takaful

TakafulTakaful

Insurance – the Islamic Way

A Presentation by:

Capt. M. Jamil Akhtar Khan ACII, MCIT, Master Mariner

Outline of PresentationOutline of Presentation

Introduction to TakafulIntroduction to Takaful Objections to Conventional InsuranceObjections to Conventional Insurance Difference b/w Conventional Insurance & Difference b/w Conventional Insurance &

Takaful Takaful Misconceptions about TakafulMisconceptions about Takaful Takaful Through Time Takaful Through Time Takaful Worldwide Takaful Worldwide Takaful ModelsTakaful Models Takaful ProductsTakaful Products Takaful Accounting Takaful Accounting ReTakafulReTakaful Foundations of Takaful in PakistanFoundations of Takaful in Pakistan Takaful Prospects in PakistanTakaful Prospects in Pakistan

Introduction to Introduction to TakafulTakaful

Takaful comes from the Arabic root-Takaful comes from the Arabic root-word ‘kafala’- guarantee.word ‘kafala’- guarantee.

Takaful means mutual protection and Takaful means mutual protection and joint guarantee.joint guarantee.

Operationally takaful refers to Operationally takaful refers to participants mutually contributing to participants mutually contributing to the same fund withthe same fund with

the purpose of having mutual the purpose of having mutual indemnity in indemnity in

the case of peril or loss.the case of peril or loss.

Meaning of TakafulMeaning of Takaful

Reference - Al Quran:Reference - Al Quran:

‘‘Help (ta awan) one another in Help (ta awan) one another in furthering virtue (birr) and Allah furthering virtue (birr) and Allah consciousness (taqwa) and do not consciousness (taqwa) and do not help one another in furthering evil help one another in furthering evil and enmity” and enmity” al maidah: verse 2 (5:2)al maidah: verse 2 (5:2)

Takaful is a form of mutual help Takaful is a form of mutual help (ta’awun) in furthering good/virtue (ta’awun) in furthering good/virtue by helping others who are in need / by helping others who are in need / in hardship in hardship

Reference – Hadith:Reference – Hadith: ““tie the camel first, then submit tie the camel first, then submit

(tawakkal) to the will of Allah”(tawakkal) to the will of Allah”

The hadith implied a strategy to The hadith implied a strategy to mitigate/reduce risk.mitigate/reduce risk.

Takaful provides a strategy of risk Takaful provides a strategy of risk mitigation/reduction by virtue of mitigation/reduction by virtue of collective risk taking that distributes collective risk taking that distributes risks and losses to large numbers of risks and losses to large numbers of participants. This mitigates the participants. This mitigates the otherwise very damaging losses, if otherwise very damaging losses, if borne individually. borne individually.

Origins of TakafulOrigins of Takaful

Members of the first Islamic community Members of the first Islamic community 14 centuries ago practiced successful 14 centuries ago practiced successful schemes of co-operative risk sharing. schemes of co-operative risk sharing.

Early precursors were developed in Early precursors were developed in response to perils and risks associated response to perils and risks associated with long-distance trade via caravans with long-distance trade via caravans or sea voyage and included:or sea voyage and included:

Hilf (Hilf (undertaking)undertaking) Aaqila (Aaqila (pooling of resources for arranging pooling of resources for arranging

payment of blood money) payment of blood money) Damaan khatar al tarik Damaan khatar al tarik (surety)(surety)

…… …… origins of Takafulorigins of Takaful

In the first constitution in Madinah of 622 In the first constitution in Madinah of 622 CE, there were codified references to social CE, there were codified references to social insurance relying upon practices like:insurance relying upon practices like:

Al – diyah and Al – aqila Al – diyah and Al – aqila (wergild or blood money (wergild or blood money to rescue accused in accidental killing).to rescue accused in accidental killing).

Fidyah Fidyah (ransom for prisoners of war)(ransom for prisoners of war) Dawania – Mutual indemnification amongst Dawania – Mutual indemnification amongst

officers working in the same department during officers working in the same department during the rule of the 2the rule of the 2ndnd Caliph Umar Ibn Al Khattab. Caliph Umar Ibn Al Khattab.

