Takaful Dr Karim Ullah Assistant Professor, IMSciences Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah Dr Karim Ullah Assistant Professor, IMSciences PhD (Islamic Financial Service) Brunel University, London BBA (Hons) Finance

Takaful Aim To develop theoretical and practical understanding of Islamic alternative to Insurance called Takaful Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Takaful Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Course Plan Takaful Takaful & Risk (miscellaneous) Shariah Based Life and Takaful (Mohammad Ayub, 2008; Karim Ullah & Wafi Al-Karagholi, 2015– In write-up) Perspectives of Takaful (Service) (Karim Ullah and Wafi Al-Karagholi, 2015 – in write-up) The Business Models of Takaful (Ayub, 2008; Simon Archer et al, 2011) Takaful Package Development Process (Habib Ahmed, 2011) Designing Takaful as Service (Karim Ullah, 2014) Takaful Typology (Miscellaneous) Takaful Operations (Miscellaneous) Supervisory Issues in Takaful (SECP Takaful Rules 2012) Takaful Market (Global Takaful Insights 2013) The Case in Focus: Pak-Qatar Takaful Limited Pakistan Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Class Engagement Lecture Critical Discussion Takaful Class Engagement Lecture Critical Discussion Readings: KYK (Know Your Knowledge) Sheets, Transcripts, Slides. Semester Project A note on Arabic terminology Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

How to fail the course! effectively Takaful How to fail the course! effectively Absence When technology is playing with you Over simplicity/complexity assumption Bi-polar approach Plagiarism Respect Inferiority & superiority complex Discipline Shariah Compliant Markets and Instruments BBA (Hons) Finance

Takaful Takaful & Risk Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Takaful Takaful Defined A Shariah based preparedness mechanism (service) for Risk Is it acceptable in Islam? Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Risk: The Reason for Takaful Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah

Takaful Risk Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Takaful Risk Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Takaful Risk Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah

Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah

Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah

Risk: some definitions Takaful Risk: some definitions The possibly of loss The probability of an unfavorable event(s)in future The potential variability of future outcomes Synonyms: The possibility of loss The probability of loss Danger A hazard The property of person exposes to damage or loss Potential losses Variation in potential losses Uncertainty concerning loss Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Uncertainty | Loss So, Takaful Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Knowledge and Risk: Islamic perspective Takaful Knowledge and Risk: Islamic perspective To Allah belong all things in Heaven and earth: verily Allah is He that is free of wants, worthy of all praise. “Holy Quran, 31: 26 “Verily, Allah is all-knowing, all-aware” 31:34 Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

The nature of risk Unpleasant outcomes Takaful The nature of risk Unpleasant outcomes Takaful (attempts to) guarantee risk avoidance Preparedness and compensation towards potential loss, damage, or destruction of items of value (including Life) The impact of risk can be mitigated by human intervention (management) Risk measurement Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Types of Risk Pure Risk: Loss | No change Takaful Types of Risk Pure Risk: Loss | No change Speculative Risk: Loss | no change | gain (Maysir) Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Maysir يَـأَيُّهَا الَّذِينَ آمَنُواْ إِنَّمَا الْخَمْرُ وَالْمَيْسِرُ وَالاٌّنصَابُ وَالاٌّزْلاَمُ رِجْسٌ مِّنْ عَمَلِ الشَّيْطَـنِ فَاجْتَنِبُوهُ لَعَلَّكُمْ تُفْلِحُونَ “O you who believe! Khamr, Maysir, Ansab (stone alter), and Azlam (arrows or dicing) are a filth of Shaytan’s handiwork. So avoid that in order that you may be successful.” Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah

Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah

(Usually) Qualified Risks for Takaful A Large number of familiar loss exposure units Losses are definite, measurable, and important Losses are fortuitous and beyond the control of the individuals or group (s) concerned; and The potential for catastrophic loss is unlikely to be covered Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

(Usually) Disqualified Risks Takaful (Usually) Disqualified Risks No monetary value No insurable interest (as required by law) Illegal or unlawful activity (including Shariah Law) Vice or dishonest behavior contributing to the risk (i.e., fraud) Some catastrophes: nuclear accident, famine or war Public policy exclusions such as fines or criminal acts Usual wear and tear and depreciation on property Other factors: delay, vermin, market agreements, government confiscation or authority, etc. Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Shariah Based Life (& Takaful) Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

“There is no God but Allah, and Muhammad is the Massager of Allah” Takaful Shariah Based Life “There is no God but Allah, and Muhammad is the Massager of Allah” Sources Quaran Sunnah Ijmah Qiyas Commandments Faith & Belief (Aqidah) Ethics & Morality (Akhlaq) Laws and Rules (Fiqh) Means for Life Essentials (Duruiyyat) Complements (Hajiyyat) Beautifications (Tahsiniyat) Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah

Primary Objectives (Maqasid) of Shariah Takaful Primary Objectives (Maqasid) of Shariah Safeguarding Faith Safeguarding Life Safeguarding Progeny Safeguarding Property Safeguarding Intellect Safeguarding Honour Takaful: Relevance? Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

The Practice of Takaful Service Introduction Rational Behavior (Roshd) Co-operation Zakat, Ushar, Sadqah Deya, Acqela, Qasama Local Takaful Practices Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

What is Wrong with The Commercial Insurance (Service) Takaful What is Wrong with The Commercial Insurance (Service) Exploitative Profits Gharar Maysir Ghaban Jahalah Prohibited goods/actions Riba Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance

Cores of risk protection in Takaful Service Nea’a Shariah conditions Moral values and ethics Islamic commercial contracts Class: BBA (Hons) Course: Takaful Instructor: Dr Karim Ullah BBA (Hons) Finance