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Islamic insurance 2014 topic 3

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takaful

takaful

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  • 1. Islamic Insurance (Takaful) Dr. Kamaru Salam Yusof Lecturer, FBMS, Unissa Negara Brunei Darussalam
  • 2. TOPIC 3: TAKAFUL; CONCEPT & HISTORY
  • 3. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam word • The term is a (infinitive noun), which is derived from the root word . • means ‘guarantee’. • The word whose chief characteristic is , means ‘sharing’. • Thus, the word (Takaful) means ‘shared responsibility or shared guarantee, responsibility, assurance or surety’.
  • 4. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam word • Technically, (Takaful) from the economic point of view means mutual guarantee provided by a group of people living in the same society against a defined risk or catastrophe befalling one’s life, property or any form of valuable things
  • 5. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Meaning of takaful 1. Responsible 2. Guarantee 3. takaful - joint guarantee, share responsiblity 3 aspects mutuality happen • Help • Responsibility • protection
  • 6. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam concept • system where participant contribute to common fund and intend to jointly guarantee each other. • when participate –seek protection –jointly co-operate
  • 7. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Dalil of Takaful “…and help you one another in righteousness and piety” As-Sunnah “Narrated by Abu Hurairah (r), who said that: once two women from the tribe of Huzail clashed when one of them hit the other with a stone, which killed her and also the foetus in the victim’s womb. The heirs of the victim brought an action to the court of the Holy Prophet (s.a.w), who gave a verdict that the compensation for the infanticide is freeing of a male or female slave while the compensation for killing the woman is the blood money (diyat), which to be paid by the ‘Aqilah’ (the paternal relatives) of the accused”.
  • 8. History of takaful
  • 9. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam History of takaful • Ancient Arab tribal custom and the companions of the Prophet. • The custom of “al-aqilah”, it is mutually agreed among the tribes that if a person is killed unintentionally by a person of a different tribe, the accuser’s paternal relatives will take the responsibility to make a mutual contribution for the purpose of paying the blood money to the victim’s relatives. • This practice of having a fund that pools contributions from a group of people to assist others in need was further encouraged in the early Islamic period.
  • 10. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam arab tribe - relation blood • Prophet approve • aqila • sence of brotherhood • case – unintentional murder
  • 11. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Takaful in modern world • The first modern Islamic insurance was introduced in Sudan - based on a cooperative model not dissimilar from a conventional mutual insurer. • More commercial models of Takaful were later implemented in countries such as Malaysia and Saudi Arabia. • Takaful has evolved into a viable alternative to conventional insurance and is able to attract a wide range of customers, Muslim and non-Muslim alike. • Eg: Sri Lanka, where less than 10 percent of the population is Muslim, some 15% of the policyholders of the sole Takaful undertaking there are non-Muslims.
  • 12. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Evolution in takaful • 1979 -- ta'awuni – Sudan • 1984 -- mudarabah – malaysia • 1984 -- wakalah – gulf • 1996 -- waqf - south africa
  • 13. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Takaful as industry today • Now practiced by over 60 companies in 23 countries. • More recently, retakaful, the equivalent of conventional reinsurance, has been developed, initially in Malaysia. • At present, most Takaful operators reinsure to conventional reinsurers, and this is considered acceptable so long as there is no practicable Shari’ah compliant alternative
  • 14. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Takaful in present day spirit 1. helping friend – feast 2. repair house 3. Moving 4. khayrat fund • All are not contradict • but not commercial
  • 15. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam
  • 16. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Takaful’s growing share of the GCC insurance industry • With a focus on Takaful, Saudi Arabia tops the world rankings, holding 75% of total global contributions, according to the latest released figures for 2009: followed by Malaysia and the UAE, which is emerging as one of the most developed Takaful markets in the region.
  • 17. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Ruling of takaful • 1965 – cairo • 1976 - mecca - insurance for profit is contrary • 1985 - Jeddah - Islamic Fiqh Academy - approved takaful as alternative • 1984 - Malaysia takaful act - 1st in world – Shariah Advisory Council
  • 18. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Ruling of takaful (2) takaful must base on 1. Mutuality 2. co-operation Principles 1. shared responsibility 2. joint indemnity 3. common interest 4. solidarity
  • 19. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Sources of Law Affecting Takaful 1. Al-Quran-elements of mutual cooperation= Almaidah: 5:2. Alleviation of hardship= 2:185 2. Sunnah= Prophet said: Tie the camel first and then leave it to Allah 3. Practices of the companion-Al-Dawawin System by S. Umar. 4. Fatwa or Ijtihad: Ibnu Abidin=Permissible insurance in trade for merchant known as Sukra. Muhammad Abduh, Zarqa-agreed to the validity of Islamic insurance 5. Masalih Mursalah= Life, necessity. A way of providing material security. 6. Urf-Tribal Custom practice known as Aqilah. 7. Unanimous Decision of Muslim Scholars – Islamic FiqhWeek Syria 1961, – Muslim Scholars Conference 1965 Egypt and Islamic Economic – Conference Mecca 1976 - Validity of insurance business except life insurance. – International Islamic Insurance Dubai 1996 – Labuan1997 -Validity of Takaful.
  • 20. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Takaful and Maqasid al Shariah. • Protection of property and Protection of life: • Hajiyat and daruriyat • Legal maxim: darar must be removed. • To spread the risks of losses around the large number of participants • Dr mohd daud bakar: making takaful mandatory to muslims. • Compulsary to protect the essential needs of the society.
  • 21. Case study
  • 22. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Insurance in Brunei • American International Assurance (AIA) • Asia Life Assurance Society Limited • Great Eastern Life Assurance Co Ltd • AXA Insurance (B) Sdn Bhd • Borneo Insurance Sdn Bhd • Aiva Insurance Sdn Bhd
  • 23. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Takaful in Brunei •TAIB •Takaful Islam
  • 24. Faculty of Business & Management Sciences, UNISSA, Brunei Darussalam Q?How it difference from insurance

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