Cooperative schemes to aid the needy, ill and Cooperative schemes to aid the needy, ill and poor.poor.

Judicial Opinions and Judicial Opinions and Fatwas confirming validity Fatwas confirming validity

of Takafulof Takaful Fatwa issued by Higher Council of Fatwa issued by Higher Council of

Saudi Arabia in 1397 AH. Saudi Arabia in 1397 AH. Fatwa Issued by the Fiqh Council of Fatwa Issued by the Fiqh Council of

Muslim World League in 1398 AH. Muslim World League in 1398 AH. Fatwa issued by the Fiqh Council of Fatwa issued by the Fiqh Council of

the OIC in 1405 AH. the OIC in 1405 AH. Approval of the Grand Counsel of Approval of the Grand Counsel of

Islamic scholars in Makkah, Maja Al – Islamic scholars in Makkah, Maja Al – Fiqh, in 1985.Fiqh, in 1985.

Takaful – Regulatory Takaful – Regulatory FrameworkFramework

Takaful Act – 1984 of Malaysia.Takaful Act – 1984 of Malaysia. Saudi Arabian Monetary Agency Saudi Arabian Monetary Agency

(SAMA) Regulations of Saudi Arabia - (SAMA) Regulations of Saudi Arabia - 2004.2004.

Bahrain Monetary Authority (BMA) Bahrain Monetary Authority (BMA) Rules – 2005.Rules – 2005.

Takaful Rules – 2005 of Pakistan.Takaful Rules – 2005 of Pakistan.

Basic Elements of TakafulBasic Elements of Takaful

Mutuality and cooperation. Mutuality and cooperation. Tabarru Tabarru (contribution)(contribution) Eliminates the elements of Gharrar, Maisir and Eliminates the elements of Gharrar, Maisir and

Riba.Riba. Wakalah/Modarabah basis of operations.Wakalah/Modarabah basis of operations. Joint Guarantee / Indemnity amongst Joint Guarantee / Indemnity amongst

participants – shared responsibility.participants – shared responsibility. Constitution of separate “Participants’ Takaful Constitution of separate “Participants’ Takaful

Fund”.Fund”. Constitution of “Shariah Advisory Board.” Constitution of “Shariah Advisory Board.” Investments as per Shariah.Investments as per Shariah.

Main drivers of TakafulMain drivers of Takaful

Piety (individual purification)Piety (individual purification) Brotherhood (mutual assistance)Brotherhood (mutual assistance) Charity (Tabarru or contribution)Charity (Tabarru or contribution) Mutual Guarantee Mutual Guarantee Community well-being as opposed to Community well-being as opposed to

profit maximization.profit maximization.

Objections to Objections to Conventional Conventional

InsuranceInsurance

Declaration by Shariah Declaration by Shariah scholars rendering scholars rendering

conventional insurance un-conventional insurance un-IslamicIslamic

Fatwa issued in Judicial Conference Fatwa issued in Judicial Conference held in Makkah in Shaban 1398 AH.held in Makkah in Shaban 1398 AH.

Verdict of Supreme Court of Egypt on Verdict of Supreme Court of Egypt on Dec. 27, 1926.Dec. 27, 1926.

Unanimous resolutions and fatwa by Unanimous resolutions and fatwa by Ulama in the Muslim League Ulama in the Muslim League Conference in Cairo in 1965.Conference in Cairo in 1965.

Unanimous decision by Muslim Unanimous decision by Muslim Scholars in seminar held in Morocco Scholars in seminar held in Morocco on May 6, 1972.on May 6, 1972.

Objections to Conventional Objections to Conventional InsuranceInsurance

Elements of:Elements of:• Uncertainty – Gharar Uncertainty – Gharar • Gambling – MaisirGambling – Maisir• Interest – RibaInterest – Riba• Risk Transfer MechanismRisk Transfer Mechanism• UW + Investment Profit belongs to the UW + Investment Profit belongs to the

CompanyCompany

Uncertainty – GhararUncertainty – Gharar Conventional insurance contract is basically Conventional insurance contract is basically

a contract of exchange (mu’awadat) i.e. a contract of exchange (mu’awadat) i.e. buying and selling whereby policy buying and selling whereby policy (indemnity) is sold as goods, with the (indemnity) is sold as goods, with the premium as the price or consideration.premium as the price or consideration.

