Document Type : Original Research Paper
Authors
Department of Islamic Jurisprudence and Fundamentals of Islamic Law, Faculty of Literature and Humanities, Islamic Azad University of Central Tehran Branch, Tehran, Iran
Abstract
BACKGROUND AND OBJECTIVES: Risk hedging strategies have been integral to the culture of various human societies throughout history. Up until the 14th century AD, risk coverage primarily took the form of trade unions, cooperatives, and mutual aid, with insurance not being recognized as independent transactions or contracts. The concept of insurance emerged in the early 14th century, driven by increased risks associated with economic growth and the complexities of daily life. This evolution led to the development of various insurance systems and models. The aim of this article is to analyze and compare the mutual and takaful insurance systems, both of which are based on the principle of risk sharing Basis. By identifying structural and functional differences, as well as their respective advantages and disadvantages, this study seeks to clarify the confusion surrounding the meanings and concepts of these models.
METHODS: This research is of an applied nature and has been conducted using a descriptive-analytical approach, employing library research and document analysis methods.
FINDINGS: Mutual and takaful insurances are examples of insurance systems founded on the principle of risk sharing basis. The similarities among the concepts of mutuality, cooperation, and takaful have led some individuals to mistakenly believe that these two insurance systems are identical and even interchangeable. For instance, some people equate takaful insurance with mutual or cooperative insurance, arguing that the emergence of takaful is unnecessary; similarly, in various studies, mutual insurance is often regarded as equivalent to cooperative insurance. However, this research indicates that despite sharing common goals and some concepts, these models differ significantly in their operational structures and possess numerous distinct characteristics. These differences necessitate careful consideration when selecting an insurance system that aligns with the specific purposes, characteristics, and risk coverage requirements of a particular target audience. Therefore, in this research, we will first familiarize ourselves with the fundamentals and concepts of both the mutual and the takaful insurance systems. By outlining their structures, characteristics, and the operational mechanisms of these two risk-sharing models, we aim to compare and analyze them in order to clarify misconceptions that may arise from blending concepts and functions, and to identify the target audience for each model.
CONCLUSION: Although there are similarities between the two insurance systems being compared, such as their goals, risk-sharing mechanisms, underwriting practices, capital profit and loss sharing, fairer premiums, transparent performance, and cost reduction, each system also has distinct differences, advantages, and disadvantages.These distinctions include restrictions on operations, types of investments, compliance with Sharia, types of coverage, and methods of risk mitigation. This indicates that despite the similarities in risk-sharing mechanisms, each insurance system caters to its own target audience. People choose the model that best suits their needs and risks based on the types of risks and the beliefs or specific advantages associated with each system. Therefore, the similarity of concepts should not lead to confusion regarding the meanings and applications of these two independent insurance systems, each of which has its own functions, structures, and characteristics.
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