Takaful is an Arabic word meaning ‘guaranteeing each other’ for mutual protection. It is not a new concept – it has been practiced by the Muslim immigrants (Muhajrin) of Mecca and the Muslim residents (Ansar) of Medina in the Muslim society following the migration (Hijra) of the Prophet (PBUH) 1,400 years ago.
Muslim rejection of conventional insurance originated in 1903, when an Islamic ruling made by prominent Muslim scholars declared that conventional insurance was un-Islamic. This prompted the search for an acceptable alternative, but it was not until the 1970s that the debate gathered momentum and Takaful was re-discovered as an accepted alternative. In 1985, the Council of the Islamic Jurisprudence Academy (Majma’ al-Fiqh al-Islami) approved Takaful as a Shari'a compliant system of co-operation, risk sharing and mutual assistance.
In this way, Takaful is a truly cooperative insurance concept for the mutual benefit of all participants and the community as a whole. Thus, the main purpose of this system is to "Bear one another's burden" rather than solely being a profit oriented enterprise.
t’azur’s role as Wakeel (Agent) is limited to managing the Takaful operations and investing the assets of the Participants’ Takaful Fund in compliance with Shari’a rules and principles.
In addition, any surplus in the Takaful Fund is distributed among Participants and shareholders on the basis of Mudaraba and Wakala models, whereas all profits in conventional insurance belong to the shareholders of the insurance company only. As such, Takaful is based on mutual cooperation whereas conventional insurance is based more on commercial factors.
The third major difference is that Takaful companies adopt strict Shari’a principles in all aspects of their operations, avoiding prohibited concepts such as Riba (interest), Al-Gharar (uncertainty) and Al-Maisir (gambling), supervised by an external Shari’a Supervisory Board
t’azur adopts the Hybrid model in line with the standards set out by the Central Bank of Bahrain (CBB) and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).