THIRD TAKAFUL SUMMIT LONDON “MASTERCLASS” 30 JUNE 2009
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SHARIAH OVERVIEW OF TAKAFUL (SESSION 1 – THE ESSENCE OF TAKAFUL) By: DATO’ MOHD FADZLI YUSOF Director/Principal Consultant First International Consulting, Malaysia
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DATO’ MOHD FADZLI YUSOF Member of the Board of Directors of Pintar Learning Sdn Bhd, an elearning provider accredited in the U.S. , Europe and Australia and a member of the Board of Directors of Heitech Padu Berhad, a company listed on the main board of the Malaysian Stock Exchange (Bursa Malaysia). He was a Member of the Islamic Council of the State of Negeri Sembilan (MAINS) until February, 2008. In this capacity he has been appointed as Member of Board of Directors of a number of companies under MAINS Group. From 1996 to 1999 he was a Member of the Islamic Council of the State of Terengganu (MAIDAM) and sat in a number of the Council’s Committees including Zakat and Baitulmal, Finance and Muassaswah Gadain (Islamic pawn system). From 1999 to 2004, he was a Member of the Board of Directors of Terengganu Equity Ltd (PTB) as well as a Member of the Board of Directors of PTB Unit Trusts Management Ltd (Pengurusan ASDI). He is a member of the Board of Directors of the ArabMalaysian Takaful Company, a Jeddahbased Takaful operator, and Amana Takaful of Sri Lanka. He is also the Chairman, Consultative Committee, Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a subsidiary of the Islamic Development Bank (IDB) Group based in Jeddah. Dato Mohd Fadzli Yusof is also currently serving as a member of the Board of Trustees, Sultan Mizan Royal Foundation (Yayasan Di Raja Sultan Mizan). He retired as the founding Chief Executive Officer of Malaysia’s pioneer takaful operator, Syarikat Takaful Malaysia Berhad (Takaful Malaysia) in 2005. Under his stewardship, assets of Takaful Malaysia grew to RM 2.4 Billion. He led Takaful Malaysia in 2001 to be the first takaful company listed on Main Board of Bursa Malaysia. Takaful Malaysia was accorded ‘Best Provider for Takaful Services’ in 2004 by Euromoney, a Londonbased financial publication. Prior to joining Takaful Malaysia, he was a senior management of Malaysian National Insurance Bhd, then the largest insurance group in Malaysia. He was appointed by the Government as a member of the ‘Special Task Force to Study Towards Establishing an Islamic Insurance Company in Malaysia’ set up by the Malaysian Government in 1983.
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DATO’ MOHD FADZLI YUSOF Whilst at the helm of Takaful Malaysia he was entrusted with the foundation and development of Asean Retakaful International (Labuan) Ltd, an offshore retakaful operator in 1997 as a vehicle to provide retakaful facilities particularly to takaful operators in the Asean Region. He remained as its founding Chairman until his retirement in 2005. He was also a founder member of the Board of Commissionaires of P.T Syarikat Takaful Indonesia and Chairman of its family takaful subsidiary company, P.T Asuransi Takaful Keluarga until 2005. Widely regarded as the man responsible for developing the country’s takaful industry into what it is today, his contributions to global Islamic finance included providing primary assistance in the establishment of takaful operators in Brunei, Indonesia, Sri Lanka, Bangladesh and Saudi Arabia. As founder chairman of Asean Takaful Group, he established the foundation for technical and business cooperation among the regional Takaful operators. Takaful Malaysia established its subsidiary, Asean Retakaful International (L) Ltd (ARIL), arguably the world’s first fullfledged dedicated retakaful company. Under his chairmanship from 1997 to 2005, not only ARIL’s shareholding base has been expanded internationally, ARIL has transformed itself into a globalbased retakaful Company that offers retakaful services to more than 40 takaful operators across the globe. He was a member of the Board of Trustees of AAOIFI (the international Islamic accounting standards body) and also served the Task Force on Islamic Finance of the Labuan Offshore Financial Services Authority from 2002 to 2005. By professional qualification he is a Member of Communication, Advertising and Marketing Foundation UK (now merged as Institute of Marketing United Kingdom) carrying the title M.CAM since 1976. He has written three books on takaful. Upon retirement in September 2005 from Takaful Malaysia, together with Islamic finance colleagues in Malaysia, Sri Lanka and Arab Saudi established First International Consulting Sdn Bhd, (consulting house focusing on Islamic finance) of which he is the Director and Principal Consultant.
