...for over 1400 years. In Islam, the concept of insurance is takaful. Q finance dictionary defines that takaful is a Islamic insurance in which all participants are members and contribute to a pool of funds that provide assistance in the event of loss on the part of any of the participants. It is an Islamic insurance arrangement avoids the prohibitions against gambling and interest in Islamic Law. Takaful, it originates from the Arabic word Kafalah, which means "guaranteeing each other" or "joint guarantee". It is based on the principles of ta’awan (mutual cooperation) and Tabarru’ (donation), where a group of takaful participants (policy-holders) agree between themselves to share the risk of a potential loss to any of them, by making a donation of all or a part of their takaful contribution (premium) to compensate for a loss. Takaful-branded insurance is based on Shariah, Islamic religious law and refer the principle of cooperation, not sale or exchange, and mitigates the objectionable aspects of gharar (uncertainty), maisir (gambling) and riba (interest). In conventional insurance the risk is transferred from the policyholder to the insurance company which brings the elements of uncertainty and chance in contract as one of the two a party makes a loss. Takaful is a structure in which the risk is shared between all participants, removing the elements of uncertainty and gambling from the contract. Moreover, a takaful fund invests the contributions in a shariah compliant manner...
Words: 9476 - Pages: 38
...“Takaful and Insurance” A comparative study Submitted to : Dr.Aziz-ur-Rehman safee Submitted by: [Year] Comparative study of Takaful and insurance [Type the company name] [Pick the date] CONVENTIONAL INSURANCE AND TAKAFUL: CONCEPTUAL AND OPERATIONAL DIFFERENCES M.Arsalan Tahir & Hatim jabbar Abstract: This study attempts to differentiate concepts and operations to execute the conventional insurance and Takaful. Management, financing, ownership and accounting system creates difference between both apparatus. Conventional insurance based on Riba (interest), Gharrar (uncertainty) and Maisir (Gambling), which are prohibited in Islam. Unlike Insurance, Tabbarro (voluntarily) and Ta’wan (mutual assistance) are cornerstone of Takaful fund. Rich literature in study, collected from secondary source, describe the differences discussed above. INTRODUCTION: Miss haps, disasters, damages and risks are inevitable in Human life, but manageable. To manage risks, damages through fire, floods, accidents, and Business, Man has find out ways to protect him from these challenges. Conventional insurance and Takaful are the ways to protect lose, but both have major differences in concepts and operations. Insurance definition According to Pfeiffer (1956) defines as “insurance is a device for the reduction of risk of one party, called the insured, through the transfer of particular risks to another party, called the insurer, who offers a restoration, at least in part...
Words: 2818 - Pages: 12
...sebagai pengenalan bagi membantu anda memahami takaful berkaitan pelaburan. Ia memberikan maklumat asas supaya anda boleh mengajukan soalan yang betul dan memahami jawapan yang diberikan oleh pengendali takaful serta membuat keputusan yang tepat sebelum menyertai sesuatu pelan takaful. Apakah takaful berkaitan pelaburan? Takaful berkaitan pelaburan adalah pelan takaful keluarga yang menggabungkan pelaburan dan perlindungan takaful. Caruman anda akan memberi perlindungan takaful, termasuk manfaat kematian dan hilang upaya, dan sebahagian daripada caruman akan dilaburkan dalam pelbagai dana pelaburan pilihan anda yang dibenarkan oleh Syariah. Sebagai peserta, anda boleh menentukan peratusan pengagihan caruman anda bagi perlindungan dan pelaburan. Dana pelaburan dibahagikan kepada unit yang sama nilainya bagi memperoleh harga seunit pelaburan itu. Harga unit ini disiarkan setiap hari di dalam akhbar bagi membolehkan anda mengikuti perkembangan nilai pelaburan anda. Berbeza daripada takaful berkaitan pelaburan, syarikat insurans juga menawarkan produk berkaitan pelaburan bagi Dana Sekuriti yang dibenarkan oleh Syariah, iaitu dana dilaburkan dalam instrumen pelaburan yang dibenarkan oleh Syariah. Walau bagaimanapun perlindungan insurans yang diberi tidak menepati kehendak Syariah. Konsep takaful dalam takaful berkaitan pelaburan Dalam takaful berkaitan pelaburan, sebahagian daripada caruman anda akan diagihkan kepada dana takaful dalam bentuk caruman penyertaan (tabarru’)...
