The world’s youngest and most dynamic insurance market in reality traces its origins back more than 1,400 years. Takaful, the name for Islamic-compliant insurance, can be translated as “shared responsibility” and refers to the co-operative risk sharing beginnings of takaful – not unlike the birth of insurance within different communities in Europe and the US.
Takaful originated within the ancient Arab tribes as a pooled liability that obliged those who committed offences against members of a different tribe to pay compensation to the victims or their heirs. This principle extended to many walks of life, including sea trade in which participants contributed to a fund to cover anyone in a group who suffered mishaps on sea voyages.
Written by, Mohammed Amin, Samih Geha, Mohammad Khan and Sridharan Nair and sponsored by Mohammed Faiz Azmi (Global Islamic Finance Leader), this paper is the first in a series of PwC publications aimed at briefing mainstream financial services companies about opportunities in Islamic finance and looks at the key features of takaful, market potential, retakaful, general and life takaful opportunities and the challenges for takaful operators.