KULIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES
PRINCIPLES AND PRACTICES OF TAKAFUL AND RETAKAFUL
PERMISSIBLE RISK IN TAKAFUL
ASYRAF ARIF BIN HUSSAIN 1223843
MUHAMMAD ARIF BIN AZMI 1222281
ASSOCIATION PROFESSOR DR NURDIANAWATI IRWANI ABDULLAH
TABLES OF CONTENT
BACKGROUND OF STUDY
MEANING OF RISK
SHARIAH STOCK SCREENING
FACTORS AFFECTING RISK RATING
PERMISSIBLE RISK AND NON-PERMISSIBLE RISK
PROPERTY INSURANCE TAKAFUL COVERAGE PLAN
ISSUES ON THE PERMISSIBLE RISK IN TAKAFUL
BACKGROUND OF STUDY
Although many researches done to overcome the issues in Takaful, there are still arises the issue of permissible risks in Takaful. The famous issue regarding permissible risks in Takaful is whether the risks that will accept by Takaful operator are the same as in conventional insurance or not. There is also a question whether Takaful can cover the risks from mixed activities such as hotels, entertainment and so on. Because of lack of information and study, there is also the perception among many Muslims on whether insurance is permissible under Islam tenet with regards to the key issues of Shariah compliance and purification. Furthermore, the concept of Takaful still could not fully understand by some Takaful operator. The question that still lies in many Muslims is “what is the difference between Takaful and insurance”. In simple words, it can be said that the concept of Takaful is still hazy to some Takaful operator. Therefore, the purpose of this study is to help people to clarify some issues regarding Takaful especially permissible risks in Takaful. The problem that led us to do research in this topic is that all risks in Takaful are permissible according to Shariah? This review will help to provide some insight about Takaful and conventional insurance. It will focus on comparison between risks in both Takaful and conventional insurance, screening process, risk on property, and so on.
MEANING OF RISK
The basic idea of Takaful is mutual cooperation to protect any of the members from unexpected future material risk. For example, if one of the members experience fire in their house which will damage their property, Takaful will help the member by using Takaful fund contributed by all members as basic element in Takaful is mutual indemnity.1 In the world that we live now, many unexpected thing can happen, include the one that can give damage or harm to us. In other words, there are many risks that one has to face in their life since the moment they were born until they die. For example, since we were born, we may face the risk of sickness, risk of death, risk of involving in car accident, risk of natural hazards and so on. Actually, risk can be classified into pure risk and speculative risk. Pure risk is a situation where there is a chance to loss or not loss. It is unavoidable. For example pure risk includes death, illness or accident. This is the risk which everyone must face in business. On the other hand, speculative risk can be defined as a category when the risk is taken; there are possibilities of loss or gain. Speculative risks can be said as gambles. All speculative risks decision is made as conscious choice and that means it is controllable. Examples of speculative risks are gambling and investment of stock. Therefore, only pure risk is allowed in Takaful or insurance because the aim of Takaful is to help members who experience loss. As speculative risk is a gambling, it is strictly prohibited to take speculative risk in Takaful.
Risk as defined by Knechel, means the possibilities that the outcome of our efforts from a process will not achieve its goal. On the other hand, according to Rejda, risk management is a...
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