Actuarial Notes

Classification of Takaful Contracts

By Ocke Kurniandi · International Actuarial Association · 2025

Study guide: Exam 6I

A paper by Ocke Kurniandi on classifying takaful (shariah insurance) contracts for IFRS reporting. It says its purpose is to share information with actuaries providing professional services under IFRS for a shariah insurance company, who may need to determine the classification of contracts, the separation of contracts and components, and whether contracts have embedded derivatives and discretionary participation features, with reference to the standards and regulation of takaful in Indonesia. It sorts contracts into the three pooling funds Indonesian regulation requires — takaful, investment and corporate funds — and works a numerical example for each contract model.

On the syllabus

  • Exam 6I — objectives A1–A2; Sections A and B, excluding Section C

Introduction

  • A takaful contract is an insurance contract based on Islamic models of financing, in which participants pay contributions to a takaful company that acts as an operator to manage risk and invest the contribution fund; takaful derives from an Arabic word meaning joint guarantee.
  • A takaful company may have three pooling funds: a takaful fund for the liabilities of takaful contracts, an investment fund for those of investment contracts, and a corporate fund for those of service contracts and shareholders' equity.
  • Contributions are divided into a risk component, an investment component (for life, if any) and an ujrah (fee) component, which covers commission, acquisition, operational, establishment and other expenses.

A Takaful Contracts

  • Takaful contracts always have significant insurance risk; the liability of takaful contracts is the maximum of the takaful fund and the actuarial liabilities (unearned premium reserve, premium reserve and claim reserve).
  • When the takaful fund falls short of the liabilities, the operator must provide qardh al-hasan, a loan without guarantee or interest, equal to the shortfall.
  • A.1 Tabarru Contract
  • A.2 Mudarabah Contract
  • A.3 Kafalah Contract
  • A.4 Hawalah Contract

B Investment Contracts

  • An investment contract is a non-insurance financial instrument, whose policyholder fund the takaful operator manages; the most frequently used models are the mudarabah, wakalah and wakalah-mudarabah (hybrid) contracts.
  • Investment contracts may have embedded derivatives or discretionary participation features, in which case they carry actuarial liabilities for future investment risk.
  • B.1 Wakalah Contract
  • B.2 Mudarabah Contract
  • B.3 Wakalah-Mudarabah (hybrid) Contract

C Services Contracts

  • C.1 Wadiah Contract
  • C.2 Al-Rahn Contract
  • C.3 Qardhul-hasan

Sources

  • Classification of Takaful Contracts (Ocke Kurniandi, IAA handout) — the document: title, author ("Ocke kurniandi, FSAI"), the purpose statement and introduction for the lead, and the section headings A–C with their sub-sections (sha256 fb2163f5eca78796…); the PDF prints no date or publisher, so the year (2025) and the International Actuarial Association as publisher are taken from the content outline
  • CAS Exam 6I Content Outline, Fall 2026 — the citation ("Kurniandi, O., FSAI … International Actuarial Association, 2025"), objectives A1–A2 and the scope (Sections A and B, excluding Section C)