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Presented by:
M Vaqaruddin
CEO
Pak-Qatar General Takaful Ltd.
Karachi
Mudharabah-Based Takaful
• In this model, a clear distinction is made between the business of takaful or insurance and the business of investing funds mobilized from policyholders and/or the shareholders. The takaful operator seeks no returns from managing the takaful business in line with the spirit of takaful. It seeks returns from the business of investing the takaful funds under a mudaraba agreement with the policyholders for managing their funds. The policyholders assume the role of fund provider or rabb-al-maal. As a mudarib the takaful company receives its share of profits generated on investments.
Mudharabah ModelPROFITS
ATTRIBUTABLE TO SHAREHOLDERS
COMPANY'S ADMINISTRATION &
MANAGEMENT EXPENSES
INVESTMENT BY COMPANY
PROFITS FROM
INVESTMENT
TAKAFUL CONTRIBUTION PAID BY
PARTICIPANT
PARTICIPANT TAKAFUL
FUND
PARTCIPANTTAKAFUL
FUND
OPERATIONAL COST OF TAKAFUL
OPERATIONAL COST OF TAKAFUL
OPERATIONAL COST OF TAKAFUL
SHARE OF SURPLUS FOR THE
PARTICIPANT
SURPLUS (PROFIT)
SHARE OF SURPLUS FOR THE COMPANY
40% (Example Only)
60% (Example Only)
COMPANY
TAKAFUL CONTRACT BASED ON PRINCIPLE OF
AL-MUDHARABAH
PARTICIPANT
Wakala-Based Takaful
• In the wakala-based model, the takaful operator acts as the wakil or agent of the policyholders. As such it is entitled to a known remuneration. It incurs all the operational expenses on behalf of its principal.
PROFIT / LOSS ATTRIBUTABLE TO SHAREHOLDERS
TAKAFUL ADMIN & MARKETING EXPENSES 25% TO 35%
INVESTMENT BY FUND
PROFITS FROM INVESTMENT
TAKAFUL CONTRIBUTION PAID BY
PARTICIPANT
PARTICIPANTTAKAFUL
FUND 65% TO 75%
PARTCIPANTTAKAFUL
FUND
OPERATIONAL COST OF TAKAFUL /
RETAKAFUL
OPERATIONAL COST OF TAKAFUL
OPERATIONAL COST OF TAKAFUL
SHARE OF SURPLUS FOR
THE PARTICIPANT
SURPLUS (PROFIT)
100%
COMPANY
TAKAFUL CONTRACT BASED ON PRINCIPLE OF
AL-WAKALAH
PARTICIPANT
60%
SHARE OF PROFIT FOR THE COMPANY
40%
MANAGEMENT EXPENSES OF
COMPANY
Wakala Model
• Waqf: Charity, religious endowment testamentary bequest of
real estate.• Waqf can be made for Property, Money or any other
asset.• Waqif should be Sain, Adult, Owner, Free.• It is not necessary for the Waqif to be a muslim.• The Waqif can put conditions at the time of Waqf.• ( Hazrat Usman RA)
Wakala-WAQF Based Takaful• Some of the Shariah scholars have critically analyzed the
Wakala system and have suggested to incorporate the concept of Waqf into the Wakala model. Under this revised model, the operator would initially make a donation to establish a benevolent fund called the Waqf Fund. When this Waqf is created, the shareholders will lose their ownership rights on the waqf. However, this fund will be administered by the operator. The donations received from the participants, seeking takaful protection, will also be deposited into this fund and the combined amount will be used for investment. Profits earned will be deposited into the same fund. Participants will be given benefit from this Waqf fund. The Waqf fund would be allowed to form contingency reserve fund apart from usual technical reserves. The Waqf fund rules would define the basis for compensation and financial help, and rules for sharing surplus between the members and operators.
PROFIT / LOSS ATTRIBUTABLE TO SHAREHOLDERS
TAKAFUL OPERATOR FEES FOR ADMIN & MARKETING EXPENSES
25% TO 35%
INVESTMENT BY FUND
PROFITS FROM INVESTMENT
TAKAFUL CONTRIBUTION
PAID BY PARTICIPANT
WAQF FUND 65% TO 75%
WAQF FUND
OPERATIONAL COST OF TAKAFUL /RETAKAFUL
OPERATIONAL COST OF TAKAFUL
OPERATIONAL COST OF TAKAFUL
SHARE OF SURPLUS FOR
THE PARTICIPANT
SURPLUS (PROFIT)
100%
COMPANY
PARTICIPANT
60%
SHARE OF PROFIT FOR THE COMPANY
40%
MANAGEMENT EXPENSES OF
COMPANY
Waqf
INITIAL DONATION BY SHAREHOLDERS TO CREATE WAQF FUND
Waqf
PROFIT SHARING ON MUDARABHA BASES
Wakala Waqf Model