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TAKAFUL :
Today insurance plays a very important role in commercial
and personal finance, but while most of us take insurance
for granted, for people of the Muslim faith conventional
insurance is incompatible with their religious beliefs.
Under Islamic jurisprudence (Shari'ah), conventional insurance
is not permissible. Therefore an innovative concept, based
on solidarity, cooperation and mutuality which have been
the keystones of Islamic society from the days of the
holy Prophet, began to develop in the early 70's in Sudan,
Middle East and Far-East Asia and it was called Takaful.
It is important to understand that Islam is not against
the concept of insurance but the basis of operation of
conventional insurance, which does not meet the requirement
of Shari'ah. In fact, the concept of insurance which simply
means the pooling of common resources to help the needy
is very much in line with the teaching of Islam which
propagates solidarity, mutual help and cooperation among
members of the community. The essence of insurance could
be seen in the system of mutual help in the Arab tribal
custom .Therefore the principle of compensation and group
responsibility was accepted by Islam and the holy Prophet.
Muslim scholars have acknowledged that the basis of shared
responsibility is embedded in the system of aqila
as practiced by Muslims of Mecca (Muhajirin)
and Medina (Ansar),
and laid the foundation of mutual insurance.
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TAKAFUL PRINCIPLES :
The operational framework of Takaful avoids elements of
Riba (interest or usury) and Gharar (unknown or ambiguous
factor in the operation of contract). Riba and Gharar
are the basic reasons why Muslim scholars regard conventional
insurance as being against the principles of Shari’ah.
The core principles of Takaful are:
- Policyholders cooperate among themselves for their common good
- Every Policy holder pays subscription to help those that need assistance
- Divide losses and liabilities among the community by a pooling system.
- Eliminate uncertainty in respect of subscription and compensation
- Not derive advantage at the cost of others
- Invest funds in Shari'ah complaint instrument
From an operation viewpoint, under Takaful the members agree to devise schemes under which they themselves are insured and are insurers. Each member pays a premium as a contribution to a common fund referred as Takaful fund or policyholder’s fund. The Takaful operator, which invariably is an insurance company, manages this Takaful fund. The Takaful operator has to ensure the member’s level of contribution commensurate with the degree of risk. Therefore, the Takaful operator can apply scientific principles in the assessment of the contribution. The members allow the Takaful operator to take Tabarru (donation) to pay the losses suffered by other members in the pool. If there is any surplus left from the contribution after deduction of Tabarru and charges, that surplus belongs to the members.
Takaful is a unique way of managing the insurance needs of the Muslim community in a manner consistent with religious beliefs.
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