Takaful

Presented by : Sadia Mona Presented to: Sir Kamran Khan Jauhar Degree College(B.B.S.Y.D.P)

Takaful:
My name is Sadia Mona.I am student of banking class 2.Today I am discussing about the topic Takaful.Before coming to my topic I want to highlight the banking system where Takaful fall. As we all know that we have two type of banking systems in Pakistan conventional banking Islamic banking In conventional banking we find the factor of interest and on the other hand Islamic banking system is Riba free. After very much debates this system came into exist so many renounced shariah scholars, lawyers and other commercial banks develop brand new products, which meet the requirement of todays complex financial world and yet remain within the bounds of shariah,like Modaraba,musharikah,murabaha,ijarah

Our Vision
The Company will strive to become the Takaful partner of choice in Pakistan catering to the financial protection, long term savings, retirement and financial planning needs of individuals, businesses, and the public sector, in full conformity with Shariah principles.

Our Mission
To be recognized as a reputable, profitable, Shariah driven Family Takaful operator offering innovative financial solutions to its clients through best in class talent, technology and distribution power.

Our Financial Credibility!

Registered with S.E.C.P. (May 16, 2008) Established with the Highest Paid-up Capital of Rs. 750 Million in Pakistan! Member of First Dawood Group (F.D.G.)! Re-Takaful Arrangement with Munich-Re (Malaysia) Sponsored by Renowned Business Organizations:

Gulf Capital Dubai Group

First Dawood

The Bank of Khyber

Group

Our Shariah Credibility

According to Takaful Rules 2005, any Takaful Operator like us, must have a Shariah Board with at least Three Competent Islamic Scholars to observe and guarantee the Shariah Compliance of whole operation! By Blessings of Allah, Our Shariah Board comprises of most and credible Islamic Scholars, like: respected

Professor Mufti Munib-ur-Rehman

Chairman Royat-e-Hilal Committee Pakistan Chairman Shariah Board (D.I.B & DFTL)

Mufti Syed Zahid Siraj

Mufti & Principal Al-Arqum Raiz-ul-uloom, Karachi Member Shariah Board (D.I.B. & DFTL)

Mufti Syed Sabir Hussain

Mufti & Mudaris Darul-uloom Amjadia, Karachi Member Shariah Board (D.I.B. & DFTL)

Our Associated Companies Under F.D.G.

BRR Group Started Modaraba Operations in 1985, and since then became one of the best with Highest paid up Capital in Pakistan of Rs. 780 Million!

BRR Guardian Modaraba

Capital Management Limited

Under FDG and its collaboration with Asian Development bank, It offers Asset management opportunities - assets risen over Rs. 5.12 Billion

First Dawood Investment Bank Ltd.

Incorporated in 1994, listed on KSE 100 Index, achieved a balance sheet sixe of Rs. 12.22 billion by 2007- with profits of Rs. 180 in same year!

Given as a gift by Registrar Modaraba to BRR Modaraba Management in 2006, upon its default, which has been recovering from losses rapidly a proof of financial credibility and belief in expertise of FDG group!

Our Individual Plans

What does Takaful mean?

In

Arabic Language, we find a verb Ka-Fa-La which means To Guarantee(Individually), while its inflexion noun word Takaful means Mutual Guarantee! Just like the Arabic verb Aa-wa-na which means To Help(Individually), while its inflexion noun word Taa-wun means Mutual Help! If we observe the nature of our operations and the kind of guarantee involved in it, we can say that Takaful means the Mutual Guarantee among the community of our Participants, for financial support in times of defined losses!

In the Light of Quran!

Help you one another in Al Birr (virtue) and At Taqwa (virtue, righteousness and piety); but do not help one another in sin and transgression, fear.. (Al-Maidah : verse 2). On the Basis of the above Obligation of Helping Each other ordained by Allah, we as Muslims have many a forms of Financial Help of others under the tenets of Huqooq-ul-Ibaad! Just like Zakat, Sadaqa, Khairat, Fitrra, Ushur, Qard-e-Hasan, Hibba, Arriya, Wirasat and Donations/Imdad the contract of Takaful provides for Mutual Guarantee for financial Help in which the basic desire is Allahs Pleasure rather than Personal Profits!! Conventional Insurance SELLS Protection, while takaful community offers Mutual Protection by Financial Support in case of hazards like DEATH, DISABILITY & DISEASE to a BREADWINNER!

