Takaful and Islamic Cooperative Finance
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Takaful and Islamic Cooperative Finance Challenges and Opportunities

Challenges and Opportunities

  • Studies in Islamic Finance, Accounting and Governance series

Edited by S. Nazim Ali and Shariq Nisar

Islamic finance distinguishes itself from conventional finance with its strong emphasis on the moral consequences of financial transactions; prohibiting interest, excessive uncertainty, and finance of harmful business. When it comes to risk mitigation, it is unique in its risk sharing approach.
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Chapter 7: Towards a watershed in takaful dispute resolution: from litigation to effective dispute management

Umar A. Oseni

Abstract

Recent years have seen significant progress in the takaful industry with a strong double-digit growth of 16 per cent amounting to US$11 billion global gross takaful contributions in 2012. In order to sustain this growth and enrich its legal landscape, there is a need to examine the feasibility of effective dispute resolution mechanisms for the takaful industry while drawing some lessons from the conventional insurance industry. This does not undermine the significance of the relevance of Islamic law in designing suitable models of enforceable dispute resolution mechanisms. While using qualitative legal analysis that predominantly adopts content analysis of current trends in takaful and insurance litigation, the chapter finds that effective dispute resolution processes such as arbitration and mediation could be adapted to suit the specific needs of shari’ah dispute resolution in the takaful industry. This would allow for cost-effective settlements that will guarantee existing business relationship among the parties and prevent unnecessary bad publicity in a highly competitive global insurance industry.

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