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WHAT DOES ISLAM SAY OF INSURANCE
Concept : “Fortunate many” helping the “Unfortunate few”
Elements of joint help, solidarity, cooperation
Islam propagates good virtues Practice of blood money (diyat)
Conceptually insurance is not contrary to rules of Islam First International Consulting
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INSURANCE CONTRACT NOT CONFIRMING SHARIAH
Buy and sell
Insurer (insurance company) as seller; policyholder as buyer
Not in accordance with Shariah characteristics of “buyandsell”
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PRESENCE OF GHARAR (UNCERTAIN)
Selling/Buying goods/services do not exist
Exist but cannot deliver to buyer
Exist and can be delivered but cannot determine quantum, timing, mode, source etc
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PRESENCE OF MAISIR (GAMBLING)
'Uncertain' element of the contract leading to lopsidedness
Resulting to unjust loss or 'injury' to one side only
Policyholder hoping for 'huge' proceed from claim against 'small' premium
Loosing all premium
Profit/loss of insurer depending chance of misfortune occurring First International Consulting
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PRESENCE OF RIBA
Penalty for late payment
Interest on policy loan
Investment activity
Guaranteed return
Refund of premium not on prorata basis
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RESOLUTION OF SCHOLARS (ULAMAAS)
National Fatwa Committee Malaysia 15th June 1972 "...Life Insurance operated by the presentday life insurance companies is a transaction containing the elements of alGharar, alMaisir and alRiba and as a consequence its contract is void; therefore HARAM..."
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RESOLUTION OF SCHOLARS (ULAMAAS)
Fiqh Academy, Jeddah 22nd28th December 1985 "...The contract of commercial insurance with the periodical fixed premium provided by the presentday insurance companies, containing major elements of risk is a contract which is void and therefore HARAM in accordance with the requirements of Shariah..."
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SYSTEM OF INSURANCE IN ISLAM
Ulamaas concluded system of insurance complying with Shariah ought to be based on the concept of cooperation, solidarity, mutuality as embodied in TAKAFUL from the verb “kafala”
JointGuarantee (Not buyandsell)
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REPORT OF THE SPECIAL TASK FORCE TO MALAYSIAN
GOVERNMENT The Report dated 11th May, 1984,accepted by the Malaysian Government interalia concludes that
"...6.1.1 From the detailed description outlined in the various chapters, a number of conclusions can be considered, as follows: a) The Task Force is confident that a company whose operation shall be based on the concept of Takaful and Mudharabah is viable to be established in Malaysia... Besides, its participants will also have the opportunity to save, invest and earn profit based on the Mudharabah principle... First International Consulting
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REPORT OF THE SPECIAL TASK FORCE TO MALAYSIAN (CONT.)
...Under the system of Islamic insurance, installments/contributions paid by a participant shall be made as tabarru not on the basis of buyandsell in view that Islamic law accepts tabarru and hence the transaction is permissible b)
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APPLICATION OF TABARRU
To donate, giveaway, contribute
Agrees to donate contributions as well as returns on its investment
Obligation to assist the needy
Tabarru for specific or defined purpose
Kept in a special account
The act of giving without the right of exchange First International Consulting
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Thank you fadzlisaba@gmail.com
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ABOUT US First International Consulting Sdn Bhd
A financial consulting group specialising in Islamic banking, capital market, takaful and other areas of Islamic financial services including but not limited to consultancy, advisory and training
First International Consulting Sdn Bhd
No. 1611A, Jalan Medan PB 2A Seksyen 9, Pusat Bandar Bangi 43650 Bandar Baru Bangi Selangor Darul Ehsan, Malaysia Tel : +6 03 8925 8454 Fax : +6 03 8926 8454
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