The consideration must be certain for an The consideration must be certain for an exchange contract.exchange contract.

The amount to be paid is not known.The amount to be paid is not known. The time it will occur is not known.The time it will occur is not known. Thus, it involves an element of uncertainty Thus, it involves an element of uncertainty

in the subject matter of the insurance sales in the subject matter of the insurance sales contract, which renders its void under the contract, which renders its void under the Islamic law.Islamic law.

Gambling – MaisirGambling – Maisir

The insured loses the money paid for The insured loses the money paid for the premium when the insured event the premium when the insured event does not occur. does not occur.

The company will be in deficit if The company will be in deficit if claims are higher than premium.claims are higher than premium.

Interest – RibaInterest – Riba

“ …“ …. Allah has permitted trading and . Allah has permitted trading and forbidden riba” (Al Baqarah 2 : 275)forbidden riba” (Al Baqarah 2 : 275)

Insurance funds invested in financial Insurance funds invested in financial instruments which contain element instruments which contain element of Riba. of Riba.

Comparing Takaful to Conventional InsuranceComparing Takaful to Conventional Insurance

IssueIssue Conventional InsuranceConventional Insurance TakafulTakaful

Organization PrincipleOrganization Principle Profit for shareholdersProfit for shareholders Mutual for participantsMutual for participants

BasisBasis Risk TransferRisk Transfer Co-operative risk sharingCo-operative risk sharing

Value PropositionValue Proposition Profits maximizationProfits maximization Affordability and spiritualAffordability and spiritual

satisfactionsatisfaction

LawsLaws Secular/RegulationsSecular/Regulations Sharia plus regulationsSharia plus regulations

OwnershipOwnership ShareholdersShareholders ParticipantsParticipants

Management statusManagement status Company ManagementCompany Management OperatorOperator

Form of ContractForm of Contract Contract of Sale Contract of Sale Cooperative,Cooperative,

Islamic contracts of Wakala orIslamic contracts of Wakala or

Mudarbah with Tabar’ruMudarbah with Tabar’ru

(contributions)(contributions)

InvestmentsInvestments Interest basedInterest based Sharia compliant, Riba-freeSharia compliant, Riba-free

SurplusSurplus Shareholders’ accountShareholders’ account Participants’ accountParticipants’ account

Misconception – 1Misconception – 1

• Risk Protection (insurance) is against Risk Protection (insurance) is against TawakkuTawakkul (total l (total dependence upon Allah (SWT)).dependence upon Allah (SWT)).

ResponseResponse

• In a Hadith narrated by Anas bin Malik, one day Prophet In a Hadith narrated by Anas bin Malik, one day Prophet Muhammed (PBUH) noticed an Arab Bedouin leaving his Muhammed (PBUH) noticed an Arab Bedouin leaving his camel untied. He asked the Bedouin, “Why don’t you tie camel untied. He asked the Bedouin, “Why don’t you tie down your camel”?down your camel”?

The Bedouin answered, “I put my trust in Allah (SWT)”. The Bedouin answered, “I put my trust in Allah (SWT)”. To which the Prophet (SAW) replied, “Tie your camel first, To which the Prophet (SAW) replied, “Tie your camel first, then put your trust in Allah (SWT)”. <then put your trust in Allah (SWT)”. <Tirmidhi>Tirmidhi>

Misconceptions about Misconceptions about TakafulTakaful

. . . Misconceptions about . . . Misconceptions about TakafulTakaful


• All risk Protection (insurance) is Haram (prohibited)All risk Protection (insurance) is Haram (prohibited)

ResponseResponse

• Fiqh Council of World Muslim League resolution and Fiqh Fiqh Council of World Muslim League resolution and Fiqh Council of Organization of Islamic Conference in Jeddah Council of Organization of Islamic Conference in Jeddah resolved that, conventional insurance as presently resolved that, conventional insurance as presently practiced is Haram, and that, cooperative insurance practiced is Haram, and that, cooperative insurance (Takaful) is permissible and fully consistent with Shariah (Takaful) is permissible and fully consistent with Shariah principles.principles.



