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PRESENTED FOR:
MDM AIMEE
PRESENTED BY:
FATIN NUR MAISARAH BT MOHD
GHAZALI
0933057
NAZRIAH BT JAINI
0933138
NUR KHALILAH BTE ABD RAHMAN
0933139

Lecture Outline
Concept & Definition
Mechanism & Operation
Products
Differences between Insurance and Takaful
Development and growth of Takaful in
Malaysia

Definition
From the Arabic language meaning
guaranteeing each other.
Individuals in the community jointly guarantee
themselves against loss and damages.
E.g. Individuals making charity donations to a
common fund from which they may each draw in
the event that they suffer loss to their houses or
livelihood.

Concept
Basis of Co-operation
Allah will always help his servant for as long as he help others. (Narrated by Imam
Ahmad and Imam Abu Daud)

Basis of Responsibility
The place of relationships and feelings of people with faith , between each
other, is just like the body; when one of its part is afflicted with pain, then the
rest of the body will be affected. (Narrated by Imam al-Bukhari and Imam
Muslim)

Basis of Mutual Protection

By my life, which is in Allahs power, nobody will enter Paradise if he does not protect his
neighbour who is in distress. (Narrated by Imam Ahmad)

Operation
Mainly four parties:
1. Participants
2. Operator
3. Insured
4. Beneficiary

Operation contd..
Participants Contribute to the mutual funds.
Insured Among the participants that face the
risk and are assisted by the funds.
Beneficiary Actually benefiting from the
funds.
Takaful operator Registered or licensed body
or corporation that manages the funds.

Mechanism
Policyholders co-operate among themselves for their
common good.
Every policyholders pays his subscription to help those that
need assistance.
Losses are divided and liabilities spread according to the
community pooling system.
Uncertainty is eliminated in respect of subscription and
compensation.
Does not derive advantage at the costs of others.
Therefore known as co-operative insurance.

Contracts of Takaful
Absence of
1. Riba (Usury)
2. Maysir (Gambling)
3. Gharar (Excessive risk or Uncertainty)

Takaful Operation in
Malaysia
Participants contribute a sum of money in a
common fund.
Fund used to mutually assist members against
a defined loss or damage.
Takaful operator manages the fund.
Takaful operator run the operation
commercially as business venture for profit.

Sources of income for

operator
Profit from the investment of its shareholders
funds;
Agency/Wakalah fee;
Share of investment profit of Takaful funds;

Underlying concepts
Takaful.
Tabarru donation, gift or contribution.
Mudharabah / Wakalah .

Products
Takaful Mysiswa
Takaful Mysinar
Takaful Myimpian

Differences between
Insurance and Takaful
ISSUES

TAKAFUL

OPERATION

- Al-Mudharabah financing

- Principle of interest

- Cash accounting
preferred

- Cash, accrual, deferred,

embedded value

- Paid from defined funds

under joint indemnity
borne by participants

- Paid from the fund

legally owned by the
company

- Exact specification of
profits

- No exact specification of
profits

- Spiritual sincerity

- Spiritual sincerity not

required

- Funds owned by
participants managed by
Takaful operators.

- Buy-Sale contract

ACCOUNTING
BENEFIT

BONUS
ELEMENT
CONTRACT

INSURANCE

Takaful development and

growth
Established alongside the establishment of Islamic Bank.
Governed under Takaful Act 1984.
First Takaful company established in 1985
Allow Muslim to have a Shariah compliant alternative.
Industry expected to grow by 15-20% annually.
As at 2007, total assets amounted to US$ 2.8 billion.

Conclusion
It is a profitable industry.
It is a way for Muslims to help each other.
Lack of awareness by Malaysian
Still many potential customers and beneficiary.