A Glance on Shariah Basis of Takaful (Islamic Insurance)

Abstract

This is a doctrinal research on the Shariah basis of takaful (Islamic Insurance). The research reveals that that takaful has basis in ancient Arabia in the system of “Aqilah” which involves mutual assistance. It can also be traced down in the Sunnah of the Holy Prophet (peace and blessings of Allah upon him) and also his companions. Moreover, a study of the primary sources for Muslims (i.e. the Qur‟an and the Sunnah), indicates that members of the first Islamic community effectively applied systems of cooperative risk sharing, long before the beginning of takaful practices. Additionally, in takaful, contributions (premiums) are paid on donation (tabarru) basis, thus the element of gharar is totally avoided. Again, takaful is based on various transactions accepted by the Shariah. Essentially, the contemporary Islamic scholars mentioned that Mudarabah or wakalah or waqf or a combination of the three models is the most appropriate Islamic contracts which should be employed in managing takaful business. Furthermore, Islam does not prohibit accepting a good opinion from others, if it proves to be beneficial. Moreover, takaful shares same philosophy with insurance which is mutual cooperation between members for the sake of mutual cooperation and protection. The idea has been realized from the understanding of how Allah wants Muslims to cooperate in achieving the Ummah‟s interest. Takaful is an example of how Islamic Shariah can help to improve welfare of the Ummah and create new socioeconomic mechanism based on equity, justice and fair play.