Does the mutuality concept uphold in the practices of takaful industry?

• Main Authors: Mohamed Naim, Asmadi, Isa, Mohamad Yazid, Abdul Rahim, Ahmad Khilmy
• Format: Article
• Published: Islamic University Malaysia (IIUM) 2018
• Subjects: HJ Public Finance
• Online Access: http://repo.uum.edu.my/26203/; https://journals.iium.edu.my/shajarah/index.php/shaj/article/view/720
• Institution: Universiti Utara Malaysia

Even though the development of takaful industry is very encouraging and variety of takaful models have been implemented, the industry still faces a lot of issues and challenges especially in the Shari’ah and operational matters. This paper discusses the current development of takaful industry in Malaysia and highlights the major issues and challenges in developing a resilient takaful market especially in upholding the mutuality and cooperative concept. Interviews with several experts from the takaful industry and academician from several universities have been conducted to study their views on the discussed matters. The study found that existing takaful models inclined towards more business oriented in order to fulfill the expectation of shareholders. Various issues in existing practices such as wakalah fee, tabbaru’ issue, ownership of return and underwriting surplus issues were among the issues that lessened the spirit of mutuality in takaful. This paper also found that the major issues in existing takaful models derived from juristic difference among scholars. There are also efforts taken by several parties to harmonize these by going back to the basic of takaful, which are brotherhood, mutual assistance and cooperation.