Al-Mudharabah is the commercial profit-sharing contract between the provider or providers of funds for a business venture and the entrepreneur who actually conducts the business. The operation of takaful may thus be envisaged as the profit-sharing business venture between the takaful operator and the individual members of a group of participants who desire to reciprocally guarantee each other against a certain loss or damage that may be inflicted upon any one of them.
Thus it is necessary to emphasise at the outset that the takaful business as practiced in Malaysia is of the kind of cooperative takaful (al-takaful al-taawuni) participated by a group of members of the public for their own cause within the domain of the private sector.
