Wakalah fee (takaful operator)
The fee a takaful operator charges, usually from contributions, for managing the participants' risk fund.
The wakalah fee is the remuneration a takaful operator receives as agent for managing the participants' risk fund. The IFSB's conduct of business standard describes contributions as comprising a service component, the wakalah fee for the operator's management and marketing services credited to the shareholders' funds, and a protection component, the tabarru, channelled to the risk fund. AAOIFI's takaful standard says the operator is not entitled to any share of the underwriting surplus, so its income must come from disclosed fees and, where it manages investments as mudarib, from a share of investment profit.
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This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.