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Nabeelah Kolia The South African Insurance Industry Survey 2016 | 45
Manager, Takaful - same same
Financial Risk Manager
Tel: +27 79 512 9865 but different
Email: nabeelah.kolia@kpmg.co.za
When you compare an orange and a clementine, at first glance they look similar. They’re
both round, they’re both fruit and they’re both orange in colour. It’s only once you cut
them open that you realise the differences between the two. In the same way, Takaful
and conventional insurance at first glance may look similar, in that they both share the
objective of protection against financial loss, but when taking a closer look, the differences
become apparent.
What is Takaful? Key elements prohibited by Islamic law However, when a loss does occur
Takaful is a system of insurance based there is gharar present again
on the Islamic principles of mutual Gharar Maysir due to the uncertainty in the
assistance (ta’awun) and donation (uncertainy) (gambling) compensation amounts which vary.
(tabarru). Takaful means joint guarantee, The element of maysir is present
whereby a group of participants Riba because the payment of the sum
contribute towards a pool of money and (interest/usury) insured depends on pure chance.
mutually agree to protect each other by The third element of riba comes in
compensating those participants who Gharar exists since there is uncertainty when funds are invested in interest-
suffer from an insured peril. of what the insurance policyholder is bearing securities. Takaful is an
“buying” or paying for if no loss occurs alternative to conventional insurance
Conventional insurance is not considered and the policyholder receives nothing. which presents itself as a form of
to be Shari’ah1 compliant because it mutual help in furthering good by
includes three key elements prohibited helping others who are in need or
by Islamic law: uncertainty (gharar), in hardship. The concept of tabarru
gambling (maysir) and interest/usury eliminates gharar and maysir - the
(riba). donation ensures that the uncertainty
concerning the contributions and
compensation is eliminated.
1 Shari’ah is the Islamic law which regulates many aspects of a Muslim's life, including the type of investments allowed
