The SAC, in its 41st meeting dated 8 March 2004 and 43rd meeting dated 29 April 2004, has resolved the following:

i. For an Islamic financing package which does not include an amount of contribution for coverage, the Islamic financial institution shall offer a takaful plan as the first option to the customer who applied for the Islamic financing that requires coverage.72 If the customer refused the takaful plan on particular reasons, the customer may choose any conventional insurance as he wished. Such an exemption is only given in consideration of the following factors:

• If the insurance premium is totally borne by the customer;
• If there is a sector or specific class in insurance whereby takaful has no expertise; or
• The customer’s application was rejected by takaful company on certain grounds.

ii. For an Islamic financing package that includes the amount for contribution of coverage, the Islamic financial institution shall ensure that only takaful plan is used to cover such Islamic financing. Conventional insurance premium shall not be included in Islamic financing package; and

iii. If a customer who has taken a conventional insurance coverage for an Islamic financing passes away or suffers any kind of peril that results in his inability to pay for the financing, the Islamic financial institution is entitled to receive compensation from the conventional insurance.

-Reference: Shariah Resolutions in Islamic Finance (2^nd edition), BNM, http://www.islamicfinance.com/wp-content/uploads/2015/01/Shariah-Resolutions-2nd-Edition-En.pdf