• All insurance contracts seek to maximize profits, which All insurance contracts seek to maximize profits, which takes benefits away from the policy holderstakes benefits away from the policy holders

ResponseResponse

• Takaful operators are mutual or cooperative entities and Takaful operators are mutual or cooperative entities and they aim for Community well being and self-sustaining they aim for Community well being and self-sustaining operations.operations.

• Under the Takaful Under the Takaful Wakalah Model, Wakalah Model, the surplus in the fund the surplus in the fund is returned entirely to the policy holders.is returned entirely to the policy holders.


Misconception - 4Misconception - 4

• All types of insurance are a form of Gambling or All types of insurance are a form of Gambling or Wagering, which is forbidden in IslamWagering, which is forbidden in Islam

ResponseResponse

• Risk or Uncertainty can be divided into two classes:Risk or Uncertainty can be divided into two classes:• Pure Risk (involves the possibility of loss or no loss)Pure Risk (involves the possibility of loss or no loss)• Speculative Risk (involves the possibility of loss, no Speculative Risk (involves the possibility of loss, no

loss or gain)loss or gain)

• Takaful insures only Takaful insures only Pure Risks and the claims are paid in Pure Risks and the claims are paid in the event of Loss to cover repairs, damage, replacement the event of Loss to cover repairs, damage, replacement of property, or an agreed fixed sum.of property, or an agreed fixed sum.

Takaful Through TimeTakaful Through Time

A chronology of A chronology of developmentsdevelopments

S. NO. EVENTS DATE

1Prophet Muhammad (PBUH) validated a system of community

self help and financial assistance which later developed into Takaful.

At the start of Hijri (During

the 7th Century CE)

2Unanimous decisions by Muslims & Fatwa issued by National

Religious Council of Malaysia.1972

3First International conference on Islamic Economics was held in

Makkah.1976

4Fatwa issued by Higher Council of Saudi Arabia in favour of

Islamic Insurance model.1977

5Development of Takaful in modern times by establishing the first

Takaful Company in Sudan.1979

6 First National Reinsurance in Sudan. 1979

…………. . Takaful Through TimeTakaful Through Time

S. NO. EVENTS DATE

7Establishment of The Islamic Arab Insurance Company in

Saudi Arabia which was later relocated in UAE.1979-80

8 Dar Al Mal Al Islami Trust, Switzerland. 1981

9 Saudi Islamic Takaful and Re-Takaful Company, Bahamas. 1983

10 Islamic Takaful Company in Luxembourg. 1983

11Development of Takaful in modern times by establishing the

first Takaful Company in Malaysia.1984

12Takaful Act, an act passed to provide for the registration and

regulation of Takaful business in Malaysia.1984


S. NO. EVENTS DATE

13Takaful Islamic Insurance and Takaful Islamic Re-Insurance

in Saudi Arabia and Bahrain respectively.1985

14Saudi Takaful Ltd., the first dedicated Re-Takaful in

Tunisia.1985

15International Cooperative & Mutual Insurance Federation

( ICMIF ) started interacting with Takaful operators in a proactive manner.

1990's

16 Takaful Bangunan IBB, Brunei Darussalam. 1993

17 PT Syarikat Takaful, Indonesia. 1994


S. NO. EVENTS DATE

18 Syarikat Takaful, Singapore. 1995

19 Islamic Insurance Company, Qatar. 1995

20ASEAN Takaful Group evolved into ASEAN Retakaful

International (ARIL) in Labuan, Malaysia.1997

21 Establishment of Dubai Takaful Insurance Company, UAE. 1997

22 Establishment of Trinidad-Tobago Takaful Friendly Society. 1999

23 Establishment of Amana Takaful in Sri Lanka. 1999


S. NO. EVENTS DATE

24A code of Ethics was developed for the Takaful Industry by

Takaful Malaysia and Takaful Nasional.2000

25 Al Aman Takaful, Lebanon. 2002

26Incorporation of Pak-Kuwait Takaful Company Ltd., the first

Islamic Insurance operator in Pakistan.2003

27International Takaful conference held in London to promote

Takaful business.2003

28A paper was published by Bahrain Monetary Agency (BMA)

which proposed rules to regulate the Takaful and ReTakaful industry.

