Challenges and Opportunities
Studies in Islamic Finance, Accounting and Governance series
Edited by S. Nazim Ali and Shariq Nisar
Chapter 5: Critical shari’ah review of takaful structures: toward a better model
Conventional (commercial) insurance involves an intolerable magnitude of gharar (uncertainty), and hence its prohibition in shari’ah. In order to Islamize insurance, it needs to be reconstructed on a different basis so that the inherent uncertainty associated with the concept of insurance will not invalidate its contracts. This is thought to be doable only if the commutative nature (mu’awada) of insurance is converted into donation (tabarru); deeming the contributions of the policy holders as mutual donations, with the takaful company being only responsible for the administration of the takaful fund as well as the takaful operations. Nevertheless, the existing takaful structures, which supposedly adopt the said methodology, still have unresolved fiqh issues. These issues pertain to the underlying concept of takaful being genuinely of donation nature and also to the applications and practices of takaful being capable of substantially ascertaining their differences from those of the conventional insurance. The chapter scrutinizes the existing takaful structures and highlights their shortcomings in an attempt to outline a new sound model, with a special emphasis on its practicalities and applications.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.