Takaful Surplus Distribution: A Controversy
Islamic Finance News 9-Jun-2010 Volume7.Issue23 Takaful Report Takaful Surplus Distribution: A Controversy by. Delil Khairat Takaful is an alternative risk management tool offered by Islamic Fiqh to replace unacceptable conventional insurance. It is based on risk sharing and sincere acts of helping fellow human beings. However the holy concept is clouded by short term tactics of surplus distribution. Conventional insurance operates on a platform of risk transfer, where an insured simply transfers a part or all of their risk to an insurance company (insurer) and pays a certain amount of money, called a premium. It is basically a contract of buying and selling. The insured buys insurance protection sold by the insurer, and pays a premium as the price. By doing so, the insured is replacing his ‘uncertainty’ to an amount of ‘certainty’ as much as the premium paid. Unfortunately, the risk transfer mechanism of conventional insurance is not acceptable to most Islamic scholars. Tran