A mathematical model of premium fund management in sharia insurance under modified-mudharabah scheme.

Sharia insurance is a type of insurance where the participants make a fixed contribution to a common pool in order to protect themselves against specific financial losses under an Islamic (Sharia) principle. The mudharabah model is one of the insurer's business models under an Islamic law that is frequently used in industry to manage the participant's fund in an exchange for a certain percentage of sharing investment profits. The purpose of this paper is to discuss the mathematical model and management of premium funds in a sharia life insurance based on a modified-mudharabah scheme. In this scheme, we add a fixed proportion of underwriting surplus as an extra compensation to the operator. In this study, we sampled participants aged 25, 45, and 65 years old by using the data from the 2019 Indonesian Mortality Table. Afterwards, we compared the operator's profit with regards to participants' age, gender, and compensation. Based on the numerical simulation, we noticed that as the participants' age increased, the operator's total profit decreased. Following that, we also noted that male participant policies generated lower profit than those for female. The difference in the operator's total profit in each gender group was wider during the last years of policy contract. Furthermore, we observed that there was a constant effect on the operator's profit when the amount of death benefit changed. [ABSTRACT FROM AUTHOR]