An Analysis of Islamic Takaful Insurance – A Cooperative Insurance Mechanism

توضیح

Starting the 1970s and increasingly in the 1990s, Islamic countries and other countries with a significant Muslim population have encouraged the provision of financial services, including insurance, under Islamic principles. As a result, a number of Islamic insurance companies, called takaful insurers, have been established to provide Muslim individuals and businesses with insurance coverage both in the life and non-life sectors. These insurers are found not only in Islamic countries and other countries with a significant Muslim population. They also operate in North America, Australia and selected European countries. This type of modified cooperative insurance mechanism is expected to further influence the
supply of and demand for insurance in the Muslim community. Nevertheless, no thorough studies have been conducted yet regarding the application of Islamic principles into insurance and how this type of insurance arrangement works. Accordingly, this paper examines: (1) Islamic socioeconomic principles applied to insurance, especially regarding the concepts of uncertainty, interest and investment arrangements; (2) describes the basic structures of takaful life insurance, non-life insurance and reinsurance; (3) investigates takaful insurer operations in selected countries; and (4) discusses existing regulations as well as suggestions for better takaful insurance operations.