THE ISLAMIC INSURANCE (Takaful) Takaful, which is known to be the alternative to normal or commercial insurance and is based on the

Islamic principles of social solidarity, cooperation and joint repayment of losees faced by the members. The basic principle is the joint agreement of the people who are willing to reimburse anyone who has faced a loss in a collective way (Mayasami et al, 1997). The main purpose of takaful under the system of Islam is to bring reimbursement to someone through has faced losses in bad times. There is a contract that helps to solve this purpose and the contract clearly enlists all the agreed upon criteria. Earning from any kind of profit is not what the main goal of this practice is, however sharing any profit is the acceptable if it is done (Maysami and Kwon, 1999). The main idea wqs started in the era of Prophet Mohammed in his era and the idea has been around since however, it was not established in a commercial perspective in different countries. The concept was based on Aqilah and cooperation that is mutually agreed upon (Klingmuller, 1969). Moving on the practice was established in many areas and was also made an obligatory practice in the times of the second Caliph, Saydina Omar (R. A .A). During the period of 14th to 17th century a Sufi Order of the Kazeeruniyya was made in port cities in Malabar and in China. This was an order that would serve the purpose of insurance for Marina companies. In 19th century, a Hanafi lawyer Ibn Abidin (1784 -1836) was one of the first Islamic scholar and he enlisted the meaning and the real concept and legalized the entity that a Takaful agency would have. He was also the first person who leaglised Insurance rather than leeping it as an obligatory practice (Klingmuller, 1969). In 1906, Muhammad Baqit Mufti of Egypt went ahead to legalise the concept of insurance and legalized the implicatrion nof it as well as per what was explained by Ibn Abidin. During the twentieth century, an Islamic juriost who was very well known called, Muhammad Abduh issued two fatwas stating that any insurance trabsaction insurance is the same as the concept of al-mudaraba financing technique, while the pther kind would be the one that is the same as the concept of the life insurance. The first effort that was made to make risk sharing a Islamic way ws conducted in the late 1970s. The first company that made the product available was called the Islamic Insurance Co. Ltd and was setup in Sudan in 1979. The company was so successful from its first year of business that it was able to share the profit they made at a rate of 5% to 8% to 10% from 1979 to 1981. Other companies also followed the example of the company in Sudan and setup companies in Islamic

countries and in countries that are not Islamic by their basis as well. In Pakistan the first company that offered Islamic Takaful was established in 1984.