Discuss developed Islamic insurance models by Jordan Islamic bank

This paper aims to discuss Reciprocal Insurance Fund Model (RIFM) and Islamic Insurance Company Model (IICM) which developed by Jordan Islamic Bank. It discusses difference of developing than traditional insurance services based on customers' needs. It depends on discuss annual financial reports in order to analysis the difference between models. The study found that (RIFM) is not owned by customers neither the Jordan Islamic bank. It is an artificial person. (IICM) has small part of insurance surplus to be as customers saving but the other part is artificial person. These models managing risks. It meets the Jordan Islamic bank returns and managing risk. Developing Islamic insurance models is directed to meet the company aims than customers' aims. The main limit of collecting data depended on the annual reports in the Jordan Islamic bank foot notes and Islamic Insurance Company annual reports. It discusses practically applied models by Jordan Islamic bank developing experiences.


Introduction
Insurance companies are important for economic growth. Companies can deal with projects risks because Insurance services can reduce its expected loss. Government gets suitable income tax, also it depends on insurance services to reduce its projects risks and general budget expenses which cover social cases as elder case, unemployment cases, and illness cases.
There are many Islamic Insurance companies round the world. Islamic insurance is different than Traditional Insurance. challenge of legal. Nazal, (2015) Suggestion Islamic Insurance Company Model based on donate relationship. Olorogun, (2018) found that Islamic insurance needs to invest in human resource and has to give return.

Ways of developing Islamic insurance models
There are two major ways to develop Islamic insurance models as follow: First: to change Traditional Insurance Companies to Islamic Insurance Company. Al-Qudah & Al -Qudah, (2015) Discussed challenge of possibility to change traditional insurance to Islamic insurance and adjusted the Insurance Islamic rule (26) to obligate company shareholders to guarantee covering customer loss when it is more than the installments of customers' baggage and when there is increasing of baggage than risk the company should distribute return.
The Islamic Insurance Company has to separate between equities and customers installments as artificial person, see figure 1: On other hand, investing should be without interest of loan. The Investing should be by contracts as: selling, lease, and sharing. This model will obligate to buy income tax for customers' installments investing profit and shareholders equities' investing profit separately. Income tax is obligatory to any Insurance company in Jordan which equal 20%-25%.
The Insurance Shariha standard no: (26) showed the difference between traditional insurance company and Islamic insurance company. The Islamic insurance company divides the responsibility between shareholders and insurance documents holders as follow: AAOIFI, (2015) 1. The responsibility of insurance documents holders is grantee to pay the loss when it occurs, and holder the insurance documents, therefore, holders own the insurance documents return from holder's installments.

Reciprocal Insurance Fund Model (RIFM)
It is in Islamic Jordan Bank as type of developed Islamic insurance service. It is box to collect all customers sharing in the risk of default because of death or patient disability or losing wealth. It is ruled by Jordan Center Bank as way to reduce the bank credit services risk. This credit services show the Islamic bank selling goods or lease building to be owned with installments payment. Its mathematics model as follow: The RIFM box yearly = (All calculated installments since the box was established + part of net profit after tax because of investing) -(investing loss + pay compensation to cover customer risk + Islamic bank expenses as manager).
The (RIFM) is managed by Jordan Islamic Bank based on the figure 3: The (RIFM) is a liability in the Islamic bank balance sheet but it does not own by customers.
The customers' problem comes as result to increase their costs when risk is not happened. When there is Islamic bank clearance the (RIFM) box will be charity. Customers cannot get part of it after their insurance contract end. The Insurance installments are not savings for the customers and insurance installments are not Islamic bank profit.

Reciprocal Insurance Fund Box
Part of the box gets in investing to get return and the Islamic bank will be the trader (Mudareb). Islamic bank will get part of profit just in profit case but it will not pay loss Part of the box gets in facing default risk. Islamic bank will get part of return as employee working and managing Islamic bank Customers paying Insurance installments Customers' installments collecting within the contract time period Paying risks compensation (-) Managing expenses (-) Investing profit (+) Insurance surplus owning by customers as saving service (RIFM) box has increased by the time because buying risk is covering small part of installments. In 2018, the box faces insurance paid for the dissolution of contracts as new item, also, there were high decreasing in insurance premiums collected in 2018, also, the box faced dissolution of some contracts. Every year the Islamic bank shows changing of the (RIFM) box as in the table 1: Year -End balance reduce the box. Income tax is more than this fund. This comes as result to investing part from all the returns that was shown in year-beginning balance. 4. The box owning has independence artificial person, it is not own by the Islamic bank or the customers Government, Islamic bank and customers get advantages. The result of changing in the box shows that risk compensations are small part of the box. The customers ask for balance between welfares. Customers ask question: why they do not get back their part of insurance premiums when the donate funds meet the risks compensation and managing expenses?
Discuss the benefit of the (RIFM) model It covers risks after the customers get service from the bank. It covers all customers default risk. The box responsible to cover all customer default in case of risk happened as death risk but it not gives saving service to customers. The bank avoids default risks.

