Analysis of Tabarru` Principle in Takaful Contract: Malaysian Experience
Under Shariah law, conventional insurance is prohibited due to the elements of gharar, maysir and riba in its implementation. Instead, takaful was introduced to replace conventional insurance. In order to ensure that takaful operates within Shariah law, a takaful contract is developed based on the...
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| Main Authors: | , |
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| Format: | Conference or Workshop Item |
| Language: | English |
| Published: |
2010
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| Subjects: | |
| Online Access: | http://eprints.um.edu.my/3171/1/Analysis_of_Tabarru.pdf http://eprints.um.edu.my/3171/ |
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| Summary: | Under Shariah law, conventional insurance is prohibited due to the elements of gharar, maysir
and riba in its implementation. Instead, takaful was introduced to replace conventional insurance. In order to
ensure that takaful operates within Shariah law, a takaful contract is developed based on the concept of
tabarru`. Although the takaful industry has been around for the past 26 years in Malaysia, the type of
contract that should be applied in the creation of a tabarru` account has yet to be specified. The types of
contracts that can potentially be used include those created based on the principles of hibah, waqf, sadaqah
or any other similar tabarru`contracts. This paper argues that tabarru` contracts should use the sadaqah
principle. This argument is based on the nature of the sadaqah principle which does not have strict requisites
and conditions, unlike other tabarru` contracts. After suggesting the use of the sadaqah principle, this paper
analyses ways in which sadaqah can be applied in the takaful contract. The use of the sadaqah principle to
create tabarru` accounts, thus eliminating elements of interest, uncertainty and gambling is the central
argument addressed in this paper.
Keywords: takaful, tabarru`, sadaqah, Islamic finance, Islamic insurance |
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