Islamic Insurance - Appendix C (Definitions)

Transcription

1. Shari ’ah Standard No. (26): Islamic Insurance Appendix (C) Definitions Premium It is the amount of the contribution, which the participant donates, along with its related profits, for the benefit of the insurance scheme. Insurance Amount It is the amount paid by the company out of the insurance account at the occurrence of the risk insured against. Risk Insured Against It is the probable, legally acceptable, accident. Commercial Insurance It is a contract between an insured party and a technical insuring body, stipulating that the former pays the latter a specific number of financial installments or a lump sum amount, against the commitment of the latter to bear a risk that can be insured against, through payment of an estimated financial indemnity to the insured or the beneficiary, on the occurrence of the risk. [Clause No. (747) of the Egyptian law, Clause No. (773) of the Kuwaiti Law and Clause No. (983) of the Iraqi Law]. Cooperative Insurance A collective insurance contract is a contract whereby each participant undertakes to pay a specific amount of money as donation to indemnify any member of the group who encounters the risk insured against. Islamic Insurance It is a kind of cooperative insurance, which covers all types of risks, under the management of a specialized company that adheres to the rules and principles of Shari’ah. In this sense, Islamic insurance differs from coopera- 698
2. Shari ’ah Standard No. (26): Islamic Insurance tive insurance as the latter only covers a specific group of beneficiaries who might encounter risks, for instance, merchants, sailors and the like while Islamic insurance is available to the general public. Islamic insurance also differs from cooperative Insurance with regard to adherence to the rules and principles of Islamic Shari’ah as well as in some technical aspects pertaining to premiums. In cooperative insurance, premiums may be variable at the beginning; whereas in organized Islamic insurance, premiums are specific due to use of precise statistical studies. Mutual Insurance, the Alternate to Life Insurance It is the insurance that covers the risks of death, inability, injury or illness, for the individual or the group, through payment of the insurance amount to the participant or the beneficiary, as per the agreement. Surplus The Surplus comprises of residual premiums of the participants (the insured) in addition to the reserves and profits, after deducting all expenses and indemnity amounts (paid or payable during the same year). The residual amount, thus computed, is considered as surplus, rather than profit. Gharar It is what one cannot predict its unrevealed/unknown consequences. Something that may occur/materialize or may not(22). Participant The Participant is a person who accepts the cooperative insurance scheme, signs the insurance policy and undertakes to observe its consequent commitments. It may be referred as the insured, the insured for and the policyholder. Insurance Account It is the account established by the company by virtue of its articles of association, to accommodate the premiums of the participants and the returns thereon as well as the reserves. Such account has an independent (22) See: “Al-Gharar Wa Atharahu Fi Al-’Uqud” (P. 53). 699
3. Shari ’ah Standard No. (26): Islamic Insurance financial liability towards its own claims and commitments, though it is represented by the company for its all affairs. This account is also known as the insurance fund, the policyholders account or the portfolio of the participants group. 700