ISLAMIC PERSPECTIVE ON INSURANCE: CONCEPT, ISSUES AND PROSPECTS

Abstract

As a global phenomenon, Islam influences every aspect of human life, whether that be personal or social and economic. Since, long Muslims have tried to lead their lives as per Islamic rules especially pertaining to business aspects which confirm to the rules of equality, cooperation, responsibility and sharing the burden, as today’s business life is full of uncertainties, hence insurance system comes to rescue. However, due to different aspects which do not confront with Islamic principles, the conventional system has been criticized by Muslim scholars and Islamic insurance (Takaful) is presented as an alternative, as it can be used as a replacement for conventional insurance having its foundations in Islamic principles of brotherhood, solidarity, cooperation, elimination of riba and proper risk management. This article will provide a brief overview of takaful system, its distinctive features, historical background, issues faced by the takaful system and how Pakistan has legislated in this behalf. A comparative analysis of both, takaful and conventional insurance will also be provided.