What
is the difference between insurance underwriting method and takaful
underwriting method?
In
general, the underwriting methodology applied in insurance and takaful is quite
similar in most activities. However,
underwriting process under takaful will also involve activities to evaluate
whether the subject matter is acceptable to Shariah principles. In other words, underwriter will ascertain
whether there exist any elements which are against the Shariah principles
related to the subject matter to be covered.
For instance, a customer applies to participate in fire takaful to cover
his business premise. If the premise is
used for non-Shariah activities such as related to gambling, drugs, prostitution,
or alcohol then the underwriter may decide to decline the risk. Nevertheless, there are instances where the Shariah
Committee may allow to accept the risk provided that the proportion of non-Shariah
activities is insignificant say less than 5%.
This is applicable in the event that the subject matter is a hotel or an
aircraft where alcohol is commonly served and constitute a small proportion of
their business activities which is less than 5%.
How
about in a case where a person want to participate in a family takaful covering her life while her profession
involves in prostitution or alike? There
are two possible situation for this case.
If the applicant does not declare on her profession which is related to
the non-Shariah activities, the underwriter will proceed to conduct the
underwriting process without the knowledge on her profession. On the other hand, if she declares her
profession in detail, there are two different opinion by Shariah scholars. Some scholars will agree to reject the risk
due to the nature of her profession. However, there are some scholars who agree
to accept the risk based on the fact that her sinful activities is her accountability
with God. Nevertheless, this kind of
situation shall be presented to the Shariah
Committee for their deliberation and decision.
