The Company must abide by the following in terms of surplus allocation:
a) Allocation of surplus to all participants, regardless of whether or not they have made claims on the policy during the financial period.
b) Allocation of surplus only among participants who have not made any claims during the financial period.
c) Allocation of surplus among those who have not made any claims and among those who have made claims of amounts less than their insurance contributions, provided that the latter category of participants shall receive only the difference between their insurance contributions and their claims during the financial periods as a percentage of the surplus.
There are a number of methods used to cover the insurance deficit. These include:
a) To settle the deficit from the reserves of participants, if any.
b) To borrow from the shareholders’ funds Qard Hasan the amount of the deficit, which shall be paid back from future surplus.
The entire equities of the shareholders shall be made available as Qard Hasan in case of a deficit in the participants' funds.
Disclosure shall be made in the financial statements of the allocation that would be made of any undistributed Takaful underwriting surplus, should the Company be liquidated.
The Company must establish a policy for determining the surplus or deficit arising from its operations. The policy must determine the basis of distributing the surplus or deficit among the participants and the shareholders and the method of transferring between the participants and shareholders. The policy developed must consider the relevant International Islamic Standards connected to the AAOIFI (Accounting and Auditing Of Islamic Financial Institutions) Board including the accounting standard of ‛Disclosure of Bases for Determining and Allocating Surplus or Deficit in Islamic Insurance Companies’.
If the Company offers different types of insurance products it can develop more than one policy for distribution of surplus/deficit.
The Company shall develop separate policies for allocation of surplus/deficit for its Takaful Insurance of Persons and Property and Liability Takaful Insurance operations.
The Company must determine any surplus or deficit arising on each separate Takaful fund. The surplus/deficit has to be determined in consultation with the Actuary for a Takaful insurance of persons’ fund.
The policy developed must be approved by the Shari’a Supervisory Committee and provided to the Authority for approval. Subsequent to its approval by the Authority, the policy may not be amended without the approval of the Shari ’a Supervisory Committee and the Authority.
Disclosure shall be made in the financial statements of the method used by the Company to cover the surplus/deficit.
Disclosure shall be made in the financial statements on the Company’s policy to settle the deficit in the participants’ fund.