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Takaful (islamic insurance)
 

Takaful (islamic insurance)

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    Takaful (islamic insurance) Takaful (islamic insurance) Presentation Transcript

    • Dedicated To Our Loving Parents and Teacher’s
    • Sana Suleman Fatima-Tu-Zahra Nimra Ikhlaq Jawad Ahmad Sidra Ghazala Asghar
    • Insurance Takaful History and Background Characteristics of Takaful Need of Takaful Difference between Takaful and Conventional Insurance Products of Takaful Models of Takaful Role of Takaful in Islamic Economic System Market Status Issues & Challenges Suggested Measures Conclusion
    • Islamic Insurance Conventional
    • A contract in which an individual receives financial protection against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.
    • Takaful (Islamic insurance) is a financial transaction of a mutual co-operation between two parties towards providing a financial security for one of them against an unexpected material risk.
    • Social scheme  Arabic word  Legally binding agreement
    •  Common good Contributions Losses & liabilities Uncertainty removes  Fair distribution of surplus
    • & Background
    • Development of Islamic insurance in five stages
    • Practices of the doctrine of al-Aqilah among the ancient Arab tribes as a tribal custom
    • The relevant legislations passed in the first constitution of Medina was in 622 B.C
    • Hazrat Umar (R.A) ordered to a group of Mujaheedin in each district, to contribute an equal amount of money to help legal heirs of those victims, in case if any person is killed by any other person of the same district.
    • 19th Century Ibn Abidin a Hanafi lawyer was the first person to discuss about the idea of insurance and its legal entity.
    • A well-known Islamic jurist, Muhammad Abduh issued two ‘fatwa’s’ mentioned that 1:-Insurance transaction is like the transaction of al”Mudarabah” financing and 2:- Life insurance is legal.
    •     Establishment of two separate funds Solidarity principle and equal surplus distribution Restricted investments Establishment of Shariha board
    • Scholars view the insurance contract as an exchange contract – money is being exchanged for money over time. Insurance is a buy and sell agreement. . Elements of: •Uncertainty – Gharrar •Gambling – Maisir •Interest – Riba •Profit distribution •Investment of funds •Nature of capital
    • Gharar is forbidden in Islam because it is not showing the full knowledge , disclosure and transparency. Gharar describe ‘RISK’..
    • In insurance Gharar exist in three forms: Gharar in the outcomes Ghaarr in the results of exchange Gharar in contract period
    • Maiser-Gambling Maisir resembled with ‘Risk taking‘ whereby insured get a huge amount without any equivalent input. Insurance include Maisir where insured makes a bet on the happening of loss and insurer also do it.
    • “ …. Allah has permitted trading and forbidden riba” (Al Baqarah 2 : 275). Every profit must be based on liability and risk otherwise it is Riba according to Islam. Conventional insurance companies normally place the insurer fund in interest bearing instruments like loans and bonds.
    • Insurance companies invest in such type of assets that are totally prohibited in Islam such as alcohol, gambeling, bonds etc. while the Takaful companies invest in interest free funds that are halal-o-haram.
    • In Takaful every policyholder has the right to know ….??? How their money is used? How the surrender value is calculated? & the Takaful policyholders must be careful that the funds are used for halal purposes. Insurance contract based on interest.
    • In Takaful every policy holder has the right to know about the distribution of profit among partners but in conventional insurance there is no hard and fast rule about that, it’s totally depend upon management of company
    • Issue insurance Tkaful Risk Risk transfer Risk sharing Gharar Gharar exist Maisir Payment depends upon chance Interest based Gharar brought down by making conditional donations Obviates the element of maisir Interest free Surplus in hands of shareholders Distribution according to proportions Investment Surplus
    • Roll NO: MC12152
    • Products of takaful General takaful Family takaful Child education plan Child marriage plan Savings + protection plan Retirement plan Marine takaful Property takaful Motor takaful
    • General takaful offer all kinds of non life risk coverage It is normally divided into following classes Property Takaful Marine Takaful Motor Takaful Miscellanea Takaful
    • Family Takaful
    • Long term savings Protection for child education Education will continue when you are not around
    • Loan Protection Ease in challenges coming financial Plan will continue Received amount good lump sum
    • "A companion of Prophet Muhammad (s.a.w.w.) asked: 'O Prophet of Allah! Should I tie my camel and then entrust Allah or should I leave the camel untied and then entrust Allah?' The Prophet (s.a.w.w.) replied: 'Don't leave your camel untied; instead first tie the camel and then put your Tawakkal on Allah.'"
