Takaful, an Introduction

Brief Explanation

Takaful means a scheme based on brotherhood, solidarity and mutual assistance which provides for mutual financial aid and assistance to the participants in case of need whereby the participants mutually agree to contribute for that purpose (Takaful Act 1984, article 2), for short it is an Islamic Insurance, which still bring sharia principles within which are the main differences with the conventional insurance. It’s been practiced for about 1400 years, historians believe that Muslim of Mecca and Medina has started a kind of mutual insurance, and it developed again with trade between Arabs and Asians which require a great time and length that increase the risk of robbery and loss.

According to the Sharia principles, we shouldn’t use the conventional insurance because it contains :

  • Gharar
    Means uncertainty, this term referring to economic uncertainty which is unpredictable and has no measurable probability.
  • Maisir
    Means gambling, further meaning is the money or wealth that could easily taken.
  • Riba
    Means interest, we shouldn’t charge an interest in the transaction.

The System


In Takaful there are 2 parties involved :

  • Ra’sul mal
    Is the investor or the party who provide the capital, in insurance term is takaful contribution or premiums.
  • Mudharib
    Is the party who provide the effort or skills in the business venture.


Generally there are two models of Takaful :

  • Mudharabah
    In mudharabah system the profit is shared through a percentage system, it could be 50:50, 60:40 or 70:30 depends on the contract. Whether the loss incurred it’s accrued to ra’sul mal only, not accrued to the mudharib.
  • Wakalah
    In the wakalah system mudharib given a fixed fee where the profit/loss is accrued to ra’sul mal only

Cash Flow

Here’s an example of how the takaful company manage the money (based on AIG Takaful Enaya) :

Takaful Cash Flow

Takaful Cash Flow

Brief History of Takaful


The very first Takaful company was established in 1979, The Islamic Insurance Company of Sudan followed by Islamic Arab Insurance Company at UAE in the same year. Malaysia is the first country in Southeast Asia to make a takaful company which is Takaful Act at 1984 and followed by Takaful Malaysia Berhad at 1985.


In Indonesia, takaful business was pioneered by the founding of PT Syarikat Takaful Indonesia (STI) at 24th of February 1994, with the cooperation between Ikatan Cendekiawan Muslim Indonesia (ICMI) through it’s foundation Yayasan Abdi Bangsa, Bank Muamalat Indonesia, PT Asuransi Jiwa Tugu Mandiri, Departemen Keuangan RI (Indonesia Ministry of Finance), and several Indonesian Muslim businesspeople.

Since Indonesia regulation states that life insurance and general insurance should be at separated company, STI found two subsidiaries, PT Asuransi Takaful Keluarga (ATK) for life insurance purpose at 4th of Augusts 1994 and PT Asuransi Takaful Umum (ATU) for general insurance purpose at 2nd of June 1995.

Anton Hermansyah

Logo of Anton Hermansyah


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