Page 132 - EXIM-Bank_Annual-Report-2022

130 eXIM BANK MALAYsIA ANNUAL REPORT 2022

Notes to the fiNaNcial statemeNts

2. sIGNIFICANt ACCouNtING PoLICIes (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)

(w) 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.
(x) 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.

(y) 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 or 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 certificated 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”).

(iii) Unexpired expense reserves
UER consists of the best estimate value of the unexpired expense reserves at the valuation date and a PRAD
as prescribed by BNM. The best estimate UER is determined based on the expected claims handling expenses
to be incurred as well as the expected expenses in maintaining certificated with unexpired risks. The method
used in computing UER is consistent with the calculation of unexpired risk reserves (“URR”).

(z) Wakalah Fees
Wakalah fees represent fees charged by the shareholder’s fund to manage takaful certificates issued by the general
takaful fund under the principle of Wakalah and are recognised at a point of time as soon as the contributions to
which they relate can be reliably measured in accordance with the principles of Shariah.