ISLAMIC INSURANCE TAKAFUL 2024

TYPES OF ISLAMIC INSURANCE

Halal insurance offers financial coverage on the basis of solidarity in all areas of daily life for the individual, his family or the company. Islamic insurance takes the following forms:

Types of Shariah-Compliant Insurances (Takaful)

• Family Takaful: Equivalent to life insurance in conventional systems, it provides financial security to family members in the event of the contributor's demise or disability.
• Health Takaful: Provides coverage for medical expenses. Beneficiaries can claim for hospitalization, surgeries, and other medical services.
• Motor Takaful: Similar to car insurance, it covers damages to the vehicle, third-party liabilities, and injuries due to accidents.
• Property Takaful: Offers coverage against damages to properties due to incidents like fires, thefts, or natural calamities.
• Travel Takaful: Provides coverage against travel-related risks like flight cancellations, loss of baggage, or medical emergencies while traveling.
• Marine Takaful: Insures goods, cargo, and other interests against maritime risks during transport.
• Education Takaful: A savings plan to fund future educational needs, ensuring continued education in case the contributor passes away or faces disability.
• General Takaful: A broad category covering various non-life insurance needs, including liabilities, machinery breakdowns, and more.
• Retirement Takaful: Similar to pension plans, it allows contributors to save for their retirement while ensuring their families have financial support if the contributor passes away before retirement.
• Agricultural Takaful: Provides coverage against agricultural risks like crop failures, livestock losses, etc.

HOW ARE TAKAFUL PREMIUMS DETERMINED?

Determining Takaful Premiums (Contributions)

• Risk Assessment:
  • Evaluation of the nature of the risk, potential loss magnitude, and the probability of the loss occurring.
  • Factors such as the driver's age, driving history, and the type of vehicle can influence contributions in motor Takaful.
• Type of Coverage:
  • Varied Takaful products have different coverage levels.
  • Broader coverage generally results in a higher contribution.
• Duration of Coverage:
  • The length of the Takaful agreement can influence the contribution amount.
  • Longer durations might have different annual contribution rates compared to short-term agreements.
• Operational and Reserves Costs:
  • Contributions factor in Takaful operators' operational costs.
  • Part of the contribution is allocated to a reserve pool (or Tabarru’ fund) from which claims are paid.
• Past Claims Data:
  • Operators analyze past claims data to anticipate future claims.
  • A high claim rate in a segment can result in higher contributions for new members in that segment.
• Investment Returns:
  • Contributions are influenced by expected returns on Shariah-compliant investments of the pooled funds.
  • Higher expected returns can reduce the necessary contributions.
• Underwriting Guidelines:
  • Takaful operators adhere to specific underwriting guidelines when determining contributions.
• Other Special Considerations:
  • Special conditions or riders in Takaful agreements can influence the contribution amount.

WHERE CAN I OBTAIN A SHARIA INSURANCE OR TAKAFUL?

Where to Obtain Sharia Insurance (Takaful)

• Local Islamic Banks:

  Many Islamic banks have a Takaful division or are affiliated with a Takaful provider.

• Specialized Takaful Providers:

  There are insurance companies that exclusively offer Takaful products.

• International Insurance Companies:

  Some global insurance companies offer Takaful products in regions with significant Muslim populations.

• Online Takaful Platforms:

  With the advent of technology, there are now online platforms and apps dedicated to offering Takaful products.

• Insurance Brokers:

  Some insurance brokers may have partnerships with Takaful providers and can help you find suitable Takaful coverage.

• Local Islamic Community Centers:

  Local mosques or Islamic centers might have information or contacts related to Takaful providers in the area.

WHAT IS RETAKAFUL ?

Retakaful is a way for any takaful insurer to reduces its risk of reimbursing large islamic insurance claims by insuring a party of its risk with another Takaful company. Retakaful is not different as resinsurance which is also applied within the conventioanl insurance industry.