Azman Mohd Nor and Zuhairah Ariff Abd Ghadas. International Islamic University Malaysia Seminar on Seminar on Insurance and Risk in Asia Pacific Kyoto International Community House 24 September 2010o. Underwriting and managing risks in takaful. Some Common Risks in Takaful.
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The requirements are very essential to:
Risks prohibited by the Shariah :
The primary activity of the company is based on riba as practised by conventional financial institutions, including commercial banks, merchant banks, finance companies, etc.
A company whose primary activity is gambling, such as companies running, casinos, gaming and others.
The primary activity of a company is the production and sale of goods and services that are prohibited in Islam, including:
(a) Processing, producing and marketing alcoholic drinks;
(b) Supplying non-halal meat like pork, etc.; and
(c) Providing immoral services like prostitution, pubs, discos, etc.
The primary activity of the company is gharar (uncertainty) such as conventional insurance trading.
Generally, to assist takaful operators
- It is the basic form where the retakaful operators accepts all the
risks within the defined categories.
- It’s usually for new companies and new risks that operator has not
- It is the excess of assets over liabilities.
- Under this type, the primary takaful operator cedes the surplus
liability above a specified retention.
- Recoveries are available when loss exceeds a cedant’s retention.
- Reinsurer pays a cedant’s aggregate retained losses in excess of a
- Now, it is not being actively practiced in Malaysia compared to the
excess of loss process.
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