Takaful and conventional insurance in Malaysia: an overview

Fatimah Muhammad Abdul Karim

QR Code Link :
Type :	Article
Subject :	HG Finance
ISSN :	2232-0032/eISSN 0128-0481
Main Author :	Fatimah Muhammad Abdul Karim
Additional Authors :	Jasri Jamal
Title :	Takaful and conventional insurance in Malaysia: an overview
Hits :	4

Place of Production :	Tanjong Malim
Publisher :	Fakulti Pengurusan dan Ekonomi
Year of Publication :	2012
Notes :	Vol. 2 (2012): Journal of Contemporary Issues and Thought (JCIT)
Corporate Name :	Perpustakaan Tuanku Bainun
PDF Full Text :	You have no permission to view this item.

Abstract : Perpustakaan Tuanku Bainun

In this paper the status of takaful and insurance in shari_ah and their operational mode were examined. To arrive at these findings and the discussions in this paper, reference was made to papers presented at various Islamic finance conferences, views and fatwas made by Islamic scholars and to some extent the sayings of Allah (S.W.T) and Prophet Muhammad (s.a.w) as carried in the Qur_an and Hadith, respectively. The basic concept of both takaful and insurance are viewed by many scholars as the same, in that the main objectives of both is that of providing protection against loss of properties and livelihood explained in Islam as `ikhtiar_. It is unanimously agreed that the differences between the two forms of insurance is the mode of operating them. While takaful is based on Shari_ah compliant principles for example paying premiums on the basis of tabarru and devoid of interest, it was identified that conventional insurance contains 3 Shari_ah non-compliant elements namely; gharar (uncertainty), riba (interest) and maysir (gambling) which makes it unlawful in Shari_ah. The differences in the operational modes of the two are highlighted and the conflicting points of conventional insurance with the Shari_ah are addressed. Keywords Takaful, insurance, Shari_ah compliance, operational models.

References

Chishti, M. A.: “Takaful Vis-à-Vis Mutual”, Insurance Journal Jan/Mar. 2004.

Khan, Zulfiqar Ali: “An Economic Review of Insurance Ordinance 2000” Research Paper at

Economics Department, University of the Punjab, Lahore, Pakistan.

Siddiqui, Muhammad Nejatullah, Professor: “Evolution of Islamic Banking and Insurance as

Systems Rooted in Ethics” read at the College of Insurance, New York in Takaful Forum,

April 26, 2000.

‘Aqilah’, in Hughes, Thomas Patrick, Dictionary of Islam, Cosmo Publication, New Delhi,

India, 1982.

Ikram Shakir; “Tomorrow’s Takaful Products”, in New Horizon, 66: 1997, p. 5

See al-Qura’n, Surah al-Maidah, 5:2; also the Takaful Act 1984, at S. 2

“Islamic Insurance in Asia: activities, problems and prospects”, in Insurance journal, Vol. 50,

1999, page 89 at 92.

Engku Rabiah A.E A and Hassan Scott P.O (2008). Essential guide to Takafu (Islamic Insurance)

1st edition. CERT publications Kuala Lumpur Malaysia. Pp 3-45

Khandia, Abdur Rahman: “Takaful An Insurance System Based on Principles of Shari’ah (Al-

Mudarba Model)”, Insurance Journal Jul/Sept. 2003.

Khan, Ahmad Ali: “Difference Between Islamic and Conventional Insurance”, Insurance

Journal Oct/Dec. 2003.

This material may be protected under Copyright Act which governs the making of photocopies or reproductions of copyrighted materials.
You may use the digitized material for private study, scholarship, or research.

Back to search page