Journal of Islamic Business and Management

Takāful: Concept, Underwriting Scope and Risk Management

Azman Mohd Noor
Published online: June 2013
DOI: 10.1111/jibm

Akin to the growth of Islamic banks, takāful has been introduced in the market to replace conventional insurance. This is in response to the market demand of the large Muslim communities around the globe to comply to their religious teaching and to live a life adhering to the divine law (Sharī‘ah). Takāful, which in principle is based on tabarru‘ (gratuitous contribution and donation) used mudarabah model in the beginning. The new trend has been towards adopting wakālah model instead of mudarabah. Waqf, another model which combines both wakālah and mudarabah has also been introduced. Takāful operators are offering investment products apart from their core business in providing protection. Takāful seems to be similar to conventional insurance in the sense of providing protection, indemnity and coverage for the insured risks, but is different in many perspectives. This paper aims at describing takāful models and related few selected Sharī‘ah issue in underwriting scope and managing risks from Sharī‘ah perspective .


Takāful Models; Tabarru‘; Waqf; Mudarabah; Wakālah; Underwriting; Surrender Value.