Islamic Sharia as a Mechanism for Regulating the Takaful Insurance Industry

Abstract

The Islamic Fiqh Academy has recognized the legitimacy of Takaful insurance, provided that it is conducted in accordance with established Sharia principles and regulations.

Islamic jurists have prohibited conventional commercial insurance due to the Sharia violations it may involve, in contrast to Takaful insurance, which is based on Islamic legal principles. Takaful insurance seeks to avoid prohibited riba (usury or interest), the wrongful appropriation of people’s wealth, gharar (excessive uncertainty), and gambling. Islamic Sharia has established a set of principles and rules aimed at preventing all practices that contravene its provisions. Accordingly, Takaful insurance cannot be practiced and developed without effective Sharia supervision to regulate insurance operations and ensure their compliance with the principles governing this type of insurance.