Words: 1312 - Pages: 6
...ARTICLE REVIEW: TAKAFUL INDUSTRIES FACES CHALLENGE IN FINDING RIGHT TALENT By Lt Kol Mohd Samin bin Mohd Salleh and Mej Marcus ak Phillip 1. DO YOU AGREE THAT MOTIVATION CAN BE INCREASED BY ADDING MORE PERKS TO THE EMPLOYEE? In this context, perks is defined as an informal word for perquisites which are privileges granted to employees in addition to their salaries and benefits (such as medical and pension plans). 'True' perks have little or no cash value or tax implications and may include company car, vacations, reserved parking space, spacious office, private dining and washroom facilities, etc. Motivation can divided into two categories: intrinsic and extrinsic motivation. Intrinsic motivation refers to the pleasure or value of an activity itself, while extrinsic motivation emphasizes the value an individual places on the results of an action and the individual assessment of the probability of realizing the results (Staw,1977). Sujan (1986) concluded that extrinsic motivation is related to selling effort, while intrinsic motivation was linked to strategy-oriented behavior. Brown and Peterson (1994) used a different category of motivation: instrumentality and competitiveness. They found that instrumentality has indirect effect on sales performance and effort act as a mediator whereas competitiveness was positively and directly related to performance. Solcum, et.al (2008), defined Motivation as a psychological state exists whenever internal and/or external forces stimulate...
Words: 1073 - Pages: 5
...1.5 Development Takaful in Malaysia 1.5.1 The Birth of Takaful Industry in Malaysia Based on the website of Bank Negara Malaysia (http://www.bnm.gov.my/files/publication/tkf/en/2004/booklet.en.pdf), in the early of 1980s, the demand of the Shariah-compliant substitute to traditional insurance from Muslim public on that time has make the takaful industry start to grow in Malaysia. The establishment of the Islamic bank in 1983 also makes the takaful industry develop as a supplement of the Islamic bank’s operation. Malaysian National Fatwa Committee has claimed that the elements of Gharar (uncertainty), Riba’ (usury) and Maisir (gambling) which present in the life insurance has cause the contract of life insurance become invalid. This situation is also one of the influences that have motivated the development of takaful...
Words: 2231 - Pages: 9
...Title Shariah Issues in Takaful: Nomination and Hibah Semester Sept 2013 Name: Fatima Zahra Habib Eddine Matric No: 1300135 Abstract _________ Fatima Zahra Habib Eddine 1300135 Although is having a rapid growth the Takaful Industry has some Shariah issues still unsolved. Mainly in the Family Takaful (Islamic life insurance) not all Scholars agree on the nomination practice. This issue will be discussed in the first chapter. When nomination is accepted not all Scholars agree whether the appointed person is a sole recipient of the gift (hibah) or an executor. The Shariah Advisory Council of Bank Negara Malaysia faced the issue. However there are still some open discussions and inconsistencies in regulations. Key terms of the research Takaful, nomination, hibah, Shariah issues, family takaful. 2 Shariah Issues in Takaful Objectives of the research: Fatima Zahra Habib Eddine 1300135 The principal objective of the research is to present the Shariah issues during the application of the nomination and the hibah in the Family takaful plans by the takaful operators. Therefore, the research will discuss: • • • • • The nomination practice in the Family takaful plans; The application of the hibah practice to the takaful proceeds; The role of the nominee in a Family takaful plan from the Shariah point...
Words: 3439 - Pages: 14
...Takaful, or we can called it as Islamic Insurance, is a concept whereby a group of participants mutually ensure each other against loss or damage. Each participant carry out his / her obligation by contributing a certain amount of donation (or tabarru) into a fund, which is managed by a third party. The third party is the takaful operator. The takaful operator will pay out the funds accordingly to its participants in the event of loss or damage suffered. Any surplus is paid out only after the obligation of assisting the participants has been carried out. Through this principle, takaful operates as a protection and profit sharing venture between the takaful operator and the participants. Nowadays, Malaysia has achieved significant milestones...
Words: 1059 - Pages: 5
...4 Research Objectives 10 1.5 Scope of Study 12 1.6 Significance of Study 13 CHAPTER 2 14 2.1 Literature Review on Insurance Sector (Conventional & Takaful) 14 2.2 Literature Review on Topic 16 2.3 Literature Review on Stability of Underwriting Operation 18 2.4 Literature Review on Solvency Margin 19 2.5 Literature Review on Retakaful/Reinsurance Dependence 20 2.7 Literature Review on Equity Return 22 CHAPTER 3 23 3.1 Data Collection 23 3.2 Variables 23 3.2.1 Dependent variables 24 3.2.2 Independent variables 24 3.3 Theoretical Framework 27...
