Takaful is not a new or recent phenomenon, despite the common view prevalent among many
people. In fact it was practiced by the Arabs of Arabia before and after the advent of Islam.
Takaful comprises of shared responsibility, mutual protection and joint indemnity for a group of
people who agreed to enter to a Takaful contract. Since the beginning of the Islamic finance,
Takaful is practiced widely in the Arab and Muslim world.
But since Islamic Shariah law are universal, the Takaful contract attracted the non-muslim countries to extend and develop their understanding about the Islamic financial system in and its products like Takaful in particular Countries like UK with a Muslim population of 1.6 Million, which constitutes 2.8% of the total population, the demand for Takaful products in increasing in a very fast ratio.
In fact the prime minister David Cameron believes that Islamic finance is a good opportunity for
UK’s financial services industry as Islamic investment have soared by 150% in the past 7 years
and are expected to be pound 1.3 trillion next year(2) .
“I want London to stand alongside Dubai and Kuala Lumpur as one of the greatest capitals of Islamic Finance anywhere in the
In my review of Tahini Coleen’s article “Islamic insurance (Takaful): demand and supply in the
UK” I will answer questions like what is the purpose of this article? Why is it important to
investigate or examine the subject of the article, what are the methods the writes uses and
whether they are enough and accurate to generalize the whole idea?
In the review I will also suggest some measure and steps that the writer should have taken into
account for getting a more accurate and better participation from the Muslim community in UK.
As you will see in the coming pages I have listed and pointed out the positive and negative
aspects of the article. In order for the Islamic financial institutions providing Takaful product. I have suggested few ways by which these institutions can promote the idea in a more effective way that is reachable to all the Muslims and non-muslims as well.
Moreover for those banks which provide Islamic banking windows, a suggestion have been made
to allow them increase their customers, since most of the participants in the survey demanded
Takaful through bank.
And in the end I have written the conclusion of the article and some suggestions related to the
development and enhancement of the Takaful.
Literature review of Takaful
“A type of Islamic insurance, where members contribute money into a pooling system in
order to guarantee each other against loss or damage. Takaful branded insurance is based on
Shariah, Islamic religious law, and explains how it is the responsibility of individuals to
corporate and protect each other.” 4
“Takaful originates from the Arabic word kafalah, which means guaranteeing each other
or a joint guarantee. This concept is in line with the principles of compensation and shared
responsibilities among the community” 5
“ Takaful is a co-operative system of reimbursement in case of loss, paid to people and
companies concerned about hazards, compensated out of a fund to which they agree too donate
small regular contributions managed on behalf by a Takaful operator” 6
“Riba is translated usury Riba is forbidden in Islamic economic jurisprudence and
consider as a major sin. Simply unjust gains in trade or business, generally through exploitation”
One of the main advantages of this article is that it mentions the history of Takaful which is an
essential element for better understanding.
Mentioning the history and the emergence and growth
of Takaful in the modern world gives a wider picture for the people.
It would have been significant benefit if the writer would have mentioned and related few real stories and cases on
how the Takaful was practiced in the past, and then relate those stories to the current situation, as
a result of which the understanding of the people might increase.
While comparing the conventional insurance with the Islamic insurance Takaful, the writer
focused on pointing out the advantages of Takaful, rather than pointing out the disadvantages of
the harsh consequences of a conventional insurance company in case of any unplanned event’s
If the writer would have done the comparison in such a way, the result of the study
might change dramatically.
For instance, in Takaful we have the element of shared responsibility
whereby the profit and loss are shared between the insurer and the insured.
Where as in
conventional insurance system the whole burden is put on the insurer, whereby sometimes the
company might not be in a position to repay the losses.
So the company is forced to approach to
any fininaicial institution where from he can get loan to cover the losses.
- If put this in a bigger
picture and look into the whole economic system , we will find that one of the main cause of the
Global Financial Crises 2007-2008 was the insurance companies and the Rating agencies
Generalizing a concept by relying on simple and small statistics is not a good idea.
Tahini Coolen in her survey gets 177 completer responses where 68% of them are students. In a non-
Muslim country like UK, it is normal to say that the people and Muslims in specific are aware of the Islamic products provided.
This might mainly because being raised up in a society where the entire education system is conventional, there is no doubt to say that the people will be unaware of the Islamic insurance Takaful. - My suggestion to make this article more accurate, is to
educate the people to the extent that they differentiate between Takaful and the conventional
insurance systems, describe the advantages and disadvantages of both products.
The results would have been more accurate if the responses were taken based on a face to face
In another research conducted by Dar (2005). It was found that 83% of the Muslim population in
UK did not believe that these Islamic services are really Islamic (halal). Based on this fact we
can understand that the only unique selling point of Takaful is that t is Shariah compliant
Takaful operators need to develop this unique marketing strategies in order to attract
new customers and not to lose their current ones.
Banks like HSBC, Lloyds which provide Islamic banking services, need to provide Takaful,
since the majority of the respondents mentioned that they prefer to get Takaful through a bank.
In the current period, there are only two Takaful operators in the UK. Namely Muslim Insurance
Services (MIS 2010) and Salam Halal Insurance (SHI 2010). These two Takaful operators play a
significant role in promoting the idea and concept of Takaful.
Of the ways by which they can attract customers is to provide products that meet complex
insurance risks i.e. catastrophic risks. Another way would be to explain the importance and
advantages of such product. This would result in the attraction of the Muslims and non-muslims
Although Takaful has experienced rapid growth worldwide in many Islamic countries, it is still
in its early stages in the UK, this is mainly because of the reasons mentioned above.
This article would encourage the Takaful operators and the needs providing Islamic banking
services in the UK to develop Takaful products to target the rapid increase in Muslim population
in the UK and increase the demand for Islamic insurance products. Some promotion strategies
maybe needed to increase the customers’ awareness of the existing Takaful products and more
importantly to their compliance to the Shariah law.
EZAMSHAH ISLAMIC (2011) “ BASIC TAKAFUL BROKING HANDBOOK” IBFIM PAGE 23
2 BBC (2013) “CAMERSON UNVEILS ISLAMIC BOND PLAN” AVALIABLE AT BBC.CO.UK
3 ALJAZEERA (2013) “CAMERON: LONDON CAN BE A WORLD CAPITAL FOR ISLAMIC FINANCE” AVALIABLE AT
4 INVESTOPEDIA (2014) “TAKAFUL INSURANCE TERMINOLOGY” INVESTOPEDIA.COM
5 IIBI “ TAKAFUL ISLAMIC INSURANCE” ISLAMIC-BANKING.COM
6 AJMAL BHATTY, PRESIDENT AND CEO, TOKIE MARINE MIDDLE EAST, TAKAFUL SUMMIT 2011
7 WIKIPEDIA “ RIBA” EN.WIKIPEDIA.ORG
8 ARSI “MAYSIR(GAMBLING AND OTHER GAMES OF CHANCE) PUREISLAMICFINANCE.WORDPRESS.COM