Muslims cannot ignore the fact that they live, trade and communicate with open global systems, and they cannot ignore the need for banking and insurance.
Takaful is an Islamic Insurance concept governed by Islamic rules and regulations (Shariah). Islamic scholars feel that Muslims need a system which is governed by Islamic Laws so that they can compete with this fast moving world. This concept has been practised in various forms for over 1400 years.
Takaful has certain principles which govern this concept these are as follows:
" Policyholders cooperate among themselves for their common good.
" Every policyholder pays his subscription to help those that need assistance.
" Losses are divided and liabilities spread according to the community pooling system.
" Uncertainty is eliminated in respect of subscription and compensation.
" It does not derive advantage at the cost of others.
Basically it is based on the principle that members contribute certain sum of money to a common pool. Purpose of this is not profit-making but to follow the principle bear one another's burden. Commercial insurance is not allowed for Muslims as it involves Uncertainty and Riba (Interest).
However, Takaful in Pakistan is at its initial stages whereas commercial insurance had developed its strong roots in this economic world. As the economy of the world is on the verge of bankruptcy and all the economic systems of the west failed at this point, it is the time where we need an economic system which has stronger roots to pass through the recessions.
And Islamic economic system has all the qualities to pass through all the storms because this system revolves around the rules and guidelines provided by the Holy Quran which is the Book of God and as Takaful being its one of the products will help the economy to survive and save the people and the nation from committing a sin by involving themselves in interest-based insurance and interest-based economic systems.
The writer is a student of ACCA