Islamic Reinsurance - Appendix D (A Model Reinsurance Agreement Issued by Islamic Insurance Company - Jordan)

Transcription

1. Shari ’ah Standard No. (41): Islamic Reinsurance Appendix (D) A Model Reinsurance Agreement Issued by Islamic Insurance Company – Jordan 1. The insurance company agrees with the reinsurance company on signing annual agreements with the aim of transferring part of the risk borne by the insurance company, to the reinsurance company. 2. The insurance company assumes beforehand commitment to transfer to the reinsurer the agreed upon part of the reinsured risk, and the reinsurer offers his acceptance. According to the conditions of the reinsurance agreements, the commitment of the reinsurer becomes valid since the time of signing the original insurance contract with the insurance client. 3. The insurance company assumes the commitment to pay the reinsurance contribution against the commitment of the reinsurer to pay its share of the claims, in addition to the commissions agreed upon for the contracts within the signed agreements. It can also be stipulated in the agreement that the insurance company shall obtain a share in the profits achieved by the reinsurer under the signed agreements. 4. The insurance company retains a percentage of the reinsurance contributions (40%) for fire agreements, general accidents and marine and health insurance, as a guarantee for honoring commitments from the side of the reinsurer. The amount thus retained is to be released after one year within the reinsurance agreement. During the period of its retention, the amount is to be invested with the Islamic Bank of Jordan through Shari’ah-acceptable modes of investment, and the reinsurer be given the part of the return agreed upon. 5. The return thus obtained by the reinsurer becomes part of his accounts, and is deductable from the commissions to be received from him, on the 1036
2. Shari ’ah Standard No. (41): Islamic Reinsurance basis of the fact that such amount is part of the cost of the reinsurance operation. 6. The reinsurer assumes the commitment to pay commission to the insurance company. Such commission is determined as a certain percentage of the reinsurance contributions. This amount does not represent a commission in the strict sense of the word. It is rather a contribution from the part of the reinsurer in the direct expenses borne by the insurance company, and which relate to the reinsured risks. 7. Such commissions enter into the accounts of policyholders as part of revenues in the account of the cooperative insurance fund. 8. The reinsurance agreement normally stipulates the right of the insurance company to obtain a specific percentage of the net profits achieved by the reinsurer under the reinsurance agreement. 9. Reinsurance profit commission is calculated at the end of the agreement period, and enters into the accounts of the policyholders as part of revenues. 1037