PRINCIPLE OF RISK MANAGEMENT AND INSURANCE
Fatin Syazana Binti Izuddin
Noraisyah Amirah Binti Mohd Shafie
Nur’Aqila Binti Mohamad Zabri 2012271324
| 1 – 2
| Takaful product : Takaful Malaysia
| 3 – 6
| Takaful Hero
| 7 – 11
| Takaful Ikhlas
| 12 – 15
INTRODUCTION TO TAKAFUL
Takaful is originates from Arabic word Kafalah, which means “guaranteeing each other” or “joint guarantee”. Takaful is commonly referred to Islamic insurance. The tabarru’ system is the main core of the takaful system making it free form uncertainty and gambling. Tabarru’ means donation, gift and contribution. Based on principle of mutuality and cooperation, encompassing the elements of shared responsibility, joint indemnity, common interest and solidarity. Each participant that needs protection must be present with the sincere intention to donate to other participants faced with difficulties. Therefore, Islamic insurance exists where each participant contributes into a fund that is used to support one another with each participant contributing sufficient amounts to cover expected claims. The objective of takaful is to pay a defined loss from a defined fund. Theoretically, Takaful is perceived as cooperative insurance, where members contribute a certain sum of money to a common pool. The purpose of this system is not profits but to uphold the principal of “bear another’s burden”. The principle of Takaful insurance are as follows:-
Policyholders cooperate among themselves for their common good. ii)
Every policyholder pays his subscription to help those that need assistance. iii)
Losses are divided and liabilities spread according to the community pooling system. iv)
Uncertainty is eliminated in respect of subscription and compensation. v)
It does not derive advantage at the cost of others.
Why conventional insurance is prohibited?
Conventional insurance involves the elements of gharar that is excessive uncertainty. It also have gambling or mavsir as the consequences of the presence of excessive uncertainty that rely on future outcomes. Other than that, conventional insurance also put interest or riba into practice in the investment activities. Conventional insurance companies are motivated by the desire for profit for the shareholders. Besides that, conventional system of insurance can be subject to exploitation. For example, it is possible to charge high premium especially in monopolistic situations with the full benefit of such over-pricing going to the company.
Syarikat Takaful Malaysia Berhad (Takaful Malaysia) was incorporated on the 29th of November 1984. The current authorized capital of Takaful Malaysia is RM500 million and paid-up capital is RM162.817 million. It commenced operation on the 22nd of July, 1985 prior to its official launching on the 2nd of August 1985 by the then Prime Minister of Malaysia, Tun Dr. Mahathir Mohamed. The incorporation of Takaful Malaysia was based on the recommendation of the “Task Force on the Study for the Establishment of an Islamic Insurance Company in Malaysia” (Task Force) set up by the Government of Malaysia in 1981. Takaful Malaysia was transformed into a public limited company on the 30th of July 1996. BIMB Holdings Berhad is the major shareholder with 65.22% stake in Takaful Malaysia. Syarikat Takaful Malaysia Berhad Model Mudharabah
The first Takaful Company in Malaysia, Syarikat Takaful Malaysia (STM) was established in 1985 as composite operation. It used the Mudharabah contract as the basis of its Takaful Model. The idea was based on the contractual relationship between the ‘capital provider’ and the ‘entrepreneur’ in the Mudharabah contract. The participant (policyholder) was designated as the capital...
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