Download - Alhuda CIBE -Takaful
Mohammad Ashraful Mobin
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Muhammad Zubair Mughal
Chief Executive OfficerAlHuda : Centre of Islamic Banking & Economics
Takaful (Islamic Insurance )
An Ideal Alternative to Conventional Insurance.
11th Feb, 16- Intl Takaful & Conventional Mutual Insurance Consortium - Dubai
Introduction to Takaful ( Islamic Insurance ) Difference b/w Conventional Insurance & Takaful Takaful Through Time General & Faimly Takaful Types Takaful Models Worldwide. Takaful - Target Market Challenges to Takaful Prospects of Takaful in Turkey.
“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.
Takaful comes from the Arabic root-word ‘kafala’ — guarantee.
Operationally, takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of loss.
The contract between the insurer & insured is technically wrong from the sharia perspective because of
Interest (Riba) Gharar (Uncertainty)) Gambling (Qamar & Maisir) Risk Transfer Issue
Mutuality and cooperation. Takaful contract pertains to Tabarru as against Aqd –
e-mu’awadat in case of conventional insurance. Payments made with the intention of Tabarru
(contribution) Eliminates the elements of Gharrar, Maisir and Riba. Wakalah/Modarabah basis of operations. Joint Guarantee / Indemnity amongst participants –
shared responsibility. Constitution of separate “Participants’ Takaful
Fund”. Constitution of “Shariah Supervisory Board.” Investments as per Shariah.
Issue Conventional Insurance
Takaful
Organization Principle Profit for shareholders Mutual Benefit for Participants
Basis Risk Transfer Risk sharing
Value Proposition Profits maximization Affordability and spiritualsatisfaction
Laws Regulations Sharia plus regulations
Ownership Shareholders are Owners Participants
Management status Managed by Company Management Operator
Form of Contract Contract of Sale Islamic contracts of Wakala orMudarbah with Tabar’ru(contributions)
Investments Interest based Sharia compliant, Riba-free
Surplus Profit of Insurance Company. Distribution to Participants on pro rata basis.
Origins in the First Constitution of Madina.
Serious efforts were made in modern times, in 1970s to come up with an Islamic alternative to the conventional insurance.
The first Takaful company was set up in Sudan in 1979, almost simultaneously followed by another one set up in Bahrain.
Poor Insurance penetration in the Muslim countries (<1% of GDP).
Average growth rate higher than conventional insurance companies (around 25%).
Non–Muslims increasingly opting for Takaful products for commercial benefits.
The number of Takaful operators worldwide is now estimated at:
280+ Takaful companies
13 Re-takaful companies
In 56 Countries.
General Takaful – offers all kinds of non-life risk coverage. It is normally divided into following classes:
Property Takaful Marine Takaful Motor Takaful Miscellaneous Takaful
Term Life Takaful
Whole Life Takaful
Endowment Takaful
Universal Takaful
Marriage Plan Education Plan
People who do not insure due to religious reasons.
People who insure and are insensitive to religious reasons.
People who currently do not insure at all.
Wakalah Based on Waqf Model : The participant's donate the fund and operator charge an agency fee.
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)
Participants
Pool of Contributions
Participants Contribution
Participants
Participants Contribution
Pool of Contributions
Investment in Shariah Complaint Avenues
Profit from Investment(Part of the profit goes to the Company for acting as mudarib)
Participants
Participants Contribution
Pool of Contributions
Wakala Fee Claims Re-Takaful Expense etc.
Investment in Shariah Complaint Securities
Profit from Investment(Part of the profit goes to the Company for acting as mudarib)
Participants
Participants Contribution
Pool of Contributions
Wakala Fee Claims Re-Takaful Expense etc.
Investment in Shariah Complaint Securities
Profit from Investment(Part of the profit goes to the Company for acting as mudarib)
Participants
Participants Contribution
Pool of Contributions
Wakala fee, Claims, Re-Takaful Expenses
SURPLUS
Investment in Shariah Complaint Securities
Profit from Investment(Part of the profit goes to the Company for acting as mudarib)
Participants
Participants Contribution
Pool of Contributions
Wakala fee, Claims, Re-Takaful Expenses
SURPLUS
Investment in Shariah Complaint Securities
Profit from Investment(Part of the profit goes to the Company for acting as mudarib)
Participants
Participants Contribution
Pool of Contributions
SURPLUS
Contingency Reserve Charity Distribute Among Participants
Wakala fee, Claims, Re-Takaful Expenses
Investment in Shariah Complaint Securities
Profit from Investment(Part of the profit goes to the Company for acting as mudarib)
Participants
Participants Contribution
Pool of Contributions
Contingency Reserve Charity Distribute Among Participants
SURPLUS
Wakala fee, Claims, Re-Takaful Expenses
Investment in Shariah Complaint Securities
Profit from Investment(Part of the profit goes to the Company for acting as mudarib)
Participants
Participants Contribution
Pool of Contributions
Contingency Reserve Charity Distribute Among Participants
SURPLUS
Wakala fee, Claims, Re-Takaful Expenses
Investment in Shariah Complaint Securities
Profit from Investment(Part of the profit goes to the Company for acting as mudarib)
Participants
Participants Contribution
Pool of Contributions
SURPLUS
Contingency Reserve Charity Distribute Among Participants
Wakala Fee Claims Re-Takaful Expense etc.
Investment in Shariah Complaint Securities
Profit from Investment(Part of the profit goes to the Company for acting as mudarib)
+ +-
=
InvestmentIncome
Operational Cost of Takaful
/ ReTakaful
Claims &Reserves Surplus
(Balance)
P A R T I C I P A N T S’ T A K A F U L F U N D (P.T.F.)
Admin Expenses,
Employee’s etc.
Wakalah Fee
InvestmentIncome
Management Expense of
the Company
Profit/Loss
S H A R E H O L D E R S’ F U N D (S.H.F.)
Participant
WAQF
Takaful Operator
Share Holder
Wakala-Waqf Model
Investment by the Company
Skepticism.
Lack of uniformity in Models & Shariah decisions.
Regulatory issues.
Capacity constraints.
Limited Investment avenues.
H.R. issues.
Thank You for Listening with Patience
Muhammad Zubair Mughal
Chief Executive Officer
AlHuda Centre of Islamic Banking and [email protected]
www.alhudacibe.com
AlHuda CIBE FZ LLE - U.A.EP: + 971 56 9286664, + 971 55 938 99 00
AlHuda Center of Islamic Banking & Economics - Pakistan
Ph: (92-42) 35913096 - 98, Fax: (92-42) 35913056Email: [email protected] Website:
www.alhudacibe.com