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The Takaful

Current Achievements

&

Future Outlook

Zubair Mughal.

Director : AlHuda : Centre of Islamic Banking and Islamic Economics.

042-5858990 - 8407850

Introduction

“Takaful” is the Sharia Compliant brand

name for the Islamic alternative to

conventional insurance. Its based on the

principle of Ta’awan or mutual assistance.

It provide provides mutual protection and

joint risk sharing in the event of a loss by

one of its member

Origins of Takaful

In the event of death caused by

someone from another tribe, the

member of the offender’s tribe would

share the “ blood money” (Khoon Baha)

to provide for the family of the victim.

From the Holly Quran

 The need for insurance is shown in the

following verse of The Quran.

“ Those of you who die and leave widows

should bequeath for their widows a

year’s maintenance and residence”

(2.240)

From the Hadiths

 By Anas-bin-Malik, One day Prophet

Muhammad(PBUH) notced a bedouin

leaving his Camel without tying it. He

asked the bedouin, “Why don’t you tie

down your camel”? The Bedouin

answered, “ I put my trust in Allah

(SWT)”. The Prophet (PBUH) then

said,” Tie your camel first, then put

your trust in Allah(SWT)” <Tirmidhi>

Why Insurance ?

Is Some thing wrong with Concept ?

 Risk Aversion

 Assuring others

 Risk sharing

What wrong with practice ?

The contract between the insurer & the

insured is technically wrong from the

sharia perspective because of

 Gharar (Uncertainty))

 Gambling (Qamar & Maisir)

 Interest (Riba)

Gharar

 Lexically it means uncertainty and

technically it means the uncertainty of

the counteract or the subject matter.

Riba in Insurance

 Direct Riba

Excess on one side in case of exchange

between the amount of premium.

 Indirect Riba

The interest earned on interest based

investments

The concept of Takaful

 Taburro (Contribution) from the

participants (Policy Holders)

 Partnership among the participants.

 Need of an Operator

 Investment in Sharia Compliant modes.

Shariah Compliance

 Shariah compliance is an essential

element in Takaful .

 It is ensured through a Shariah

Supervisory/ Advisory Board at the level

of each Takaful company.

 The role of the Shariah Board is vital in

meeting the specific demand of a public

who would not insure otherwise.

Different Models of Takaful

 Pure Mudarabah Model : The participants

and operator enter into modarabah Contract.

 Wakalah Model : An Agency Agreement is

made between participants and Operators on

the basis of Wakalah ( Agency agreements)

 Wakalah Based on Waqf Model : The

participant's donate the fund and operator

charge an agency fee.

Takaful Pioneers

 Takaful started some 27 years ago in

the Middle East with the launching of

two companies:

 The Islamic Arab Insurance Co. (IAIC) in

the UAE and

 The Islamic Insurance Co. of Sudan

 But it took some time for the

movement to take shape.

Takaful Pioneers

 Later in 1984, Malaysia played a

pioneering role in setting the first Legal

framework specific to Takaful (Takaful

Act).

 This was instrumental in the successful

launching of the Takaful movement in

Malaysia and in other countries of South

East Asia.

Other Islamic/ Takaful

Legislations

 Other markets such as the Sudan and

Iran have Islamic regulatory

environments and became naturally

Takaful markets.

 In the Gulf countries specific Takaful

legislations are coming through in

Bahrain and in Saudi Arabia

Takaful drivers

 This movement is driven by

 A strong demand from a public who would

not insure otherwise (because of religious

beliefs); and

 The successful development of Islamic

banking institutions providing capital and

Islamic financial instruments for asset

management and investment.

Takaful Drivers

 Islamic banks and financial institutions play a

strategic and important role in the distribution

of Takaful products (especially Life Takaful

Products).

Takaful Operators

 The number of Takaful operators

worldwide is now estimated at:

 60 Takaful companies

 3 Retakaful companies

 This number may reach 90 + if so-

called Takaful windows are to be

included.

Takaful Premium

 Takaful is one of the fastest growing

segments in insurance (at around 20%

pa. on average)

 World Takaful contributions are

conservatively estimated at around US$

3billions, of which:

 60% General Takaful

 40% Family Takaful

Takaful Geographical Spread

 South& East Asia : 56%

 Middle East : 36%

 Africa: 7%

 Europe, USA & Others: 1%

Main Markets

 Malaysia

 Indonesia

 Iran

 GCC countries

 Other Arab countries

 Other Asia Pacific

 Pakistan ( Emerging Market )

The Challenges ahead

 Despite a remarkable breakthrough and

a dynamic and sustained growth, there

are challenges facing the Takaful

industry.

Challenges

 Business Model Dilemma

 Could create an uneven / unfair business

environment to operate

 Need to reach a consensus internationally on a

common and standard Takaful business model

Takaful Best Practices

 Regional Takaful institutions and

organisations need to come together

internationally in order to promote and

standardise best practices within the industry:

 Islamic Financial Services Board (IFSB)

 ASEAN Takaful Group (ATG)

 International Takaful Association (ITA)

 Accounting and Auditing Organization of Islamic

Financial institutions (AAOIFI)

Growth Outlook

 World Muslim population is estimated at

1.5 billions, of which around 97% are

based in Asia and Africa.

 A two-digit growth in the range of 15%

to 20% can be reasonably sustained for

at least the next 10 years in the existing

markets (Far and Middle East).

Takaful Products to Non-

Muslims

 Takaful Products are not exclusive to

Muslims.

 Competitively priced and sold through

the right channel it could attract any

consumer irrespective of their origin or

faith.

