Page 129 - EXIM_AR2021

ANNUAL REPORT 2021 127

Notes to the fiNaNcial statemeNts

2. significant accOUnting POlicies (cOnt’D.)

2.4 Summary of significant accounting policies (cont’d.)
(w) Insurance receivables
Insurance receivables are recognised when due and measured on initial recognition at fair value. Subsequent to
initial recognition, insurance receivables are measured at amortised cost, using the effective yield method.
If there is objective evidence that an insurance receivable is impaired. The Group and the Bank reduce the carrying
amount of the insurance receivable accordingly and recognised that impairment loss in profit and loss. Objective
evidence of impairment for insurance receivables and the determination of consequential impairment losses.
Insurance receivables are derecognised when the derecognition criteria for financial assets, as described in
Note 2.4(f), have been met.
(x) Insurance payables

Insurance payables are recognised when due and measured on initial recognition at fair value of the consideration
payable less directly attributable transaction costs. Subsequent to initial recognition, they are measured at
amortised cost using the effective yield method.

(y) Claims expenses and commission expenses
General Insurance/Takaful Business

Claim expenses represent compensation paid or payable on behalf of the insured in relation to a specific loss
event that has occurred. They include claims, handling costs and settlement costs and arise from events that have
occurred up to the end of the reporting date even if they had not been reported to the Group and the Bank.

Commission Expenses and Acquisition Costs
(i) General Insurance/Takaful Business

The gross cost of acquiring and renewing insurance policies net of income derived from ceding reinsurance
premiums is recognised as incurred and properly allocated to the periods on which it is probable they give rise
to income.

(z) Expense liabilities
The expense liabilities of the shareholder’s find consist of expense liabilities of the general takaful fund which are
based on estimations performed by a qualified actuary. The expense liabilities are released over the term of the
takaful certificates and recognised in statement of profit and loss.

(i) Expense liabilities of general takaful fund
Expenses liabilities in relation to the Group’s and the Bank’s general takaful business are reported as the
higher of the aggregate of the provision for unearned wakalah fees (“UWF”) and the unexpired expense reserves
(“UER”) and a Provision of Risk Margin for Adverse Deviation (“PRAD”), as prescribed by BNM.
(ii) Provision for unearned wakalah fees

The UWF represents the portion of wakalah fee income allocated for expenses to be incurred in managing
general takaful certificates that relate to the unexpired periods of certificates at the end of reporting period.
The method used in computing UWF is consistent with method used to reflect the actual unearned contribution
reserves (“UCR”).