    • "It is narrated that Hazrat Muhammad Mustafa (s.a.w.w) said: It is better to leave your heirs wealthy rather than poor and asking others for their needs.“
    •  Well planed lifestyle  The period of plan and if he completes this plan successfully by a disciplined savings than he will have a handsome amount in his hands on the maturity for his remaining life’s financial needs.
    • Financial protection Investment of amount in Halal business Availability of other financial riders Maturity of amount Loan protection Partial withdrawals Availability of plan Tax free plan
    • PRESENTED BY NAMRA IKHLAQ
    • OUTLINE :  Takaful Models.  Takaful models implemented in Pakistan.  Reasons why other takaful models not implemented in Pakistan.  Role of takaful in Islamic economy.
    • TAKAFUL MODELS There are three main different Takaful Models use today. Takaful Models Mudharabah Wakalah Wakala -waqf model
    • Takaful models implemented in Pakistan WAKALA-WAQF MODEL Wakala model with waqf fund
    • WAKALA IN ARABIC AGENCY The wakala concept is essentially an agent-principal relationship, where the takaful operator acts as an agent on behalf of the participants. Operator as wakil/Agent: Operator is an organization which manages Takaful Fund of participants. Participant as principal: A contributor to Takaful Fund by participating in any protection scheme.
    • Wakala fee: The fee received by a Takaful Operator from the Participants to manage Takaful fund. Initial donation by shareholders. Waqf fund Participant contribution / Tabarru Tabarru / Donation: The contribution of participants in waqf fund.
    • Shareholders Participants/po licyholder contribution / Waqf fund Overall takaful contract as wakeel Administrated by Opretor Only investment portion as mudarib
    • WAQF FUND 1 Saved for payment of wakalah fee claims or retakaful expenses. 2 This portion is invested, or used for making investment.
    • Waqf fund Investment in 100% Islamic transactions or sharia complaint securities. Profit on investment Profit sharing on MUDARBAHA basis Profit for the shareholder Profit for participants
    • Profit for the company Minus Administration expenses like employees salary etc. MINUS Management expenses of company. Profit distribute between shareholders.
    • Waqf fund _ + +
    • Waqf fund
    • Mudarabah model(partnership of sharing profit and loss) Policy holder Provide capital Takaful operator Manage the whole takaful operation and make investments. Rabb-ulmal Mudarib
    • Takaful models not implemented in Pakistan Issues in Mudarabah model. 1. 2. 3. 4. Nature of contract is undermine. Sharing in underwriting surplus. General takaful. Qard-al-hasan.
    • Issues in wakalah model. 1. Sharing in underwriting surplus. 2. Not reduce operator fee for largest clients reduce the risk premium rates. 3. Initial expenses of takaful are not born by shareholders.
    • Status and Potential of Takaful industry Profile of Global Takaful Industry  The first Takaful company was established in 1979 - the Islamic Insurance Company of Sudan. Malaysia started in 1984.  Presently 150 Takaful companies in 25+ countries worldwide offering General and Family Takaful with estimates of Takaful contributions at over $ 5 billions globally
    • Contd ………………             Australia Bahrain Bangladesh Brunei Egypt Ghana Indonesia Iran Jordan Kuwait Luxembourg Malaysia             Pakistan Qatar Saudi Arabia Senegal Singapore Sri Lanka Sudan Trinidad & Tobago Tunisia Turkey United Arab Emirates Yemen
    • Takaful is obstacle by less human resources. Lack of talented, skilled and experienced people. It is good to teach people Takaful concept.
    • Islamic financial institutions are not putting too much effort in developing Takaful. It is crucial for marketers to enhance the industry and the innovation of new products. Financial markets must understand the needs and wants of customer . Many consumers are still stick to conventional insurance. It is important to address educational issues and to develop consumer awareness.
    • Often, scholars are not agree each other to establish a framework for Takaful. The issue of different regions i.e Malaysia and Middle East countries. Model of Takaful is being practiced by specific region.
    • Quite self interest between Shariah Supervisory Board and the board of directors of the Takaful. There is no clear mission and responsibility of Shariah board. At present, there are no manual and standard terms of reference.
    • The lack of appropriate investment vehicles, especially with the long term duration. The limited range of shariah compliant asset could be the result of asset risk.
    • Micro insurance Life
    • Kind of model of Takaful Every nation has its own model of Takaful. Terms of standardization is mainly based on different regions. The lack of standardization will harm the development of Takaful.
    • Role of takaful in Islamic economic system. welfare scheme 1.Create exploitation free society. 2.It is a safeguard against people faith, life, prosperity and property. 3.Facilitate capital formation. 4.Motivate individual for saving. 5.Utilization or resources. 6. Greater employment.