Forms of Financial Cooperation & Guarantees in the Era of Prophet (P.B.U.H.)

Takaful Many

is based on the concept of Taawun or mutual assistance Islamic practices related with Huqooq-ul-Ibaad require the financial support of others near or related to us! were many customs and forms of Mutual Guarantee either for Sharing the risks and mitigating losses by mutual cooperation in the times of our Prophet (P.B.U.H)!

There

Forms of Financial Cooperation & Guarantees in the Era of Prophet (P.B.U.H.) (cont.)

11

Takaful in the Hadith

They {Muslims of the Quraysh and Yathrib tribes} are one community (ummah) to exclusion of all men. The Quraysh emigrants according to their personal custom shall pay the blood-rite (aaqila) within their number and shall redeem their prisoners with the kindness and justice common among believers."

Takaful in the Hadith (cont.)

Believers

are to other believers like parts of a structure that tighten and reinforce each other." Al-Bukhari and Muslim Believers, in their affection, mercy and sympathy towards each other, are like the body, if one of its organs suffers and complains, the entire body responds with insomnia and fever.
Muslim

The

Takaful from Islamic Scholars

Islamic

1961

Fiqh Week Conference, Damascus

Second

Conference of Muslim Scholars, Cairo 1965 1972

Symposium

on Islamic Jurisprudence, Libya

Takaful from Islamic Scholars (cont.)

First

International Conference on Islamic Economics, Makkah February 1976 The Islamic Conference, Makkah, October 1976 Council of Saudi Ulema (1397 Ah/1977 CE) resolution

Takaful from Islamic Scholars (cont.)

Fiqh

Council of Muslim World League (1398/1978) resolution

Fiqh

council of Organization of Islamic Conference (1405/1985) Ijtima of the scholars in Dar ul Uloom, Karachi on the validity of Takaful as Shariah compliant alternative to Conventional Insurance, 2003

Takaful through Time

S.NO 1 EVENTS Prophet Muhammad () validated a system of community selfhelp and financial assistance Unanimous decisions by Muslims & Fatwa issued by National Religious Council of Malaysia. DATE At the start of Hijri 1972

First International conference on Islamic Economics was held in Makkah.

Fatwa issued by Higher Council of Saudi Arabia in favour of Islamic Insurance model. Development of Takaful in modern times by establishing the first Takaful Company in Sudan.

1976

1977

1979

Takaful through Time (cont.)

S. NO. EVENTS Establishment of The Islamic Arab Insurance Company in Saudi Arabia which was later relocated in UAE. DATE

197980

7
8 9 10

Dar Al-Mal Al-Islami Trust, Switzerland.

Saudi Islamic Takaful and Re-Takaful Company, Bahamas. Islamic Takaful Company in Luxembourg.

1981
1983 1983 1984

Development of Takaful in modern times by establishing the first Takaful Company in Malaysia.
Takaful Act, an act passed to provide for the registration and regulation of Takaful business in Malaysia.

11

1984

S. N O. 12 13

Takaful through Time (cont.)

Syarikat Takaful, Singapore. Islamic Insurance Company, Qatar. ASEAN Takaful Group evolved into ASEAN Re-Takaful International (ARIL) in Labuan, Malaysia.

EVENTS

DATE 1995 1995

14

1997

15 16 17

Establishment of Dubai Takaful Insurance Company, UAE.

Establishment of Trinidad-Tobago Takaful Friendly Society. Establishment of Amana Takaful in Sri Lanka.

1997 1999 1999

Takaful through Time the (cont.) A code of Ethics was developed for
18
Takaful Industry by Takaful Malaysia and Takaful Nasional. IJTIMA held in Darul Uloom, Karachi on permissibility of Takaful International Takaful conference held in London to promote Takaful business. A paper was published by Bahrain Agency (BMA) which proposed rules to regulate the Takaful and Re-Takaful industry. A committee to frame Takaful rules in Pakistan was founded Takaful Insurance forum organized by Egyptian Insurance Supervisory Authority (EISA) was held for the recognition of a growing interest in Takaful scheme.