2004

29Takaful Insurance forum organized by Egyptian Insurance

Supervisory Authority (EISA) was held for the recognition of a growing interest in Takaful scheme.

2005

30 SECP notifies Takaful Rules in Pakistan. 2005


Takaful WorldwideTakaful Worldwide The first ever Takaful company was The first ever Takaful company was

established in 1979 - the Islamic Insurance established in 1979 - the Islamic Insurance Company of Sudan. Company of Sudan.

70+ Takaful Companies in over 20 countries.70+ Takaful Companies in over 20 countries. Takaful premium is 0.1% (USD 3 Billion in Takaful premium is 0.1% (USD 3 Billion in

2004) of the Global insurance premium and 2004) of the Global insurance premium and is expected to increase to USD 12.5 Billion is expected to increase to USD 12.5 Billion by 2015.by 2015.

Average growth rate higher than Average growth rate higher than conventional insurance companies. conventional insurance companies.

Non – Muslims increasingly opting for Non – Muslims increasingly opting for Takaful products for commercial benefits.Takaful products for commercial benefits.

Takaful ModelsTakaful Models

Mudaraba ModelMudaraba Model

The surplus is shared between the The surplus is shared between the participants with a takaful operator. The participants with a takaful operator. The sharing of such profit (surplus) may be in sharing of such profit (surplus) may be in a ratio 5:5 , 6:4 etc. as mutually agreed a ratio 5:5 , 6:4 etc. as mutually agreed between the contracting parties. between the contracting parties. Generally, these risk sharing Generally, these risk sharing arrangements allow the takaful operator arrangements allow the takaful operator to share in the underwriting results from to share in the underwriting results from operations as well as the favourable operations as well as the favourable performance returns on invested performance returns on invested premiums. premiums.

Profits attributable

to Shareholders

Company’s Admin. & Mangt.

Expenses

Takaful Contribution

paid by Participant

General TakafulFund

General TakafulFund

Operational Cost ofTakaful

Surplus(Profit)

Participant’sShare

from Surplus

Company’s Share from

Surplus

Investment By

Company

Profit From

Investments

Company

Participant

Mudaraba Model

Wakala ModelWakala Model

Cooperative risk sharing occurs among Cooperative risk sharing occurs among participants where a takaful operator participants where a takaful operator earns a fee for services (as a Wakeel or earns a fee for services (as a Wakeel or Agent) and does not participate or a share Agent) and does not participate or a share in any underwriting results as these in any underwriting results as these belong to participants as surplus or belong to participants as surplus or deficit. Under the Al- Wakala model the deficit. Under the Al- Wakala model the operator may also charge a fund operator may also charge a fund management fee and performance management fee and performance incentive fee. incentive fee.

General TakafulFund

OperationalCost ofTakaful/

ReTakaful

Surplus(Profit)

SurplusDistribution

toParticipants

Participants’

Takaful Fund

Wakala Model

Takaful

Contribution

paid

by Participant

Company

(Capital)

Mudarib's’Share

of PTF’s Investment

Income

ManagementExpense

of the Company

Profit/Lossattributable toShareholders

WakalaFee

(30% to 35%)

ProfitFrom

Investments

InvestmentIncome

Reserves

Investment bythe Company

Investment Income Sharingon Mudaraba Basis

Wakala -Waqf ModelIt is a WAKALAH model with a separate legal entity of WAQF in-It is a WAKALAH model with a separate legal entity of WAQF in-

between.between.

The relationship of the participants and the operator is directly The relationship of the participants and the operator is directly with the WAQF fund. The operator is the ‘Wakeel’ of the fund and with the WAQF fund. The operator is the ‘Wakeel’ of the fund and the participants pay contribution to the WAQF fund by way of the participants pay contribution to the WAQF fund by way of Tabarru.Tabarru.

The contributions received would also be a part of this fund and The contributions received would also be a part of this fund and

he combined amount will be used for investment and the profits he combined amount will be used for investment and the profits earned would again be deposited into the same fund which also earned would again be deposited into the same fund which also eliminates the issue of Gharar.eliminates the issue of Gharar.

