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- Title
Corporate Understanding of Actuarial Methods (Pricing) in Takaful Practices.
- Authors
Billah, Mohd Ma’Sum
- Abstract
In Takaful policy, actuary plays an important role in determining the pricing for the Takaful plan as well as the rate of contribution and claim. The actuary department in Takaful uses both mobility rate and mortality rate in benchmarking the costing. It also focusses on rate of investment return or in conventional insurance, it is familiar with the term of rate of investment. The Actuary department in expecting the return or profit uses this method of investment return. The mobility rate is used for measuring the critical illness and medical expenses. The mortality rate is commonly used as ‘khayrat’. Similarly, with conventional insurance, Takaful also recognizes time value of money in order to measure the expected return for the company. However, the benefit with rate in time value of money is considered as service charge (Ujrah) in Takaful practices which is lawful in Islam. The internal staff do the process of calculating the cost, and they are the staff of the actuary and price department in Takaful. In the actuary department, there are several people who directly contribute in preparing the cost for the new Takaful plan. They are specializing in statistics, valuation and product development. The characteristics to become a member for the team are generally with minimum skill in actuaries and already taken extra qualifications on the actuaries in the United Kingdom, United States, Australia or alike.
- Subjects
TAKAFUL; PRICES; VALUE (Economics); EXPECTED returns; RATE of return
- Publication
Journal of Islamic Banking & Finance, 2023, Vol 40, Issue 4, p10
- ISSN
1814-8042
- Publication type
Article