Why Takaful operator dictates the amount to be
contributed into Takaful fund as it is based on tabarru’at or donation concept?
This question was posed to me during my session
with about 40 lawyers from Malaysian Bar Council in April 2015. It is a valid question and it proves that the
person who posed the question does understand
the concept of tabarru’at very
well. If you want to donate some money
to a needy, you will decide how much to donate instead of being told by
someone.
Similarly, when we enter a mosque, we may
contribute some money according to our own willingness into a donation box or
sometimes known as “khairat” fund. In
the event that someone or a family in the same community encounter some
difficulties such as death, accident, flood or fire, the trustees of the mosque
will decide how much to donate to the family based on the available amount in
the fund. Or sometimes, the trustees may
had predefined the amount of donation based on the event and usually the amount
is just a token say RM1,000 or RM2,000 as a way to comfort the family during
the hardship. The amount set is based on past experience of the mosque with
high level of confident that the fund is more than sufficient to cater for such
events in any particular period.
However, takaful business is a commercial entity
owned by few shareholders who had invested their money, RM100 million, in the
case of Malaysia, to finance all the operational activities of the business
with an anticipation of a reasonable return.
Therefore, the management of takaful shall ensure with high level of
confident that the takaful fund is always more than sufficient to cater for all
the takaful needs i.e. to pay claims as well as meeting with all regulatory
requirements such as solvency and reserving as prescribed by relevant laws.
Besides that, the management shall also ensure that the business will generate
reasonable expected return to the investors whether by way of investment
activities or core operational activities i.e. underwriting of the
business. As a result, takaful operator
will establish a prudent rating structures based on common critical factors
mainly to ensure that the business is viable and sustainable for as long as
needed to meet with all expectations of stakeholders.
Thus, even though tabarru’at is used in takaful
business, the participants are bound to abide by certain rules including the
amount of contribution to be made due to
the commercial objective of the entity.
