Takaful – An islamic way of insurance


Muslim jurists acknowledge that the basis of shared responsibility in the system of “aquila” as practiced between Muslims of Mecca and Medina laid the foundation of mutual insurance. Islamic insurance was established in the early second century of the Islamic era when Muslim Arabs expanding trade into Asia mutually agreed to contribute to a fund to cover anyone in the group that incurred mishaps or robberies along the numerous sea voyages (marine insurance).


Takaful is an Arabic word meaning “guaranteeing each other” or joint guarantee.

The Tabarru’ system is the main core of the Takaful system making it free from uncertainty and gambling. Tabarru’ means “donation; gift; contribution.” Each participant that needs protection must be present with the sincere intention to donate to other participants faced with difficulties. Therefore, Islamic insurance exists where each participant contributes into a fund that is used to support one another with each participant contributing sufficient amounts to cover expected claims. The objective of Takaful is to pay a defined loss from a defined fund.

Muslim jurists conclude that insurance in Islam should be based on principles of mutuality and cooperation. Encompassing the elements of shared responsibility, joint indemnity, common interest and solidarity.

Takaful in the Modern Day

In the modern theory of Takaful we have not deviated at all. Pak Kuwait Takaful Company Limited is the operator of the Takaful fund. The participant’s contribution is deposited in the Takaful Fund operated by Pak Kuwait Takaful Company Limited. Out of this fund all claims will be settled and investments are made in Shariah Compliant Funds which are approved by our Shariah Board. At the end of the period after careful calculations the surplus amount of the fund will be returned to the participants of the fund on proportion

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