Losses to the participant are paid by the company from the same Losses to the participant are paid by the company from the same

fund.fund.

Operational expenses that are incurred for providing Takaful Operational expenses that are incurred for providing Takaful

services are also met from the same fund.services are also met from the same fund.

WAQF FundOperational

Cost ofTakaful/

ReTakaful

Surplus(Profit)

SurplusDistribution

toParticipants

Wakala-Waqf Model

Company

(Capital)

Mudarib's’Share

of PTF’s Investment

Income

ManagementExpense

of the Company

Profit/Lossattributable toShareholders

WakalaFee

(e.g. 30% to 35%)

InvestmentIncome

InvestmentIncome

Reserves

Investment bythe Company

Initial Donation

to create

WAQF Fund

Contribution

by

Participant

Investment Income Sharingon Mudaraba Basis

Models – The beauty of Islam lies Models – The beauty of Islam lies in itsin its

plurality & diversity … !plurality & diversity … !

Takaful ProductsTakaful Products

General TakafulGeneral Takaful – offers all kinds – offers all kinds of non-life risk coverages products of non-life risk coverages products like motor takaful, marine takaful, like motor takaful, marine takaful, fire takaful, home takaful, shop fire takaful, home takaful, shop takaful, etc. takaful, etc.

Family TakafulFamily Takaful – offers life – offers life coverage.coverage.

Banca-TakafulBanca-Takaful – tailored coverages – tailored coverages for banks. for banks.

Takaful AccountingTakaful Accounting Two separate accounts are created:Two separate accounts are created:

1. Participants’ Takaful Fund. 1. Participants’ Takaful Fund. 2. Shareholders’ Fund. 2. Shareholders’ Fund.

Separate Accounts are created for:Separate Accounts are created for:1. Operational activities. 1. Operational activities. 2. Investment activities.2. Investment activities.

Dual audit of all transactions:Dual audit of all transactions:1. Financial Auditors. 1. Financial Auditors. 2. Shariah Auditors. (criteria: Accounting & 2. Shariah Auditors. (criteria: Accounting &

AuditingAuditing Organization of Islamic Financial Organization of Islamic Financial

Institutions, AAOIFI).Institutions, AAOIFI).

P & L Account - Participants’ Takaful Fund

(Based on Wakala Fee @ 35% (say)(PKR)

ParticularsParticulars YearYear

Gross Written ContributionGross Written Contribution

300,000300,000

,000 ,000

Movement in UCRMovement in UCR

(60,000,(60,000,

000)000)

Wakala feeWakala fee

(105,00(105,000,000)0,000)

Total RevenuesTotal Revenues

135,000135,000

,000 ,000

LESS: LESS:

Claims Cost (Including IBNR Claims)Claims Cost (Including IBNR Claims)

(100,00(100,000,000)0,000)

Claims recoveredClaims recovered 65,000,65,000,

000 000

Retakaful CostRetakaful Cost (80,000,(80,000,

000)000)

Total ExpensesTotal Expenses

(115,00(115,000,000)0,000)

Underwriting resultUnderwriting result

20,000,20,000,

000 000

Investment IncomeInvestment Income

2,000,02,000,0

00 00

LESS: Modarib's Share (From Investment Income)LESS: Modarib's Share (From Investment Income)

(500,00(500,00

0)0)

Pre-Tax Profit/(Loss) Pre-Tax Profit/(Loss)

21,500,21,500,

000 000

P & L - Shareholders’ Fund

(Based on Wakala Fee @ 35% (say)(PKR)

ParticularsParticulars YearYear

Share Capital Share Capital 200,000,000 200,000,000

Wakala feeWakala fee 105,000,000 105,000,000

Modarib's ShareModarib's Share 500,000 500,000

Total RevenuesTotal Revenues 105,500,000 105,500,000

LESS:LESS:

Business acquisition cost (Commissions)Business acquisition cost (Commissions) (33,000,000)(33,000,000)

Administration and general expensesAdministration and general expenses (70,000,000)(70,000,000)

Total ExpensesTotal Expenses (103,000,000)(103,000,000)

