Takaful (arab. - mutual guarantee).
Most Islamic scholars regard conventional insurance as not complying with Shariah for it contains element of gharar (uncertainty) and riba (usury). The element of gharar in insurance contract prevails the degree permissible from the point of view of Shariah. The thing is there is uncertainty about the terms of the contract (those about term and subject-matter) at least for the insurer. Moreover, the insurer is not sure whether the money he paid as installments will be used in operations that are permitted by Shariah or not. The element of riba occurs when an interest provided by certain types of insurance is being paid. It can also appear when the premium amount is used in operations connected with collection or payment of interest, or in other operations impermissible from the point of view of Shariah. The main parties to takaful contract are the participant and the operator. The following theses underlie the concept of Islamic insurance.
1) Takaful has no contact with excessive gharar (al-gharar al-kathir) since the part of installments paid by each participant is considered to be a donation or voluntary contribution that is directed to a special fund. Should an insured accident occur, this fund is used to provide the compensation. In addition to paying the money necessary to cover the sum of the damage the participant can be sure he will be paid the income from the other part of installments on basis of the PLS (profit and loss sharing) system regardless of occurrence of insurance accident. The operator is aware of the amount of his share that the terms of a contract provide a certain amount of the share agreed upon by the parties to a contract. The amount of income depends exclusively on the operations carried out by insurance company and does not appear to be a fixed interest that does not depend on income. Life, health and property of a man is believed to be in the possession of Allah, so it is quite natural from the point of Islam that there is uncertainty about what is going to happen to them:
"Verily the knowledge of the Hour is with Allah (alone). It is He who sends down rain, and He Who knows what is in the wombs. Nor does any one know what it is that he will earn on the morrow" (surat Lukman, 34);
2) The installments or a part of them paid by the participant can be used in operations on condition that those operations do not contradict with Shariah. In case an operation of a takaful company contains the elements, prohibited under Shariah it will be acknowledged void and null. Articles and memorandum of agreement of every takaful company provide that investment activity of a company is to be in compliance with Shariah principles;
3) The main purpose of Islamic insurance is to guarantee or cover participants’ risks. Parties to a contract of Islamic insurance (takaful) can be either a warrantor or a warrantee;
4) Takaful business is based on a very special mechanism of profit and loss sharing called mudarhabah. This mechanism helps to avoid the element of riba as it is, which is inherent to conventional insurance;
5) Shariah Supervisory Board is to supervise business activity of takaful companies. The main goal of Shariah Supervisory Board is to decide whether company’s new products and operations comply with Shariah or not;
6) All parties to a contract must conduct in accordance to the utmost good faith principle;
7) Insurers are entitled to offer their representatives for positions in the Board of Directors;
8) Takaful unlike conventional insurance prevents from violating the terms of inheritance prescribed by Shariah.
To who are the services of takaful companies can be addressed?
Faithful Russians who follow provisions prescribed by their religions concerning economical relations have no opportunity to realize their skills and knowledge in the economy of modern Russia. At the same time as the Gallup polls show labor qualities of this very people are below the average.
We should not excogitate new mechanism to help faithful people to realize themselves in modern economy. We should resort to the ones already existing that are of a good account in different countries in the world.
As a result the faithful will become active participants of modern economic life, and the economy itself will acquire new means that has not been used before for moral and ethic reasons.
The conception of Islamic insurance (takaful) does not contradict but in fact respond to what representatives of different confessions think of ethic conduct in the sphere of economy.
For this reason most clients of certain Islamic insurance companies in the world are non-Muslims.
Bekkin R.I., Ph. D. in Law,
Moscow State University of International Relations,
Ministry of Foreign Affairs of Russian Federation
Most Islamic scholars regard conventional insurance as not complying with Shariah for it contains element of gharar (uncertainty) and riba (usury). The element of gharar in insurance contract prevails the degree permissible from the point of view of Shariah. The thing is there is uncertainty about the terms of the contract (those about term and subject-matter) at least for the insurer. Moreover, the insurer is not sure whether the money he paid as installments will be used in operations that are permitted by Shariah or not. The element of riba occurs when an interest provided by certain types of insurance is being paid. It can also appear when the premium amount is used in operations connected with collection or payment of interest, or in other operations impermissible from the point of view of Shariah. The main parties to takaful contract are the participant and the operator. The following theses underlie the concept of Islamic insurance.
1) Takaful has no contact with excessive gharar (al-gharar al-kathir) since the part of installments paid by each participant is considered to be a donation or voluntary contribution that is directed to a special fund. Should an insured accident occur, this fund is used to provide the compensation. In addition to paying the money necessary to cover the sum of the damage the participant can be sure he will be paid the income from the other part of installments on basis of the PLS (profit and loss sharing) system regardless of occurrence of insurance accident. The operator is aware of the amount of his share that the terms of a contract provide a certain amount of the share agreed upon by the parties to a contract. The amount of income depends exclusively on the operations carried out by insurance company and does not appear to be a fixed interest that does not depend on income. Life, health and property of a man is believed to be in the possession of Allah, so it is quite natural from the point of Islam that there is uncertainty about what is going to happen to them:
"Verily the knowledge of the Hour is with Allah (alone). It is He who sends down rain, and He Who knows what is in the wombs. Nor does any one know what it is that he will earn on the morrow" (surat Lukman, 34);
2) The installments or a part of them paid by the participant can be used in operations on condition that those operations do not contradict with Shariah. In case an operation of a takaful company contains the elements, prohibited under Shariah it will be acknowledged void and null. Articles and memorandum of agreement of every takaful company provide that investment activity of a company is to be in compliance with Shariah principles;
3) The main purpose of Islamic insurance is to guarantee or cover participants’ risks. Parties to a contract of Islamic insurance (takaful) can be either a warrantor or a warrantee;
4) Takaful business is based on a very special mechanism of profit and loss sharing called mudarhabah. This mechanism helps to avoid the element of riba as it is, which is inherent to conventional insurance;
5) Shariah Supervisory Board is to supervise business activity of takaful companies. The main goal of Shariah Supervisory Board is to decide whether company’s new products and operations comply with Shariah or not;
6) All parties to a contract must conduct in accordance to the utmost good faith principle;
7) Insurers are entitled to offer their representatives for positions in the Board of Directors;
8) Takaful unlike conventional insurance prevents from violating the terms of inheritance prescribed by Shariah.
To who are the services of takaful companies can be addressed?
Faithful Russians who follow provisions prescribed by their religions concerning economical relations have no opportunity to realize their skills and knowledge in the economy of modern Russia. At the same time as the Gallup polls show labor qualities of this very people are below the average.
We should not excogitate new mechanism to help faithful people to realize themselves in modern economy. We should resort to the ones already existing that are of a good account in different countries in the world.
As a result the faithful will become active participants of modern economic life, and the economy itself will acquire new means that has not been used before for moral and ethic reasons.
The conception of Islamic insurance (takaful) does not contradict but in fact respond to what representatives of different confessions think of ethic conduct in the sphere of economy.
For this reason most clients of certain Islamic insurance companies in the world are non-Muslims.
Bekkin R.I., Ph. D. in Law,
Moscow State University of International Relations,
Ministry of Foreign Affairs of Russian Federation
