Takaful insurance in theory and practice

Islam attaches great importance to insurance, as an instrument of protection of the individual and the community, and considers it an indispensable element of the process of achieving socio-economic justice in society. Consequently, in the Islamic concept of insurance, the social component dominates...

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Bibliographic Details
Published inBankarstvo Vol. 50; no. 1; pp. 108 - 133
Main Authors Lekpek, Ahmedin, Ibrović, Semir
Format Journal Article
LanguageEnglish
Published Association of Serbian Banks 2021
Subjects
d47
insurance
islamic finance
mudarabah
mutual insurance
risk management
takaful
wakalah jel classification: g22
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Summary:Islam attaches great importance to insurance, as an instrument of protection of the individual and the community, and considers it an indispensable element of the process of achieving socio-economic justice in society. Consequently, in the Islamic concept of insurance, the social component dominates over the commercial component. However, requirements of the modern environment have made it necessary to have Shariah-acceptable commercial insurance. Given that conventional insurance models are largely Shariah non-compliant, Takaful insurance has been developed to meet the needs of individuals and institutions that want to be insured in accordance with Shariah principles. In this paper, we will analyze the process of evolution of Takaful insurance, its types and models, perform a comparative analysis of Takaful and conventional insurance, reviewing arguments in favor of Shariah specific nature of conventional insurance, and finally, list the challenges of implementing Takaful insurance in practice.
ISSN:1451-4354
2466-5495
DOI:10.5937/bankarstvo2101108L