Now we discuss the concept of takaful basically is an Arabic word that means kafala it comes from the Arabic word kafala which means to guaran to guarantee so takaful means Mutual indemnification or Mutual guarantee and the concept of takaful was established by the sahaba based on the Madina chart so in the Madina Charter we have the concept of mutual solidarity and mutual indemnification so this Mutual solidarity Mutual indemnification is also an established principle in Sharia and therefore it has to reason foreign money is provided by an entire trib for example as if one person killed another person from another tribe so this concept of atira and the blood money is also you know accepted.


In Sharia, it means that basically, takaful refers to where people or policyholders pull their funds together, and then their funds are then you know used to indemnify each other under a taka food scheme so this is what is referred to as a takaful or Mutual indemnification policy the concept of the castle has gained widespread you know acceptance however much more is required in terms of developing the takaful mechanism the careful mechanism basically is either premised on the concept of a box where there is premium donations or premiums that are paid over 12 pool or it could be on a hybrid basis with a modaraba structure so takaful is different from conventional Insurance.


Conventional insurance is impermissible for three reasons the first is due to the reason of river and interest why because if you paid a premium of let's say x and you receive y that is a concept of riba or it will also be information on the wages of our future uncertainty there's uncertainty because if you paid a particular premium Now for something to be delivered at a future date it could be that you could get a payout or not for example so that that is the element of horror now there is a difference between the work refers to an uncertainty that could happen or not so it is a major uncertainty and rather refers to yesterdays and uncertainty that could happen but the occurrence of that uncertainty is unknown it is much good so this is and lastly is the concept now  of gambling of Timar so gambling in the sense that you pay a hundred thousand dollars in premium but you only get the benefit of ten thousand dollars so  convention insurance is impermissible for these three reasons now takahul  is premised on the basis of mutual solidarity.


Mutual indemnification is similar to a mutual Co-op but the underlying structure is based on your works or as I said based on a Hybrid Works plus modaraba structure investment structure you know and the investment is based on Sharia-compliant assets and stocks Etc so this is a diagram of itaka food company as you can see the taka voltage contributions into the work pool and then there is another you know subsidiary structure that is referred to as the investment fund for the pool so this is referred to as the carpooling company then you have convention Insurance where the capital and expenses are invested into a structure and it is referred to as premiums.


You can notice the difference here at the Careful company is that it is referred to as contributions right based on the Maliki principle and Convention insurance is that it is a premium that is paid over now the main difference between conventional insurance and Islamic indemnification I refer to takaful as Islamic indemnification is that in takaful it is the sharing of risk it is not a transfer of this in conventional Insurance it refers to the transfer of risk so where risk is transferred from one party to the next that is referred to as the transfer of risk so convention insurance as I mentioned is impermissible because it refers to the transfer of risk from one party firmly in short or from the policyholder to the insurance company the carpool is permitted because it refers to the mutual indemnification of the parties so this is the concept of takaful.


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