In When it comes to issues of surplus,

In the distribution ofsurplus, the takaful company should prioritize the interests of takafulparticipants as essentially the surplus is belonging them. When it comes toissues of surplus, the distribution of the surplus must be carried out fairlyand transparent. In implementing surplus administrativeprocess, the following factors need to be considered and taken into account:a.   Unrealized profitsThe surplus is distributed onincome and actual realized profit.

This mean the future participants will getmore benefit than the previous generation of participants as unrealized capitalgains are not reflected in previous surplus distributions. b.  Provision for bad investment In takaful industry, provision for bad investmentwhich value has fallen from the value reflected on the purchase will reduce thetakaful surplus. Therefore, takaful company should rewrite corresponding tothat particular provisions to ensure it benefits the future participants.

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 c.  Qardhal HasanThe 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. d.  Determination of a fund-basedsurplus or product portfolioWhile there is a practical limitation to filterout surpluses to individual participants, efforts must be made to distributesurpluses in a way that identifies the particular experience of a cohort ofparticipants who share the same characteristics. The surplus distributionprocess needs to identify those who qualify for the surplus sharing. Among theeligible participants are as follows:a.

     takaful participants who havenever made a claim throughout the year.b.     takaful participants who claimless than their risk contribution is paid into the risk pool.c.    takaful participants who have made maximum claims are definitely notentitled.