In the distribution of
surplus, the takaful company should prioritize the interests of takaful
participants as essentially the surplus is belonging them. When it comes to
issues of surplus, the distribution of the surplus must be carried out fairly
and transparent.


In implementing surplus administrative
process, the following factors need to be considered and taken into account:

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Unrealized profits

The surplus is distributed on income and actual realized profit. This
mean the future participants will get more benefit than the previous generation
of participants as unrealized capital gains are not reflected in previous
surplus distributions.


Provision for bad investment

In takaful industry, provision for bad investment
which value has fallen from the value reflected on the purchase will reduce the
takaful surplus. Therefore, takaful company should rewrite corresponding to
that particular provisions to ensure it benefits the future participants.




Qardhal Hasan

The repayment of the loan, known as Qardhal Hasan should be given priority
over the distribution of surplus to the participants. This is because Qardhal
Hasan is considered as a loan injection into the takaful fund.


Determination of a fund-based
surplus or product portfolio

While there
is a practical limitation to filter out surpluses to individual participants,
efforts must be made to distribute surpluses in a way that identifies the
particular experience of a cohort of participants who share the same


The surplus distribution
process needs to identify those who qualify for the surplus sharing. Among the
eligible participants are as follows:

a.     takaful participants who have
never made a claim throughout the year.

b.     takaful participants who claim
less than their risk contribution is paid into the risk pool.

takaful participants who have made maximum claims are definitely not