Words: 9580 - Pages: 39
...SERVICES BOARD and INTERNATIONAL ASSOCIATION OF INSURANCE SUPERVISORS ISSUES IN REGULATION AND SUPERVISION OF TAKAFUL (ISLAMIC INSURANCE) August 2006 THE JOINT WORKING GROUP: Islamic Financial Services Board International Association of Insurance Supervisors Members • Professor Rifaat Abdel Karim Ahmed • Islamic Financial Services Board • Dr Simon Archer • Islamic Financial Services Board • Abdullah Haron • Islamic Financial Services Board • Arup Chatterjee • International Supervisors • Abdul Rahman Tolefat • Bahrain Monetary Authority • Peter Casey • Dubai Financial Services Authority • Kholoud Saqqaf • Insurance Commission of Jordan • Dana Janbulat • Insurance Commission of Jordan • M'unis Haddadin • Insurance Commission of Jordan • Zabidi Othman • Central Bank of Malaysia • Wan Malawati Wan Mansor • Central Bank of Malaysia • Wan Mohd Nazri Wan Osman • Central Bank of Malaysia • Fahad A. Al Zomea • Saudi Arabia Monetary Authority IFSB & IAIS – Issues in Regulation and Supervision of Takaful (Islamic Insurance) Association of Insurance Page 2 of 16 Issues in Regulation and Supervision of Takaful (Islamic Insurance) Table of contents Background ..............................................................................................................................4 SECTION 1 – BACKGROUND TO TAKAFUL .........................................................................4 Islamic Religious Law (Shari’a) ......
Words: 6267 - Pages: 26
...What is Takaful Takaful - Islamic insurance - is founded on the cooperative principle and on the principle of separation between the funds and operations of shareholders, thus passing the ownership of the Takaful (Insurance) fund and operations to the policyholders. The premiums collected from the policyholders are considered as donations and they constitute the Takaful fund from which all claims are reimbursed. At the end of each financial year, after deduction of expenses, any remaining cash surplus will not be retained by the company or its shareholders, but returned to the policyholders in the form of cash dividends or distributions. In this respect, Takaful business is different from the conventional insurance in which the policyholders, rather than the shareholders, solely benefit from the profits generated from the Takaful and Investment assets. The Investment assets representing the Takaful fund that accumulate over the retained reserves, surpluses and provisions are invested by the shareholders who manage the company on behalf of the policyholders. The shareholders are rewarded with a percentage of the profit on these investments. | | | | |Can Muslims engage in risk control? | | | | | | | |It is a Muslim's belief that everything that happens in this world is by the will (Qadha and Qadar) of Allah. Similarly...
Words: 2545 - Pages: 11
...Journal of Financial Reporting and Accounting Insurance vs Takaful: identical sides of a coin? Hairul Suhaimi Nahar Downloaded by ZHONGNAN UNIVERSITY OF ECONOMICS AND LAW At 10:31 08 December 2015 (PT) Article information: To cite this document: Hairul Suhaimi Nahar , (2015),"Insurance vs Takaful: identical sides of a coin?", Journal of Financial Reporting and Accounting, Vol. 13 Iss 2 pp. 247 - 266 Permanent link to this document: http://dx.doi.org/10.1108/JFRA-02-2015-0029 Downloaded on: 08 December 2015, At: 10:31 (PT) References: this document contains references to 66 other documents. To copy this document: permissions@emeraldinsight.com The fulltext of this document has been downloaded 248 times since 2015* Users who downloaded this article also downloaded: Mohamed Sherif, Nor Azlina Shaairi, (2013),"Determinants of demand on family Takaful in Malaysia", Journal of Islamic Accounting and Business Research, Vol. 4 Iss 1 pp. 26-50 http:// dx.doi.org/10.1108/17590811311314276 Khalid Al-Amri, (2015),"Takaful insurance efficiency in the GCC countries", Humanomics, Vol. 31 Iss 3 pp. 344-353 http://dx.doi.org/10.1108/H-05-2014-0039 Nor Aziah Abu Kasim, (2012),"Disclosure of Shariah compliance by Malaysian takaful companies", Journal of Islamic Accounting and Business Research, Vol. 3 Iss 1 pp. 20-38 http:// dx.doi.org/10.1108/17590811211216041 Access to this document was granted through an Emerald subscription provided by emeraldsrm:509129 [] For...
