Takaful 137
- bonus pre-agreed shares of any investment income, if the investment
income return is greater than a pre-agreed percentage.
Furthermore, in some companies, thewakalaandmudarabafees are
defined as being to cover shareholders’ profit expectations−that is, the
expenses incurred by shareholders in running the company and in running
the investment of the policyholders fund are paid by policyholders, and
additional fees are paid to the shareholders. This was used by some
companies to stop shareholders running the risk of being paid fees that did
not cover the expenses of running the company.
Qard al-hasan
In all of these variations, theqard al-hasanis still paid if the policyholders
fund makes a deficit in one financial year.
There is at least onetakafulcompany where the policyholders fund is not
paid aqard al-hasanif the policyholders fund makes a deficit in one financial
year. In this scenario, the policyholders fund will contain some of the money
from the shareholders “contingency fund” to cover the possibility of the
policyholder fund going into deficit. Essentially, the shareholders have made
aqard al-hasanat the beginning of the life of thetakafulbusiness. As the
policyholders’ funds make surpluses, it will replace the shareholders
contingency funds with some of this surplus money, and repay the
shareholders for putting their moneyin the policyholders’ funds.
Retakaful
As with conventional insurance, often thetakafulbusiness may need to
Islamically insure itself, in case it suffers a lot of unexpected losses at the
same time (eg. floods in an area where many policyholders have personal
householdtakafulpolicies) or one very large unexpected loss takes place (eg.
if thetakafulbusiness insured an oil rig offshore and this oil rig sank). This
Islamic insurance of thetakafulbusiness is known asretakaful.
Currently there is a dearth of strongly rated insurance retakaful
companies. A strong insurance rating is important as thetakafulcompany
would only Islamically insure itself if it knew that the big loss(es) that may
impact thetakaful company adversely would not impact the retakaful
company, and they may look to the insurance rating as a proxy for this
insurance strength. At the time of writing, there are only threeretakaful
companies andretakafulwindows that have a rating of A- or above, and
there are less than 20retakafulentities in the world.
This lack ofretakaful capacity and strongly ratedretakafulcapacity
presentstakafulcompanies with a quandary, as they need to buyretakaful
but there isn’t the capacity. Shari’a boards have recognized this problem
