National church insurer hits back as ex-VP mounts takeover bid, plans Islamic insurance launch
What is Takaful Insurance?
Takaful represents a cooperative insurance model that aligns with Islamic principles, where participants pool their resources to safeguard against potential losses or damages. This system operates under strict adherence to Sharia, the Islamic religious law, which mandates mutual assistance and protection among members. The scope of Takaful includes coverage for health, life, and other general insurance requirements.
Introduced as a Sharia-compliant option, Takaful insurance counters the conventional insurance industry, which often conflicts with Islamic teachings against riba (interest), al-maisir (gambling), and al-gharar (excessive uncertainty).
Takaful insurance key insights
Takaful embodies a cooperative form of Islamic insurance with members contributing to a mutual fund instead of traditional premiums.
Governed by Sharia, it provides comprehensive insurance for health, life, and general needs.
Claims by members are compensated from the collective Takaful fund.
Exploring Takaful In Takaful agreements, all members pledge mutual guarantees and contribute financially to a collective fund, which is then used to support one another as needed. These contributions are tailored based on the individual’s coverage needs and specific circumstances. Takaful contracts detail the risks covered and the duration of coverage, akin to conventional insurance policies.
The administration and management of the Takaful fund are overseen by a Takaful operator who levies a fee to cover operational expenses such as marketing, underwriting, and claims processing.
Claims are paid from this fund, and any surpluses after accounting for future potential claims and other reserves are returned to the members, either as dividends, reductions in future contributions, or other distributions.
Operational guidelines for Islamic insurance companies
They must adhere to Islamic cooperative principles.
Transactions with only Islamic insurance and reinsurance entities are permissible for commissions.
Separate maintenance of funds for participants and shareholders is mandatory.
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