Islamic Insurance Company Model (IICM)
This type has been developed in Jordan after the Jordan Islamic bank tried to avoid dealing with the traditional insurance companies. It established by other shareholders the Islamic Insurance Company. It separates equities accounting and insurance holders' documents which are the customers. Its model is shown in figure (4) and (5) Calculated of customers Insurance installments surplus has factors as in figure (2). These factors reduce the surplus except investing profit. Division of surplus has two parts. First part will be transfer to be added for the next year as artificial person. The second part will be distributed back to customers as personal saving.
In 2017, the all-insurance installments were (23,475,644) but the distributed of surplus for customers was just (220,388). This comes as result to the reserves which increased than (13) million and paying compensation net were about (12) millions.
The part of surplus for every customer is calculated based on the following way: (All customer installments yearly / all customers' installments yearly)

×
The surplus that will be distributed by the company policy

Analysis Finance of the Islamic insurance company in Jordan
This model impacts the Islamic insurance company financial tables. There is division between shareholders and rights of documents holders. Rights of documents holders are shown in liabilities as divided liabilities, also it has different income statement than shareholders income statement, see the table 2: Islamic insurance company has flexible return of the insurance documents holders' management. Percentage calculating is increased by documents' increase, also percentage may be increased to meet the company needs, see  The company returns based on efforts' return which is calculated as follow: All holder's insurance documents' ×the changed percentage yearly 19% 20% 22% 30% The company returns based on Modaraba sharing in investing return is calculated as follow: the changed percentage yearly× All holders insurance documents' investing returns 25% 25% 25% 25% Resources: by authors based on Islamic Insurance Company annual reports 2014 -2017

Analysis Customers Complains
The results of the Islamic insurance company managing were faced by complain as follow: The insurance documents holders ask to get their surplus after their contracts end. They depend on the Islamic rule of owning the surplus every year because documents are yearly.
They are paying income tax by calculation: The insurance documents holders find difference between all insurance documents holders and surplus of the insurance documents holders is high, see table 4:   Years from 2014 -2017 were showed surpluses. The company did not give insurance documents holders loan to cover their needs, therefore, it distributed the part of the insurance documents holders' surplus.

Discuss the (IICM)
This model tries to solve problem by give the customer part of insurance surplus as way to promote Islamic insurance but it not solves the customer problem as expecting because of the following reasons: 1. The company builds reserves from the customers' installment as artificial person in the company. The reserves are high part of customers' installments. 2. The company policy distributes small part of insurance surplus yearly. 3. The undistributed insurance surplus is artificial person not owning by customer or equity. It is liability.

Discuss the benefit of the (IICM) model
It covers customer's risks even the customer not get service from Jordan Islamic bank. It covers the customer's risk partly based on the Insurance companies' law not as in the (RIFM). The Islamic Insurance Company gets return from managing and investing customers' installments. It is way to reduce risk not avoid it.

Results of Comparing between (IICM) and (RIFM) Models
Based on the discussing of the models, the comparing shows the results as in

Conclusion
Jordan Islamic bank developed and applying two Islamic Insurance models (RIFM) is not owned by customers neither the Jordan Islamic bank. It is an artificial person. (IICM) has small part of insurance surplus to be as customers saving but the other part is artificial person. It meets the Jordan Islamic bank returns and managing risk by avoids or reduces. Developing Islamic Insurance model is directed to meet the Insurance Company as profitability model but the benefit is meeting Insurance company aims more than the customers' aims.
Developing Islamic insurance models is directed to meet the establisher aims which impacts the result of applied the model practically. It is directed to meet profitability organization with Islamic rules. It is trying to get returns by two ways: 1. To get managing, and working returns by added contract of managing and working by return. It calculated as part of Insurance services expenses. 2. To get part of profit by investing part of collecting insurance installments.
Also, it is directed to meet covering the organization customer's defaults risk. By the time some organizations developed the model to meet its organization reducing of risk classification. It gets part from customers' installments to get reserves or provisions.

Recommendation for Future Research
Based on the results there is need to develop new model to reduce customers costs than (RIFM) and (IICM) in order to increase distributed insurance surplus.