Underwriting surplus
What remains in the participants' risk fund after claims, expenses and reserves, plus attributed investment returns.
The underwriting surplus is the positive financial result of the participants' risk fund: the balance after deducting expenses and claims, including movements in technical provisions, from contribution income and adding the investment returns attributed to it, following IFSB-29. How it is used is set by the contract and the Shariah board, and it may be distributed to participants, retained in the fund, or partly shared with the operator where that is allowed.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
Participants' risk fundThe pool of donated contributions from which takaful claims are paid, owned collectively by participants and managed by the operator.Takaful participantA person or business that joins a takaful scheme, contributes to its funds and is entitled to compensation under its terms.Wakalah model (takaful)The takaful model in which participants appoint the operator as agent to run underwriting and investment for a known fee.Takaful accountingAccounting for takaful contracts and funds, which keeps the participants' funds and the operator's own accounts distinct.