Cover Image

Distribution of underwriting surplus and investment profit from tabarru' fund: Shariah contracts applied and current market practice

Takaful is a contract whereby the participants commit to contribute an amount on regular basis or in one lump sum in a specified fund to mutually guarantee each other and appoint a body to act as the fund manager. In this contract, Takaful participants have the opportunity to mitigate the possible f...

Full description

Saved in:
Bibliographic Details
Main Authors: Ibrahim, Ahmad Basri, Mohd Ali, Ahmad Fadhil Hamdi, Elias, Mohd Hafizal, Wan Ahmad Lotfi, Wan Ahmad Najib
Format: Article
Language:English
Published: Australasian Journal of Islamic Finance and Business (AJIFB) 2015
Subjects:
HG8011 Insurance
Online Access:http://irep.iium.edu.my/45532/1/45532.pdf
http://irep.iium.edu.my/45532/
http://acrd.net.au/ajifb/files/Paper%205.pdf
Tags: Add Tag
No Tags, Be the first to tag this record!
id my.iium.irep.45532
record_format dspace
spelling my.iium.irep.455322018-03-07T09:05:06Z http://irep.iium.edu.my/45532/ Distribution of underwriting surplus and investment profit from tabarru' fund: Shariah contracts applied and current market practice Ibrahim, Ahmad Basri Mohd Ali, Ahmad Fadhil Hamdi Elias, Mohd Hafizal Wan Ahmad Lotfi, Wan Ahmad Najib HG8011 Insurance Takaful is a contract whereby the participants commit to contribute an amount on regular basis or in one lump sum in a specified fund to mutually guarantee each other and appoint a body to act as the fund manager. In this contract, Takaful participants have the opportunity to mitigate the possible financial risk that their families might encounter in case of misfortune. The contribution then will be placed into respective participant’s account or also known as Participants’ Investment Fund (PIF). The fund manager, i.e. Takaful operator will drip from every PIF an amount on the basis of donation into a collective Participants’ Risk Fund (PRF) or known as Tabarru’ Fund. This fund does not belong to the Takaful operator; it’s rather owned by the participants. The Takaful operator only manages the fund on behalf of the participants. Being a fund, money in it is also invested and would possibly generate profit. At the same time, with proper management of the Tabarru’ fund, it might produce surplus after payment of claims at the end of financial year. There are several Shariah views and methods on the treatment of the investment profit and underwriting surplus generated from the fund. These views differ from one to another depending on the contracts adopted, which ultimately would define the permissibility of sharing the profit and the surplus between related parties. In Malaysia, the sharing of underwriting surplus is allowed according to the resolution passed by Central Bank of Malaysia (Bank Negara Malaysia) subject to the certain guidelines. All eleven (11) Takaful operators in Malaysia have different practices in distributing the surplus and profit with respect to Shariah contracts applied and operational treatments. This research will study these differences and provide recommendations on the issues identified. Australasian Journal of Islamic Finance and Business (AJIFB) 2015-10 Article REM application/pdf en http://irep.iium.edu.my/45532/1/45532.pdf Ibrahim, Ahmad Basri and Mohd Ali, Ahmad Fadhil Hamdi and Elias, Mohd Hafizal and Wan Ahmad Lotfi, Wan Ahmad Najib (2015) Distribution of underwriting surplus and investment profit from tabarru' fund: Shariah contracts applied and current market practice. Australasian Journal of Islamic Finance and Business, 1 (1). pp. 73-91. http://acrd.net.au/ajifb/files/Paper%205.pdf
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
language English
topic HG8011 Insurance
spellingShingle HG8011 Insurance
Ibrahim, Ahmad Basri
Mohd Ali, Ahmad Fadhil Hamdi
Elias, Mohd Hafizal
Wan Ahmad Lotfi, Wan Ahmad Najib
Distribution of underwriting surplus and investment profit from tabarru' fund: Shariah contracts applied and current market practice
description Takaful is a contract whereby the participants commit to contribute an amount on regular basis or in one lump sum in a specified fund to mutually guarantee each other and appoint a body to act as the fund manager. In this contract, Takaful participants have the opportunity to mitigate the possible financial risk that their families might encounter in case of misfortune. The contribution then will be placed into respective participant’s account or also known as Participants’ Investment Fund (PIF). The fund manager, i.e. Takaful operator will drip from every PIF an amount on the basis of donation into a collective Participants’ Risk Fund (PRF) or known as Tabarru’ Fund. This fund does not belong to the Takaful operator; it’s rather owned by the participants. The Takaful operator only manages the fund on behalf of the participants. Being a fund, money in it is also invested and would possibly generate profit. At the same time, with proper management of the Tabarru’ fund, it might produce surplus after payment of claims at the end of financial year. There are several Shariah views and methods on the treatment of the investment profit and underwriting surplus generated from the fund. These views differ from one to another depending on the contracts adopted, which ultimately would define the permissibility of sharing the profit and the surplus between related parties. In Malaysia, the sharing of underwriting surplus is allowed according to the resolution passed by Central Bank of Malaysia (Bank Negara Malaysia) subject to the certain guidelines. All eleven (11) Takaful operators in Malaysia have different practices in distributing the surplus and profit with respect to Shariah contracts applied and operational treatments. This research will study these differences and provide recommendations on the issues identified.
format Article
author Ibrahim, Ahmad Basri
Mohd Ali, Ahmad Fadhil Hamdi
Elias, Mohd Hafizal
Wan Ahmad Lotfi, Wan Ahmad Najib
author_facet Ibrahim, Ahmad Basri
Mohd Ali, Ahmad Fadhil Hamdi
Elias, Mohd Hafizal
Wan Ahmad Lotfi, Wan Ahmad Najib
author_sort Ibrahim, Ahmad Basri
title Distribution of underwriting surplus and investment profit from tabarru' fund: Shariah contracts applied and current market practice
title_short Distribution of underwriting surplus and investment profit from tabarru' fund: Shariah contracts applied and current market practice
title_full Distribution of underwriting surplus and investment profit from tabarru' fund: Shariah contracts applied and current market practice
title_fullStr Distribution of underwriting surplus and investment profit from tabarru' fund: Shariah contracts applied and current market practice
title_full_unstemmed Distribution of underwriting surplus and investment profit from tabarru' fund: Shariah contracts applied and current market practice
title_sort distribution of underwriting surplus and investment profit from tabarru' fund: shariah contracts applied and current market practice
publisher Australasian Journal of Islamic Finance and Business (AJIFB)
publishDate 2015
url http://irep.iium.edu.my/45532/1/45532.pdf
http://irep.iium.edu.my/45532/
http://acrd.net.au/ajifb/files/Paper%205.pdf
_version_ 1643612803356950528
score 13.211869

Similar Items