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Al Hilal Islamic Takaful Insurance
Al Hilal Bank's Takaful Islamic Insurance subsidiary is called Al Hilal Takaful, established with AED 100 million of share capital in August 2008 according to the Al Hilal Takaful CEO, Mr Jihad Abdul Rahman Vetroni, in a press release 16 Sep 2009.
Contact information for Al Hilal Bank is tel 800 666666 (toll-free in the UAE).
What is Takaful insurance?
Takaful refers to insurance companies that are Sharia compliant, i.e. follow Islamic principles (might also be called Halal insurance). The idea is that both the insurers and the insured form a group and cover each other for possible losses due to unforseen events. Which is similar to the original principals that guided the establishment of conventional insurance companies. Any insurance company, whether Islamic or not, collects revenue from the insured, or policyholders, to be set aside as a supply of funds to be paid out as compensation when needed. In a Takaful Islamic insurance company, these funds are managed according to Sharia-compliant principles. This means that funds do not invest in:
- industries or companies involved with products or services that are haram, for example alcohol, gambling (maisir), pork products, or pornography
- investments that involve the payment or receipt of interest (riba)
Takaful insurance companies have shareholders and policyholders (as do non-Islamic insurance companies). However, to be Sharia compliant, an insurance company is run for the benefit of policyholders rather than shareholders. Another way of looking at it is to view the shareholders in a Takaful insurance company as one of the expense items - they receive fees or a fixed proportion of profits for providing management services. Takaful insurance has two varieties:
- Mudarabah (Mudaraba) is the principle by which the shareholders take a fixed proportion (decided in advance) of any profits made by the company, and the remainder of the profit is shared out amongst policyholders. However, the shareholders must shoulder all operating expenses.
- Wakala (Wakalah) is the principle by which any profits made by the insurance company are shared out amongst the policyholders. The shareholders do not get a proportion of the profits, however, they charge a management fee to the policyholders, which is decided in advance (annually).
Difference between Islamic and conventional insurance companies
| Item | Islamic Takaful | conventional |
|---|---|---|
| Company owners | shareholders | shareholders |
| Revenue source | policyholders | policyholders |
| Profit beneficiaries ... or | policyholders | shareholders |
| ... losses attributable to | policyholders | shareholders |
| Surplus fund investment | must be Sharia-compliant | no general restrictions |
| Management | decided by shareholders | decided by shareholders |
| Religious guidance | Shariah committee | none |