10. Underwriting Management

This chapter has focused on analysing the risks that potential participants bring to the takaful fund. This is done through a process called underwriting, in which a professional underwriter assesses each potential participant’s eligibility for cover. Based on the risk analysis, the underwriter selects participants of the takaful fund, classifies them according to the risk they present and decides their contributions. Participants are placed into different classes of risk namely preferred, standard, substandard (rated) and declined. Underwriters follow a risk-analysis process that involves collecting and analysing information. After carrying out the analysis, the underwriter can accept the takaful application, refuse the request for cover or accept the application but attach conditions to the cover. If the underwriter approves the application, it is forwarded to the participant membership department for completion. If the application is refused, a rejection letter will be sent to the takaful agent or consultant and the applicant. If modifications need to be made, the application will be sent back to the takaful agent, who will review it with the potential participant.