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Chapter Ten: Reinsurance and its Applications in Islamic Takaful Companies…
Chapter Ten: Reinsurance and its Applications in Islamic Takaful Companies
The Concept of Reinsurance
The History of Reinsurance
Aims and Motives of Reinsurance
Motives for reinsurance
Insuring high-value property
Financial capacity for compensation
Increasing risk acceptance capacity
Methods and Forms of Reinsurance
Methods of Reinsurance
Facultative Reinsurance
Reinsurance Agreements
Forms of Reinsurance The following is a description of the most important forms of Reinsurance
Reinsurance by quota share
Reinsurance higher than ability
Reinsurance higher than a specific limit of loss
Comparison between Conventional Reinsurance and Islamic Reinsurance
Areas of Similarities
Reinsurance involves two parties: the reinsurance company and the direct insurance company
The motive for reinsurance is to address the inability of insurance companies to insure high-value property and to increase their risk acceptance capacity for higher gains
The reinsurance contract is a financial compensatory agreement
the relationship for compensation payment is limited to the direct
The reinsurance company is obligated to provide financial compensation to the direct insurance company as per the agreed conditions in the reinsurance contract
The reinsurance company offers reinsurance commissions and reinsurance profit commissions to the insured companies, providing compensation for expenses incurred and rewarding skillful insurance practices.
Areas of Difference
Conventional Insurance Companies do not consider the legitimacy or illegitimacy
Conventional Insurance Companies act as direct parties in the reinsurance contract,
Conventional Insurance Companies typically invest reserve amounts received from reinsurance companies using interest-based methods
In Conventional Insurance Companies, the amounts paid as compensation for damages, reinsurance commissions, or reinsurance profit commissions are not subject to Shari'ah judgments