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DEVELOPMENT OF GLOBAL TAKAFUL MARKET

DEVELOPMENT OF GLOBAL TAKAFUL MARKET. MELECIO C. MALLILLIN Let's Listen to the Insurance Regulators and Experts September 7, 2012.

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DEVELOPMENT OF GLOBAL TAKAFUL MARKET

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  1. DEVELOPMENT OF GLOBAL TAKAFUL MARKET MELECIO C. MALLILLIN Let's Listen to the Insurance Regulators and Experts September 7, 2012

  2. TAKAFUL is an Islamic insurance concept which is grounded in Islamic MUAMALAT (Islamic Banking), observing the rules and regulations of Islamic law, some of which are based on the following fundamentals: Basis of Cooperation: Help one another in 'al-Birr' and in 'al-Taqwa' (virtue, righteousness and piety), but do not help another in sin and transgression; God will always help his servant for as long as he helps others; One true Muslim and another true Muslim are like buildings, whereby every part in it strengthens the other parts. Basis of Mutual Protection: By my life (which is in God's power), nobody will enter Paradise if he does not protect his neighbor who is in distress. The fundamentals underlying Takaful are very similar to cooperative and mutual principles, to the extent that the cooperative and mutual model is one that is accepted under Islamic law. Some Muslims believe that Insurance is not necessary, as society should help its victims. Others believe that Muslims should not ignore the fact that they live, trade and communicate with open global systems, and the need for banking and insurance. They believe in creating Muslim-friendly banking systems and a workable insurance framework by which Muslims can compete with non-Muslims in business and have coverage in daily life.

  3. TAKAFUL PRINCIPLES are as follows: • Policy holders cooperate among themselves for their common good; • Every policy holder pays his subscription to help those who need assistance; • Losses are divided and liabilities spread according to the community pooling system; • Uncertainty is eliminated concerning subscription and compensation; • It does not derive advantage at the cost of others.

  4. HOW DOES TAKAFUL DIFFER FROM COOPERATIVE INSURANCE AND PROPRIETARY INSURANCE?Takaful can be considered a Shari’a compliant form of conventional cooperative insurance….

  5. Note: Critics of the Mudarabamodel argue that in the cooperative framework, underwriting surplus is not considered a profit and the Takaful operator does not therefore have any right to it. Furthermore, the Mudarabacontract entitles the Takaful operator to a share in the underwriting surplus, but not to a share in any deficit.

  6. The Takaful industry is slowly expanding beyond its home markets.

  7. A list of multinationals with Takaful or Retakaful operations.

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