Takaful Models and Global Practices

There is a global interest in Islamic finance in general and Takāful in particular. The main feature that differentiates Takāful services from conventional ones is Sharī‟ah compliance nature of these services. Investors are taking keen interest in this potential market as Muslims constitute about one fourth of the world population (Muslim population, 2006). To streamline operations of a Takāful company, management and Sharī‟ah experts have developed different operational models for Takāful business. Takāful model is the basis of the company operational activities. It provides conceptual framework for the operations of Takāful Company and sets a path for the flow of funds in the organization. All the transactions of the company business are carried out in the light of conceptual framework of Takāful model adopted by the company. A number of Takāful companies are successfully operating in Muslim and Arab countries and growing each year faster than their conventional counter parts. Many conventional insurance companies, showing their interest in Takāful, have opened Takāful windows to compete with Takāful companies. This research paper discusses different Takāful models being practised by Takāful operators across the world. The paper is mainly divided into two sections. First section discusses functioning and conceptual mechanism of Takāful models practised by Takāful operators across the world. Second section raises some fiqh related issues faced by Takāful operators practicing different Takāful models in different countries.