The Islamic Insurance and Conventional Insurance

0 Introduction Islamic insurance, also known as Takaful, is a product and service that guarantees and provides risk protection to consumers according to Islamic principles. Both Islamic insurance and traditional insurance use the same concept, using the concept of assurance. There are also differences between Takaful, which is based on Takaful and Islamic law, traditionally based on risk taking and speculation, and traditional insurance. Muslim jurists generally think that the concept of insurance does not contradict the principles of Islam and Muslims and Holy Prophets accept this concept.

The elements of traditional insurance are as follows. Gharar (uncertainty), Riba (profit) and Maisir (gamble) are contrary to the Muslim creed. Muslim scholars only oppose certain weaknesses of insurance contracts, not against insurance itself (these weaknesses make insurance contracts unstable). That is why the Malaysian National Islamic Religious Commission issued fatwa in 1972, which is illegal because life insurance includes Gallar, Mysir, and Riba. Therefore, Takaful insurance attempts to remove all these aspects of traditional insurance and works under the guidance of Islamic law. According to Islamic law, the concept of tabarru will tolerate and validate transactions. It changes the basis of a contract from a bilateral exchange agreement (mu'awadat) to a one-sided charity contract.

Islamic insurance, also known as Takaful, is an emerging industry compared to traditional insurance. The origin of Takaful started in the 14th century, but Malaysia began to operate Takaful first in 1984. It is Syarikat Takaful Malaysia Bhd. (Dawood Yousef Taylor, 2005) Like traditional mutual insurance company in 1979, whether Sudan first introduced modern Islamic insurance based on cooperative model. However, in most countries including Malaysia and Saudi Arabia, a tacaugh business model was introduced after that. (IFSB and IAIS, 2006)