Takaful
Takaful and Actuarial Practices (TK2002)
1000490
Ahmad Azhar Bin Mohd Juwaidi
1000490
International Center for Education in Islamic Finance
This project paper is a partial fulfillment of Module TK2002 of
Certified Islamic Finance Professional (CIFP)
INCEIF
September 2013
1|Page
Takaful and Actuarial Practices (TK2002)
1000490
Question
Whilst the development of the takaful industry has been rapid many takaful operators fail to distinguish themselves from their insurance counterparts. Takaful does not have any USPs (unique selling propositions). Shariah compliant does not seem to have any brand value.
Critically examine these issues and discuss how a takaful operator can market itself successfully in the current competitive environment.
Answer
1. Introduction
Takaful is not a new phenomenon, despite the common view prevalent among many people. In fact, it was practiced by Arabs of Arabia before and after the arrival of Islam.
Islamic Scholars point to many different examples that range from pre-Islamic Bedouin practice to the time of the Prophet Muhammad’s (PBUH) life demonstrating that takaful was practiced by the Arab’s, at large, and Muslims and is, therefore, a legitimate Islamic financial practice.
Takaful can be translated as ‘shared responsibility’ and refers to the co-operative risk sharing. Takaful originated within the ancient Arab tribes as pooled liability that obliged those who committed offences against members of a different tribe to pay compensation to the victims or their heirs. This principle extended to many walks of life, including sea trade, in which participants contributed to a fund to cover anyone in a group who suffered mishaps on sea voyages.
However, it was not until 1979, in Sudan, that the first modern takaful company was set up. In 1985, the Grand Council of Islamic Scholars of the Organization of the Islamic
Conference formally allowed the use of takaful as an alternative
1000490
Ahmad Azhar Bin Mohd Juwaidi
1000490
International Center for Education in Islamic Finance
This project paper is a partial fulfillment of Module TK2002 of
Certified Islamic Finance Professional (CIFP)
INCEIF
September 2013
1|Page
Takaful and Actuarial Practices (TK2002)
1000490
Question
Whilst the development of the takaful industry has been rapid many takaful operators fail to distinguish themselves from their insurance counterparts. Takaful does not have any USPs (unique selling propositions). Shariah compliant does not seem to have any brand value.
Critically examine these issues and discuss how a takaful operator can market itself successfully in the current competitive environment.
Answer
1. Introduction
Takaful is not a new phenomenon, despite the common view prevalent among many people. In fact, it was practiced by Arabs of Arabia before and after the arrival of Islam.
Islamic Scholars point to many different examples that range from pre-Islamic Bedouin practice to the time of the Prophet Muhammad’s (PBUH) life demonstrating that takaful was practiced by the Arab’s, at large, and Muslims and is, therefore, a legitimate Islamic financial practice.
Takaful can be translated as ‘shared responsibility’ and refers to the co-operative risk sharing. Takaful originated within the ancient Arab tribes as pooled liability that obliged those who committed offences against members of a different tribe to pay compensation to the victims or their heirs. This principle extended to many walks of life, including sea trade, in which participants contributed to a fund to cover anyone in a group who suffered mishaps on sea voyages.
However, it was not until 1979, in Sudan, that the first modern takaful company was set up. In 1985, the Grand Council of Islamic Scholars of the Organization of the Islamic
Conference formally allowed the use of takaful as an alternative
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