Takaful Operational Framework

Question 1

EXPLAIN THE OPERATION OF TAKAFUL.

Answer 1

1. Proposal
   
   • disclose all information (utmost good faith - participants)
   • application form
2. Underwriting
   
   • risk assessment (accepted or rejected)
   • risk classification
   • pricing
3. Contract
   
   • formation of contract
   • disclose all information (utmost good faith - takaful operator)
4. Claim

Question 2

WHAT IS ACTUARIAL SCIENCE?

Answer 2

The discipline that applies mathematical and statistical methods to asses risk in insurance and the finance industries.

Question 3

WHAT IS UNDERWRITING ACTUARIES?

Answer 3

• It set the extent of insurable risk the company is able to take
• Decide on how much coverage the company should provide
• Determining the price of products

Question 4

UNDERWRITING ACTUARIES USAGE IN TAKAFUL?

Answer 4

1. Product development

2. Upon policy subscription

Question 5

DOES UNDERWRITING ACTUARIES PROMOTE THE CONCEPT OF TABARRU’ AND TA’AWUN?

Answer 5

• avoid adverse selection
• promote fairness
• range of premium payment will vary

Question 6

DOES UNDERWRITING ACTUARIES CONTRADICT TO THE BELIEF IN QADA’ AND QADAR?

Answer 6

• estimates future events
• paradoxical (seemingly absurd or self-contradictory.) to the belief in qada’ and qadar.
• as an effort to reduce uncertainty and at least to minimize risk
• parallel to the concept of tawakal