Towards Integrating Trust In Takaful Model



Statement of Problem: The current Takaful models practised in Malaysia are facing issues and challenges with respect to Shariah compliance and good governance. For instance, Tabarru' funds in Malaysia have attracted tax on their investment returns. In addition, these Takaful models may not be in line with the legal framework of certain common law countries. These non-alignments may create difficulties for Takaful operators to penetrate non-Muslim countries.

The Key Objective: To study the weaknesses of the existing Takaful models and make recommendations that will enable Takaful operators to realise their full potential. We hypothesize that this can be done by adopting concept of trust, which is similar to the concept of cash Waqf, in the Takaful model.

Research Questions: Whether the concept of trust in Takaful model is Shariah-compliant? Whether the concept of trust if applied in Takaful model would meet regulatory approval? Whether the application of trust in Takaful model would provide benefits for the operators and its participants?

Research Methodology: The research will employ both library research and field work. For library research, textbooks and periodicals will be thoroughly examined and analysed. Qualitative analysis will be used to understand and expound the theoretical and practical aspect of the trust and Takaful concepts. Comparative analysis will be used when comparing the concept of trust with any acceptable practice in Shariah. Field study will include data gathering on the acceptability of the Takaful concepts in identified Muslim and non-Muslim countries. Interviews with Takaful practitioners, operators and policyholders in Malaysia will be conducted in order to understand the strengths and weaknesses of current Takaful models and ways to improve the models to enable Takaful to be a viable alternative to insurance in Muslim and non-Muslim markets. Interviews will also be conducted with Takaful practitioners, operators and policyholders in the United Kingdom, Singapore, and Indonesia on market penetration of the new proposed Trust Takaful Model.

Research Outcome(s): This research should be able to identify the strengths and weaknesses of the current Takaful models in order to further improve them and to provide a new Takaful model that is able to be integrated into Muslim and non-Muslim market.

Keywords: Takaful, Mudarabah, Wakalah, Waqf, Trust, Participants Risk Fund (PRF), Participants Investment Fund (PIF)...

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