Mudharabah Model
Under the mudharabah contract, the takaful oprtaor acts as a mudharib (entrepreneur) and the participants as rabbul mal (Capital providers). The contract specifies how the surplus from the takaful operations is to be shared between the takaful operator and the participants. Looses are borne by the participants as the capital providers. However, to protect the interest of the participants, the takaful operator is required to observe prudential rules including provision of interest-free loans by the operato to the takaful risk funds in the event that there is a deficiency in the takaful risk funds.
Source: Malaysia International Islamic Financial Centre (MIFC)
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