Conclusions

 Despite the challenges facing this “new”

industry, exciting times are ahead once

the latent potential is unleashed.

 The success of Takaful largely depends

on that of Islamic Financial institutions

on a global basis.

Conclusions

 There is a need for

 More strategic alliances and synergy

between Islamic Financial institutions

 More cooperation between Islamic

operators at an international level

 A better legal and regulatory environment

 Better competencies in Islamic Finance.

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← Older revision	Revision as of 02:33, 21 September 2016
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	+
	+
	+	== Top 20 FREQUENT WORDS ==
	+	takaful 7
	+	ace 5
	+	agents 5
	+	customers 5
	+	distribution 3
	+	rate 3
	+	awareness 2
	+	bnm 2
	+	business 2
	+	factors 2
	+	infrastructure 2
	+	malaysia 2
	+	model 2
	+	prubsn 2
	+	sri 2
	+	values 2
	+	<U+202B>ÈÓã 1
	+	accumulation 1
	+	agency 1
	+	akhtar 1
	+	allah 1
	+	alternative 1
	+	announced 1
	+	approach 1
	+	attitude 1
	+	award 1
	+	aziz 1
	+	bancatakaful 1
	+	beginning 1
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	+	practices 1
	+	processes 1
	+	products 1
	+	project 1
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	+	recruiting 1
	+	regular 1
	+	riding 1
	+	services 1
	+	shared 1
	+	shareholders 1
	+	snapshot 1
	+	succes 1
	+	tan 1
	+	till 1
	+	today 1
	+	untapped 1
	+	wealth 1
	+	zeti 1
	+	ÇáÑÍãä 1
	+	ÇáÑÍíã<U+202C> 1
	+	åááÇ 1
	+
	+
	+
	+	== DOCUMENT KEY POINTS ==
	+	*huge untapped market to be shared i higher cost of living increase per capita income rm k more awareness on wealth accumulation for the future and loved ones i non muslim awareness inclination towards ethical financial services takaful is a solution not an alternativea
	+	*takaful penetration rate in malaysia birth rate
	+
	+
	+	''Please note, This is an auto generated summary based on sentances position in the document and other factors''
	+	== DOCUMENT WORD ANALYSIS ==
	+	=== Main Category ===
	+	: AlHuda Material\takaful
	+
	+
	+	=== KeyWords ===
	+	taka islam insur malaysia productdeferred shariah countries muslim financial retakaful model growth custom partner developed service mutual bankable provided scheme
	+
	+
	+
	+	== RELATED DOCUMENTS ==
	+	:[[A Review of Takaful by Prof. Khawaja Ahmed Saeed]]
	+	:[[Agency Management,Training and Incentive Programme]]
	+	:[[Audit Issue of Islamic Banking]]
	+	:[[Banca Takaful by Faisal Shahzad Abbassi]]
	+	:[[Best Practices from e- Insurance to e-Takaful by Sami Guello]]
	+	:[[Calculated Risks, Measurable Results]]
	+	:[[Challenges & Issues Faced by Takaful Industry by Mr. Imtiaz ]]
	+	:[[Co-Operative Insurance and Takaful]]
	+	:[[Current Achievements of Takaful by Dr. S. J Malaikah]]
	+	:[[International Cooperative & Mutual Insurance Federation]]
	+	:[[Islamic Banking And Finance Malaysia’s Experience And Achiev]]
	+	:[[Islamic Finance & Investment Symposium by Sohail Jaffar]]
	+	:[[Islamic Insurance in 21st Century by Ahmad Feizal]]
	+	:[[Islamic Insurance Opertunities and Challenges]]
	+	:[[Issues and Challenges in Retakaful by Azman Ismail]]
	+	:[[Leveraging BancaTakaful as a Key Growth Channel by Mr. Rohai]]
	+	:[[Life Family Takaful by Mr. P Ahmed]]
	+	:[[Micro Insurance Co-Operative and Takaful]]
	+	:[[Micro Takaful by Shabir Patal]]
	+	:[[Microinsurance and Takaful]]
	+	:[[Microinsurance, cooperatives and Takaful]]
	+	:[[MicroTakaful – the way forward by Capt. M. Jamil Akhtar]]
	+	:[[Opertunities in Islamic Insurance]]
	+	:[[Present Scenario and Future Potentials of Takaful by Kazi Md]]
	+	:[[ReTakaful by Rohail Ali Khan]]
	+	:[[Syariah Compliant General Takaful Products by Sami Guellouz]]
	+	:[[Takaful and Mutuality by Mohd. Masua Billah]]
	+	:[[Takaful by Abdul Rahim]]
	+	:[[Takaful for Microfinance]]
	+	:[[Takaful Opperunities and Challenges By Azeem Pirani]]
	+	:[[Takaful Products Family Takaful Linked Investment Plans by S]]
	+	:[[Takaful World Prospective Middle East & North Africa]]
	+	:[[Takaful]]
	+	:[[Takful - Zubair Mughal]]
	+	:[[Takful Report]]
	+	:[[The Islamic Vision Presentation]]
	+	:[[The Success of Retakaful by Farid Benbouzid]]
	+
	+
	+
	+	== DOCUMENT REFERENCES ==
	+
	+
	+	=== Number of Pages ===
	+	10
	+
	+
	+	=== Published Date ===
	+	2016-09-17 01:21:13
	+
	+
	+	== Full Document ==
	+
	+
	+	[http://45.40.136.134/~hodhood/HodHoodDocuments/IslamicFinance/Takaful/Takaful.pdf Read the Full Document]
	+
	+
	+	[[Category:Islamic Finance]]
	+
	+	[[Category: Takaful]]