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About Takaful

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.

The Basic Principles of Takaful are:

  • Takaful Participants cooperate for the common good.
  • Every Participant contributes / donates their subscription into a fund to help other Participants in need.
  • Losses are divided and liabilities spread according to a community pooling system.

  • Uncertainty (Al-Gharar) is eliminated in respect of contributions based on donation and fixed benefits.
  • Advantage is not derived at a cost to others and surplus, if any, is distributed fairly to the Participants.


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.

Takaful vs Conventional


Takaful is based on mutual cooperation.
Takaful is based on mutual cooperation.
Takaful is free from interest (Riba), gambling, (Maysir), and uncertainty (Gharar).
All or part of the contribution paid by the Participant is a donation to the Takaful Fund, which helps other Participants by providing protection against potential risks.
Takaful companies are subject to the governing law as well as a Shari’a Supervisory Board.
There is a full segregation between the Participants Takaful Fund account and the shareholders' accounts.
Any surplus in the Takaful Fund is shared among Participants only, and the investment profits are distributed among Participants and shareholders on the basis of Mudaraba or Wakala models.
In case of the deficit of a Participants’ Takaful Fund, the Takaful operator (Wakeel) provides free interest loan (Qard Hasan) to the Participants.
The Plan Owners’ and shareholders’ capital is invested in investment funds that are Shari’a compliant.
Takaful companies have re-insurance with Re-Takaful companies or with conventional re-insurance companies that adhere to certain conditions of Shari’a.

Conventional Insurance Companies
Conventional insurance is based solely on commercial factors.
Conventional insurance includes elements of interest, gambling, and uncertainty.
The premium is paid to conventional insurance companies and is owned by them in exchange for bearing all expected risks.
Conventional companies are only subject to the governing laws.
Premium paid by the Policyholder is considered as income to the company, belonging to the shareholders.
All surpluses and profits belong to the shareholders only.
In case of deficit, the conventional insurance company covers the risks.
The capital of the premium is invested in funds and investment channels that are not necessarily Shari’a compliant.
Conventional insurance companies do not necessarily have re-insurance with re-insurance companies that abide by Shari’a principles.



Takaful is the Shari’a-compliant alternative to conventional insurance. Participants donate their Contributions to the Participants’ Takaful Fund, which is used to pay for any loss or damage that any of the Participants may suffer from. This means that the Participants share the risks.

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.

There are several differences between Takaful and conventional insurance. The main differences are that in Takaful, the Participants donate to a shared Takaful Fund to provide protection for each other against risks, whereas in conventional insurance the premium is paid to the insurance company which bears all of the risk.

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

Shari’a is an Islamic code of law based on the Holy Quran and Sunnah, and covers aspects of day-to-day life.

t'azur has a meticulous process for reviewing all of its products and making sure they are Shari’a compliant. This is done through its internal Shari’a Compliance Department and its external Shari’a Supervisory Board, which is lead by prominent Shari’a scholars.

Takaful can be employed using different models, for example; the Wakala Model, the Mudaraba Model, the Hybrid Model (combination of both Wakala and Mudaraba), the Waqf Model, the co-operative model (as practiced in Saudi Arabia).

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).

A Wakala is a contract that appoints someone to be the Participant’s Wakeel (Agent) for a certain fee.

Wakala fees are paid for the services provided by the Wakeel, which include customer service, administration and claim handling. All Wakala fees are regularly reviewed and confirmed by the Shari’a Supervisory Board.

Mudaraba is a Takaful model based on profit-sharing. The Participant and the Takaful Company, as the Mudarib (investment manager), share any surplus/profits from investments with each other in accordance with a pre agreed ratio.

t'azur invests all of your Contributions in Shari’a compliant investments and funds with leading fund managers.

Yes, of course! All our Takaful plans are designed for everyone. What is important is that the Participant should abide by the terms and conditions of the plan, which are based on the rules of Shari’a.

At A Glance

t’azur Company b.s.c. (c) is a Bahraini closed joint stock company incorporated under the laws of the Kingdom of Bahrain and licensed and regulated by the Central Bank of Bahrain.

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