Islamic Insurance (Takaful) in Pakistan

Abstract

Takaful is based on the concept of collaboration, brotherhood , mutual understanding, harmony among the members of the society who work freely and willingly to agree contribute money to bear a common goal and objectives of providing mutual financial support to the members of the group or society under certain conditions and circumstances. Takaful has emerged as an opposite and helpful system of Islamic Banking movement all over the world. Islamic Insurance (Takaful) like Islamic Banking has become a practical reality. Due to innate Sharia principles which are widespread in character, the Takaful business would be more attractive in the coming years both for the Muslim and non Muslim communities. However majority of the Muslim countries having Islamic Banks have established Islamic Insurance companies as necessary complements to Islamic Banking. The growth of Takaful companies would serve as the vehicle of risk pooling. It will also provide way of investment. It has been expected that total Takaful contribution is about 0.05% of total world insurance contribution. However, in Pakistan the expansion of Takaful industry during last decade had been very impressive. The consumers demand for different Shariah based products is rising and a high level of demand for Takaful is being predicted by market viewer. Thus the Takaful industry is fast growing and entering a constant development stage. It is now right time for the national regulators to provide encouraging Takaful laws, rules & guidelines in Pakistan.