Words: 11566 - Pages: 47
...Title: The Takaful predicament The article is written up by Nabilah Annuar on 5 Dec 2013 that explains about the difficulty faces by Takaful industry in the region. The expansion of the Takaful industry faces a number of challenges such as slowing growth rate due to the firms need to struggle for the scale and face growth competition. According to Abdul Rahman Al Baker (2013) said the struggle or challenge faces by Takaful industry due to the industry that grows both in the region and the Islamic world as well as further afield. Moreover, the Takaful industry is driven largely by Arab Saudi and Malaysia where the Takaful globally is expected growth 16% annually in the coming years where is not meet the expectation that compared to an average growth is 22.4% for the between years 2007 to 2011. The difficulty faces by the Takaful industry are less customer awareness and understanding regarding the product. Therefore, it become a most crucial area that need to be handle by the industry in order to enhance the cutomers awareness and understanding. Probably, the industry can do a campaign or talk regarding takaful product to customers. In addition, the different in regulatory regimes also become a challenge to the industry. Some corrective action may can be taken such as have an MOU with the regimes in order to help promote takaful industry. Hence, the lack number of expertise n takaful also become a challenges According to the data obtained from Milliman (World Takaful Report,2013)...
Words: 383 - Pages: 2
...Critical assessment of four financial instruments in the Islamic financial markets Raja Shahridatul Dewa Binti Raja Musa C070187 This project paper is a partial fulfillment of Module IB2001of Part 2 of Certified Islamic Finance Professional (CIFP) INCEIF September 2008 Critical assessment of four financial instruments in the Islamic financial markets Raja Shahridatul Dewa Binti Raja Musa Abstract There has been remarkable growth in the Islamic finance industry and seen double-digit growth in recent years. Increasing numbers of Islamic financial institutions are attempting to penetrate the international markets in meeting the global demands for Islamic finance. This calls for the development of innovative Islamic financial instruments which are shariah compliant that represent as alternatives to conventional instruments covering areas of Islamic banking, Islamic insurance, Islamic equities and Islamic bonds/sukuk. A parallel development of Islamic financial markets should also take place that look into the aspect of liquidity and cash flow management. At the same time legal and regulatory requirements are needed to ensure the smooth functioning of Islamic financial institutions. Given the uniqueness of the operations and transactions comprising contractual arrangements and instruments, it is critical for Islamic financial institutions to identify specific...
Words: 8010 - Pages: 33
...Introduction to Islamic Insurance K. M. Mortuza Ali 1 K. M. Mortuza Ali Managing Director Prime Islami Life Insurance Limited 29 Dilkusha C/A Raj Bhaban (6th Floor) Dhaka – 1000 Phone – 9560889, 9570729 (Off) 8353552 (Res) Mobile – 019-366617 Fax – 880-2-9564390 Email – plicl@bdonline.com kmortuza@bdmail.net 2 Chapter (I) Basic ideas about Risk & Insurance 1. 2. 3. 4. 5. 6. 7. 8. 9. What is Risk? How do we distinguish between pure risk and speculative risk ? How risk is handled? Why every risk is not insured? What are the characteristics of Insurable risks? What are the requisites of Insurance for Covering Risk? What are the Principles of Insurance contract? What are the different types of Life Insurance policies? How Insurance is different from Gambling? 10. What is the main function of insurance? 11. What is the greatest value of insurance? 12. What is the Purpose of Life Insurance? 13. How insurance protects value of life? 14. How life Insurance schemes meet the saving needs? 15. What are the social and economic values of Insurance? 16. What is the Actuarial principle of Life Insurance? 17. What is reinsurance? 18. What are the different methods of reinsurance? 1. What is Risk? Risk has been defined as the uncertainty as to the occurrence of an economic loss. It is the passivity of adverse result from a desired outcome. Risk and probability are not synonymous. We must understand the difference between risk and probability. The terms hazard and peril are...
Words: 44615 - Pages: 179
...TABLE OF CONTENTS PART 1: OVERVIEW ................................................................................................................. 1 1. Introduction............................................................................................................................ 1 2. Objectives .............................................................................................................................. 2 3. Scope of Application ............................................................................................................ 2 4. Legal Provision...................................................................................................................... 3 5. Effective Date & Compliance Deadline ............................................................................. 3 6. Approach................................................................................................................................ 4 PART 2: SHARIAH GOVERNANCE ARRANGEMENTS ................................................... 5 SECTION I: General Requirements of the Shariah Governance Framework ..............5 - 9 SECTION II: Oversight, Accountability & Responsibility............................................. 10 - 14 SECTION III: Independence............................................................................................ 15 - 16 SECTION IV: Competency ..................................................
Words: 11007 - Pages: 45
