persons It includes all forms of Takaful insurance of persons, Medical Takaful insurance of all forms and personal accidents Takaful insurance associated with Takaful insurance of persons. Technical Provisions The provisions which the insurer (the Company) must deduct and maintain to meet the insured’s accrued financial liabilities as per Law's stipulations. Actuary The person who estimates values of the insurance contracts, documents and the related accounts. Risk Management Policy The process of identification, evaluation and mitigation of the economic effects of the past, present or future events, or their impact, that cause a Company to deviate from its stated objectives whether positively or negatively. These events can impact both the asset and liability side of the Company’s balance sheet, the Company’s profit and loss account, its cash flows, its earning capacity, profitability, ability to continue operating, reputation and its intellectual and technological capital. Risk management should be well integrated into the organizational structure and decision making processes. Risk Appetite The degree of risk that the Company and Board of Directors are willing to accept in respect of conducting the business. Derivatives A financial asset or liability whose value is derived from an underlying asset, liability or related index. Common forms of derivative instruments include forwards, futures, options, swaps, credit derivatives or combinations thereof (as applicable). Investments The act of investing, laying out money or capital by a Company with the expectation of profit. Hedging To invest in a manner that reduces the risks related to underlying assets or liabilities. Total Invested Assets The sum of all assets held for investment purposes, including derivatives or other hedging instruments and cash. Admissible Assets The value of total assets, after taking into account the constraints and limitations that are taken into consideration when calculating the solvency margin of the Company. Solvency Margin Funds that the Company is required to maintain to fulfill the obligations of the Minimum Capital Requirement, Minimum Guarantee Fund and Solvency Capital Requirement. Minimum Capital Requirement The minimum capital required to be maintained by a Company at all times as directed by the Authority. Own Funds The capital that an insurance Company has available to meet solvency requirements, which includes Admissible Assets less liabilities. Solvency Capital Requirement Funds that the Company must maintain to cover current and projected operations during the next twelve months, which are measured to ensure that all quantitative risks have been taken into account. Minimum Guarantee Fund Funds that the Company must maintain to cover current and projected operations during the next twelve months, which is at least one third of the Solvency Capital Requirement or a greater amount as determined by the Authority. Unearned Contribution Reserves (UPR) Provisions for the contributions which represent the portion of the contribution corresponding to the responsibilities extended beyond the date of the statement of financial position. Unexpired Risk Reserves (URR) Provisions for the contributions which represent the portion of the contribution subsequent to the financial statement date and where the contribution is expected to be insufficient to cover anticipated claims, expenses and a reasonable profit margin. Outstanding Loss Reserves (OSLR) Provisions representing claims that have been reported but not yet settled. Typically, this is the sum of the remaining liabilities for each open claim estimated on a case-by-case basis. Incurred but Not Reported (IBNR) Provisions for claims that have been incurred but not yet reported or have not obtained enough information related to such claims as of the reporting date. Allocated Loss Adjustment Expense (ALAE) or Unallocated Loss Adjustment Expense (ULAE) Provisions representing future claim expenses and related handling costs. The Allocated (ALAE) reserve is for expenses and costs that can be assigned to a specific claim. The Unallocated (ULAE) reserve is for all other overhead expenses and costs that can’t be assigned to a specific claim. Mathematical Reserve Provisions created for long-term insurance contracts (Takaful Insurance of Persons and Fund Accumulation operations products more than one year) to cover all future claim liabilities as determined by the Actuary. External Auditor The External auditor licensed to operate in the State. Authority Examiners Employees of the Authority, or delegated personnel, authorized to perform examination and inspection of Company records, transactions and documents. Insurance Agent The person approved and authorized by the Company to carry out insurance operation on its behalf or in behalf of any branch thereof. Beneficiary The person who acquired the rights of the Takaful insurance contract at the start or these rights that have been legally transferred thereto. Insurance or Underwriting Surplus The residual amount in the participant’s fund of the total premium contributions provided by participants and its investments in addition to Re-Takaful yields or other revenues during the financial period after deducting the total of paid claims, changes in technical provisions and Wakala and Mudaraba fees during the period. Unit Linked Insurance Policies Insurance plans that provide the option to invest in any number of qualified investments, such as stock, bonds, mutual funds. Second Article – Glossary Application
The Glossary mentioned in the first article of this Section should be applied to all regulations and provisions identified in Part One and Part Two of these regulations.
Third Article – Regulations Application
The provisions of the regulations herein should be applied to Takaful insurance companies incorporated in the State and the Takaful foreign insurance companies licensed to practice the activity in the State.