ISFI 3.1.3 Guidance
1 One of the important matters required to be disclosed by an Islamic financial institution pursuant to ISFI Rule 3.1.3(b) is the basis applied by the institution in treating any insurance deficit or surplus. Appendix B to
AAOIFI FAS 13 provides some guidance as to how such a deficit or a surplus may be treated.
2 That appendix states that there are a number of ways to address an insurance deficit, including—
(a) settling the deficit from the reserve of policyholders, if any; and
(b) borrowing from the shareholders funds or from others the amount of the deficit which should be paid back from future surpluses; and
(c) asking the policyholders to meet the deficit pro rata; and
(d) increasing the future premium contribution of policyholders on a pro rata basis.
3. That appendix also states that there are a number of ways to allocate an insurance surplus, including—
(a) allocating the surplus to all policyholders, regardless of whether or not they have made claims on the policy during the financial period; and
(b) allocating the surplus only among policyholders who have not made any claims during the financial period; and
(c) allocating the surplus among those who have not made any claims and among those who have made claims of amounts less than their insurance contributions, provided that the latter category of policyholders should receive only the difference between their insurance contributions and their claims during the financial period; and
(d) allocating the surplus between policyholders and shareholders; and
(e) allocating the surplus by using other methods.
|Amended by QFCRA RM/2012-3 (as from 1st February 2013)|