In surplus sharing. Among the eligible participants are

In the distribution ofsurplus, the takaful company should prioritize the interests of takafulparticipants as essentially the surplus is belonging them. When it comes toissues of surplus, the distribution of the surplus must be carried out fairlyand transparent. In implementing surplus administrativeprocess, the following factors need to be considered and taken into account: a.  Unrealized profitsThe surplus is distributed on income and actual realized profit. Thismean the future participants will get more benefit than the previous generationof participants as unrealized capital gains are not reflected in previoussurplus distributions.

 b.  Provision for bad investment In takaful industry, provision for bad investmentwhich value has fallen from the value reflected on the purchase will reduce thetakaful surplus. Therefore, takaful company should rewrite corresponding tothat particular provisions to ensure it benefits the future participants.   c.  Qardhal HasanThe repayment of the loan, known as Qardhal Hasan should be given priorityover the distribution of surplus to the participants.

This is because QardhalHasan is considered as a loan injection into the takaful fund. d.  Determination of a fund-basedsurplus or product portfolioWhile thereis a practical limitation to filter out surpluses to individual participants,efforts must be made to distribute surpluses in a way that identifies theparticular experience of a cohort of participants who share the samecharacteristics.

 The surplus distributionprocess needs to identify those who qualify for the surplus sharing. Among theeligible participants are as follows:a.     takaful participants who havenever made a claim throughout the year.b.     takaful participants who claimless than their risk contribution is paid into the risk pool.c.

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    takaful participants who have made maximum claims are definitely notentitled.