Towards a More Holistic Landscape of Takāful System: A Proposal to Rejuvenate the Spirit of Mutuality through Corporate Waqf Model

Modern takāful concept originally arose from several Islamic and pre-Islamic notions of risk management without any element of commercialism. A study of the doctrines of ʿaqīlah, diyah or tabarru which led to the present modern takāful system, will show that the underpinning philosophies of such concepts centred on the pure spirit of co-operation (taāwūn), joined indemnity and mutual responsibility. Yet, the spirit seems to be waning from the contemporary takāful implementation as most takāful operators / providers run as private limited companies owned by shareholders cum investors whose motivation is to make profits. Rather, the original takāful concept is more suited for a mutual company or cooperative society. The experience by the takāful system is similar to that of the conventional insurance which began on a basis of mutuality and cooperative system before gradually changing to profiteering corporation. Amongst the factors attributed to the change was the need to have access to a suitable amount of capital at a reasonable cost, economic and regulatory pressures as well as changes in demographic and marketplace. In the quest for a takāful model with attributes of mutual company which could withstand business pressures, and most importantly, abide by all Sharīah requirements, all three concerns need to be harmonised under one business approach. Thus, this article attempts to propose a new takāful model which builds upon corporate waqf concept. The amalgamation of inherent features of waqf (i.e. perpetuity, irrevocability and inalienability) and philosophies of takāful (co-operation, joined indemnity and mutual responsibility) may create a holistic takāful system that is customer-centric but remains efficient and relevant to modern business requirements.