Page 18 - Insurance Times February 2016
P. 18
Cover Story
The Takaful
Insurance And
Reinsurance
The Islamic Insurance
And Reinsurance
Introduction: In 1985 the Majma al-Fiqh al Islami reached an agreement
about the Islamic Insurance.
Followers of Islam all over the world constitute around 25% The Conventional Insurance contains GHARAR i.e. un-
of the Global Population. MENA region i.e. Malaysia, Indo-
nesia, Saudi Arabia, East Africa and Southern Africa etc. are certainty, RIBA i.e. receipt of interest, HARAM i.e. in-
markets where Muslim population impacts growth of Insur- vestment in alcohol, gambling, pornography etc. There
ance which is Shariah Compliant. As compared to emerging is excessive risk taking i.e. MAYSIR. All these make Con-
Markets of Non- Muslim regions growth rate of Insurance ventional Insurance non-compliant with Shariah. Thus
Premiums is 1.3% of GDP in Muslim Populated Markets. Conventional Insurance is forbidden in Islam.
Prophet Mohammad's Revelations by Allah plus 'SUNNAH' Co-Operative Insurances are according to the Islamic
i.e. sayings and actions by the Prophet constitutes the Is- traditions built on the Principles Of Voluntary Contribu-
lamic Laws. tion and Mutual Co-operation. Such Insurances and
Reinsurances are Shariah compliant. This is called
The Islamic Jurists interpret these from time to time but TAKAFUL which means 'To Guarantee Each Other. The
they never contradict the Quran and the Sunnah in their Arabic verb 'KAFLA' means to help, to assist, to take care
interpretations. of one's needs.
Such is the Body of the ISLAMIC LAW i.e.THE SHARIAH. The Takaful operations are based on the principles of
'Shared Responsibility', 'Brotherhood', 'Solidarity' and
The FIQH-AL-MU AMLAT is the arm of the Islamic jurispru- 'Mutual Co-Operations'. All these provide financial se-
dence. It decides which of the economic transactions are curity against a defined RISK with Joint Indemnity.
'Shariah Compliant'.
Profit sharing by Insurer and shareholder, Gambling in
share market and Interest earning are against Islam. The
Takaful Co-operative Insurance is against all these i.e.
K. L. Naik GHARAR: Profit earning out of Premiums when Policy holder
gets nothing if there is no Loss Recovery.
Managing Director
Xperitus Insurance Brokers Pvt.Ltd MAYSIR: (Gambling) : Policy holders gaining nothing when
there are no loss recoveries and Insurers losing when Losses
18 The Insurance Times, February 2016
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