Operating ProfitOperating Profit 2,500,000 2,500,000

Investment IncomeInvestment Income 20,000,000 20,000,000

Net profit / (loss) before taxationNet profit / (loss) before taxation 22,500,000 22,500,000

ReTakafulReTakaful Currently few ReTakaful companies worldwide Currently few ReTakaful companies worldwide

offering a relatively small capacity:offering a relatively small capacity: Sudan (1979) National Reinsurance. Sudan (1979) National Reinsurance. Sudan (1983) Sheikhan Takaful Company. Sudan (1983) Sheikhan Takaful Company. Bahamas (1983) Saudi Islamic Takaful and Bahamas (1983) Saudi Islamic Takaful and

ReTakaful Company.ReTakaful Company. Bahrain/Saudi Arabia (1985) Islamic Insurance Bahrain/Saudi Arabia (1985) Islamic Insurance

and Reinsurance Company. and Reinsurance Company. Tunisia (1985) B.E.S.T. ReTunisia (1985) B.E.S.T. Re Malaysia (1997) ASEAN ReTakaful Malaysia (1997) ASEAN ReTakaful

International.International. Dubai (2005) TakafulRe by ARIG. Dubai (2005) TakafulRe by ARIG. Lloyds of London to form a ReTakaful Lloyds of London to form a ReTakaful

Syndicate.Syndicate. SwissRe to form a separate ReTakaful PoolSwissRe to form a separate ReTakaful Pool MunichRe to form a separate ReTakaful PoolMunichRe to form a separate ReTakaful Pool Provision in Takaful Rules – 2005.Provision in Takaful Rules – 2005.

Foundations of Takaful in Foundations of Takaful in PakistanPakistan 19491949 - Declaration made in the Objectives Resolution - Declaration made in the Objectives Resolution

adopted by the Constituent Assembly of Pakistan adopted by the Constituent Assembly of Pakistan “Sovereign state of Pakistan is established to enable “Sovereign state of Pakistan is established to enable Muslims individually and collectively to order their lives Muslims individually and collectively to order their lives in accordance with the injunctions of the Holy Qur’an in accordance with the injunctions of the Holy Qur’an and Sunnah”.and Sunnah”.

19731973 - The Constitution of Pakistan declares Pakistan - The Constitution of Pakistan declares Pakistan as “Islamic Republic of Pakistan and Islam as the official as “Islamic Republic of Pakistan and Islam as the official religion of the state”. religion of the state”.

19851985 - Objectives Resolution was made ‘substantive’ - Objectives Resolution was made ‘substantive’ part of the constitution.part of the constitution.

19831983 to 1989 -to 1989 - The Council of Islamic Ideology held its The Council of Islamic Ideology held its sessions in order to survey the Islamic Insurance sessions in order to survey the Islamic Insurance System.System.

19921992 - The Council of Islamic Ideology submitted its - The Council of Islamic Ideology submitted its report on Islamic Insurance System.report on Islamic Insurance System.

20002000 - The Insurance Ordinance defines the term - The Insurance Ordinance defines the term “Takaful” in Section 2 and provides for establishment of “Takaful” in Section 2 and provides for establishment of Takaful companies in the country.Takaful companies in the country.

Sept., 2005Sept., 2005 - Takaful Rules notified . - Takaful Rules notified .

Takaful Prospects in Takaful Prospects in PakistanPakistan

97% Muslim population.97% Muslim population.

Demand for insurance increasing with increase Demand for insurance increasing with increase in per capita income.in per capita income.

Personal lines insurance business (leasing, Personal lines insurance business (leasing, health, Medicare) growing at a higher rate than health, Medicare) growing at a higher rate than other conventional classes.other conventional classes.

Islamic banking on sound footing with support Islamic banking on sound footing with support of the Govt.of the Govt.

ConclusionConclusion

Takaful defined. Takaful defined. Difference with conventional Difference with conventional

insurance.insurance. Takaful Models Takaful Models Takaful WorldwideTakaful Worldwide Prospects and Outlook.Prospects and Outlook.

Thank you for your Thank you for your attentionattention

takaful

Business

takaful takaful

takaful members

takaful objections

pakistanfoundations

takafulmeaning of takaful

pakistan takaful prospects

al khattab

maja al fiqh