Islamic Insurance and Takaful Insurance Models

Abstract: Since the early ages, people have developed many institutions related to risk sharing and social solidarity. The most advanced of these is the current insurance system. The existence of social security institutions has been known in Islamic societies since the first day. In Islamic law, there are many practices that recall insurance in the theoretical and historical context. One of the concepts in present day is takaful. Takaful is an insurance system based on Islamic principles. There are several models that enable Takaful insurance to operate. One of them is the hybrid model that combines mudaraba and wakalah. The participation of the participants in the system and the directing of the income are done as in the previous systems. In the hybrid takaful model, the takaful operator receives a percentage of the participants’ donations. This part is like the wakalah model. However, it also receives a predetermined percentage of the income from investments. This includes the mudaraba takaful, resulting in a hybrid takaful model. Conventional insurance systems are considered contrary to Islamic principles due to haram, interest (riba), gambling and risk. For this reason, the conventional insurance system cannot adequately address those who adopt an Islamic perspective. This situation hinders the development of insurance in countries that adopt Islamic principles. In this study, the functioning of takaful insurance in the hybrid model center will be discussed. In addition, the legitimacy of takaful will be examined according to the current insurance system in terms of fiqh.