S. N O.

EVENTS

DATE

2000

19
20 21 22

Al Aman Takaful was established, Lebanon.

2002
2003 2003 2004

23
24

2004
2005

S. NO. 25

EVENTS
SECP (Security Exchange Commission of Pakistan) notifies Takaful Rules in Pakistan. First Takaful Company Pak Kuwait General Takaful was established in Pakistan. Pak-Qatar General Takaful Limited in Pakistan

DATE 2005

26

2006

27

2007

28

Dawood Family Takaful Limited incorporated in Pakistan. Among the first two companies in 4th May Life Takaful to be incorporated in this Country 2007 this year!

The Conventional Insurance Protection Cycle

Protection Buyer
Insure d

Protection Seller Conventional Insurance

Insure d

Insure d

Insure d

Takaful vs. Insurance - The Shariah Aspect

There are three major objections against Conventional Insurance
1. Riba (Interest)
Riba Bil Nasiya-direct

Riba Bil fazal-indirect

2. Gharar 3. Qimar

The Takaful process (cont.)

There

are three different models in use

- Malaysia Middle East and other countries - Pakistan and South Africa

Mudharabah Model Wakalah Model

Wakalah/Waqf Model

All these models are based on risk-sharing rather then risk-transferring

Takaful vs. Insurance

Takaful
A contract on the basis of Taawun/Tabbaru (Donation) for mutual sharing of financial losses by the Takaful Community! Not based on Profit-Earning from Participant Takaful (Protection) Fund.

Conventional Insurance
A contract on the basis of Sales/Premium a bilateral contract of indemnity for a non -existing liability at a specific price! Major Consideration of Underwriting Profit from Protection fund.

Due to being a Non-Sales Contract, it contains no Haram Elements of Conventional Insurance.

Provision of Distributable Surplus from PTF after the settlement of claims and wakala fees! Constant Supervision of Shariah Board to ensure no investment on basis of Riba, Qimar and Gharar!

Due to nature of Sales Contract, it involves the Haram elements like Gharar, Qimar and Riba.
No benefit of Surplus from Protection Fund, as the protection fund becomes property of Insurer! No supervision or guarantee by Ulema for Shariah Complaince of the whole system!

Wakalah/Waqf Model of Takaful & Investment

Participants
Share for Members from PTF SURPLUS, After reserves

Contributions

Appreciation of Investment Units/ HALAL PROFITS on Investment

GUARANTEED SUM for Natural Death Cover & Additional Riders for Members

Dawood Family Takaful Limited

Participant Investment Account (PIA)

Donation for the PTF Communit y

Participant Takaful Fund (P.T.F.)

Risk sharing Fund Between Participants

Whos Who in the Process?

Plan Design & Calculation of Values in Takaful Plans (Actuarial Department) Hiring Management & Staff/ Training & Skills Development (HR &TD Departments)

New Business/Submission of Proposal & Contribution/Agency Management (Marketing & Agency Department)

Underwriting/Acceptance of Risk to the PTF/ Issuance of PMD/ Customers & Claims (Operations Department)

Managing Commissions & Funds/Investment Portfolios/Companys Finance

(Finance & Accounts

Audit; Shariah Audit; Legal Compliance; Overall Supervisory Senior Management & B.O.D.

Non-Payment of Regular Contributions If any Contribution is not paid within the grace period, then: If the Membership has no Cash Value, it will end immediately without any payment. If there is a Cash Value, the membership will be maintained enforce for the sum at risk from the due date of first unpaid Contribution. The Sum Covered shall be so maintained by cancelling units from the PIA At the beginning of each Membership month, if the Cash Value is insufficient to meet any of the charges for that month then the Membership would lapse. Additional Contribution top-ups The Participant has the option to make additional top-ups (additional payments for Investment purposes) at any time. This top-up becomes part of PIA, where the Partial Withdrawal rules are applied, (minimum withdrawal of Rs. 30,000/ or 20% or Pre-withdrawal). In case of the participants death, the current cash value of the top- up would be paid along with the Death benefit.

Thank You !