Foreword
The emergence of takaful, or mutual insurance arrangements that conform to the principles of Shari'ah, is a welcomed development that enhances and completes the Islamic financial system. Through takaful, consumers and providers of Islamic financial services are provided with a Shari'ah-compliant means to obtain insurance cover against personal and business losses. Takaful companies support Islamic capital markets through their active subscription of and trading in Islamic financial instruments. Insurance coverage for the assets underlying Islamic financial contracts can also now be done in a Shari'ah-compliant manner.
Growth in the takaful industry has been robust in recent years. Nonetheless, the industry is still in its early stages of development relative to the other sectors of Islamic finance in banking and capital fund-raising. Industry estimates put takaful contributions globally at about US$3.4 billion in 2007. This figure is creditable given the low penetration rates for takaful in many jurisdictions and that the industry is presently more focused on the retail markets, with wholesale needs largely yet to be addressed. Herein lies the still largely untapped potential of takaful. There are now about 150 takaful operators worldwide, including those in non-Muslim countries. In Singapore, takaful products have been available since 1995 and the first retakaful company started operations in 2004.
One of the main challenges confronting the takaful industry is raising ...
