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Advantages Of Retakaful

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According from the figure 2, there are two main methods in retakaful which are the facultative and treaty. Facultative methods are only affected in special cases and placed on the basis of individual risk, for example, individual families, group families or mortgage takaful. While, the second method is the treaty where a takaful operator agrees to sue within a certain period of time, and retakaful the operator agrees to accept all risks included in the terms of the retakaful contract up to a certain amount. Both methods are acknowledged by Item 4 of Shari’ah Standard No. 41, AAOIFI 2010. A. Treaty Retakaful Treaty takaful is a contract where the retakaful operator takes a commitment to accept all the risks and liabilities included in the scope of the agreement signed with the takaful operator. It is also means the annual agreement between the retakaful operator (the ceding office) and retakaful operator, where the retakaful operator will automatically receive any contribution included in the terms of the agreement. The treaty programme can be arranged if there is adequate flow of conduct. While, the …show more content…

The cedant and retakaful operators do not share any loss in a fixed proportion and may not share any loss at all. This is because the ceding companies will be responsible for all losses under the amount of retained savings and retakaful will handle the balance of any losses above the figures with the usual upper limit. Under non-proportional, there are two of applying the treaty method which are excess of loss and stop loss cover. Firstly, excess of loss means the cedant pays the sum of each claim for each risk until the predetermined limit and retakaful pay the amount of the claim above the limit up to a certain amount. The retakaful are being arranged with the various limits and cuts It can be arranged in whole account or separately by business

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