Arabic (تكافل) for an Islamic concept and practice which draws its basics and rules from the two supreme sources of shari’a (Islamic religious law), which are the Quran and Sunna. With takaful, a group of individuals assume a mutual responsibility, on a cooperative basis, towards guaranteeing each other against calamities, losses, damages, and generally unfavorable economic events. Takaful members contribute funds to establish a pool from which claims are paid or provided for.
Shari’a outlaws the concept of conventional insurance on the basis that it constitutes forbidden items like riba (interest), maysir (gambling) and gharar (excessive uncertainty). The global takaful industry is worth more than US 25 billion (2020 figures). It is also estimated to grow at 15% per annum, far outstripping the annual growth for conventional insurance.
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