Perspective and Challenges of Takaful Industry

Today,insurance is an essential part of the financial system in each country. In the capital market, insurance companies are of important institutions that, along with other financial institutions contribute to the resource allocation. Insurance and Takaful companies play significant role in covering the risks of economic activities and are of the most important institutions for economic growth flourishing. Islamic insurance industry, in order to avoid some problems of conventional insurance from Sunni jurisprudence perspective, has suggested Takaful model that has received more tendency in both Muslim and non-Muslim countries. Although conventional insurance is legal from Shia jurisprudence, but using of Takaful increases the capacity of the insurance market. This article tries to introduce Takaful and investigate its differences with the conventional insurance, and its challenges via descriptive-analytical method. The results show that Takaful industry has distinct characteristics from conventional insurance. Takaful financial operations are more transparent than conventional insurance. In Takaful customers (insured) have a share in underwriting surplus and profit from investment and therefore closer to justice. Takaful, homogenization and standardization of business models and regulations are important for developing Takaful industry. Reducing costs and encouraging investors require strengthening the secondary market for Takaful.