Shari'ah inspection of surplus distribution in takaful operations
This research intends to shed light on a number of issues related to surplus distribution in takaful. The first part is devoted to revisiting the main financial concepts related to the surplus such as the underwriting surplus and profit. Modes of distribution such as pro-rata and offsetting will also be discussed in the light of equity principle advocated by Shari'ah. The second part deals with the major juristic views and doctrines delineated in favor of surplus distribution. Legal doctrines such as the ownership or otherwise of the surplus after donation would be meticulously discussed and reviewed in the light of current practices of takaful operators. The last part deals with a general outline of Shari'ah parameters in relation to equitable surplus distribution. This is followed by a scrutiny of surplus distribution practices of some modern takaful operators both in Malaysia and abroad. The research argues that while it is strongly recommended to redistribute the surplus to the participants only, there is a considerable Shari'ah ground allowing takaful operators to share in the surplus for reasons outlined in this research.
Takaful , Surplus distribution , Islamic finance , Malaysia
Soualhi , Younes. (2010). Shari'ah inspection of surplus distribution in takaful operations. Journal of Economics and Management, 18 (2), pp. 197-220.