The Issues of Contracts Regulating The Investment of Cooperative Insurance Fund: SABB as a Case Study

Authors

  • Basim Mohammed Ali Al -Mabadi University of Tabuk, Saudi Arabia
  • Asmak Ab Rahman Universiti Malaya
  • Abdul Karim Ali Universiti Malaya

DOI:

https://doi.org/10.33102/jmifr.v17i1.263

Keywords:

Cooperative insurance, Takāful fund, Shariah contracts, Investment

Abstract

The investment of cooperative fund (takāful fund) in cooperative insurance is one of the most important features of the cooperative insurance industry compared to conventional one.  Moreover, it is a key component in the support and development of such Fund. However, there have been illicit violations in the Shariah contracts that regulate the investment, thus, have been criticised particularly by Fuqahā’ (Islamic jurists) and practitioners. The study highlights the nature, significance and parameters of investment in cooperative insurance. It displays and analyses the opinions and critiques pertaining to such transactions. In other words, it displays and analyses the contract of mudārabah (profit-sharing model) and that of wakālah bi al-istithmar (agency contract for investment model) because there are seen practically as the most frequent transactional contracts. The study, therefore, examines SABB as a Takaful model in Saudi Arabia, which claims its commitment to the implementation of Shariah and its principles, particularly in the management of takāful and investment operations. In addition to analysing the contractual relationship between them and their policyholders, based on the contract of wakālah bi al-istithmar. The study also investigates the most important issues of contracts being used to invest of the cooperative fund as well as positive aspects arising from their implementation. Consequent findings reveal that the takāful or cooperative insurance industry has proven its significance and success in the insurance market both in the Kingdom of Saudi Arabia and at the international level. There are Sharīʿah contracts that regulate the investment of Fund, distinguishing them from others. The findings also show that the Sharīʿah contracts that regulate the investment are principally legal and permissible; therefore, the problems and issues that surround such transactions have arisen from mis-implementation.

References

ʿAbd al-ʿAẓīm, Abū Zayd. (2011). Al-Binā u al-Sharʿī al-Aslam li al-Ta’mīn al-Islāmī Takāful. Al-Mu’tamar al-ʿAlamī al-Thāmin li al-Iqtiṣād al-Islāmī wa al-Tamwīl. Qatar.

ʿAbd al-Karīm Qandūz, wa Khālid al-Sahlāwī. (2017). Istikhdām Mu’ashirāt al-Taḥlīl al-Mālī fī al-Taʿarruf ʿAlā Asbābi ʿAdami Tawzīʿ al-Fā’id al-Ta’mīnī ʿAlā Ḥamlah al-Wathā’iq Bi Sharikāt al-Ta’mīn al-Taʿāwunī al-Saʿūdiyyah. Majallah al-Dirāsāt al-Māliyyah wa al-Muḥāsabah wa al-Idāriyyah.

Accounting and Auditing Organization for Islamic Financial Institutions-AAOIFI) (2010).

Al-Bayhiqi, Aḥmad Ibn al-Ḥusayn. (2003). Al-Sunan al-Kubrā (3rd ed) (Edited by Muḥammad ʿAbd al-Qādir, al-Muḥarrar). Beirut: Dār al-Kutub al-ʿIlmiyyah.

Al-Khuwaylidī,ʿAbd al-Sattār. (2010). Al-Mushkilāt al-Qānūniyyah wa al-Taḥaddiyāt al-Iqtiṣādiyyah al-Latī Tuwājihu al-Ta’mīn al-Taʿāwunī. Mu’tamar al-Taʿāwunī: Abʿāduhū wa Āfāquhū wa Mawqif al-Sharīʿah al-Islāmiyyah Minhu. Ammn: al-Jamiʿah al-Urduniyyah.

Al-Maʿāyīr al-Sharʿiyyah. (Sharīʿah Standards) Al-Manāmah, Bahrain: Hay’atu al-Muḥāsabah wa al-Murājaʿah.

Al-Rajhi Takāful. (n.d.). Retrieved from https://www.alrajhitakaful.com/Arabic/Pages/ AboutUs/ModernApplicationOfTakaful/FormsOfTakaf ulManagement.aspx (accessed on 14 August 2018).

Bank Negara Malaysia. (2010). Notices & Announcements. Retrieved from http://www.bnm. gov.my/index.php?ch=8&pg=14&ac=1511 (accessed on 14 August 2018).

David, R. T. (2006). A General Inductive Approach for Analyzing Qualitative Evaluation Data. American Journal of Evaluation, 27(2), 237-246. DOI: 10.1177/1098214005283748.

Engku Rabiah Adawiah. (2008). Essential Guide to Takaful. Kuala Lumpur: CERT Publications.

Hāyil Dāwūd. (2010). Al-Istithmār fī al-Ta’mīn al-Taʿāwunī. Mu’tamar al-Taʿāwunī: AbʿAduhū wa Āfāquhū wa Mawqif al-Sharīʿah al-Islāmiyyah Minhu. Ammn: al-Jamiʿah al-Urduniyyah in collaboration with al-Majmaʿ al-Fiqh al-Islāmī al-Dawlī.

Ibn Manẓūr, Muḥammad Ibn Mukram al-Ansārī. (1994). Lisān al-ʿArab (3rd ed.). Beirut: Dār Ṣādir.

Ibraḥīm Muṣtafa et al. (n.d.). Al-Muʿjam al-Wasīṭ. d.m. Dār al-Daʿwah.

Ismāʿīl Dawrāmī. (2016). Al-ʿAlāqah al-taʿĀqudiyyah fī ʿAmaliyyah iʿĀdah al-Takāful wa Taṭbīqatuhā fī Mālīziah. Kuala Lumpur: International Islamic University Malaysia (IIUM).

Muḥammad Akram Lāl al-Dīn. (2012). Al-Istithmār fī Sināʿat al-Takāful abʿĀduhū wa Aḥ Kāmuhū wa Mashākiluhū. Mu’tamar al-Mujtamaʿ al-Fiqh Islāmī al-Dawlī fī Dawratihī al-ʿIshrīn. Algeria: al-Majmaʿal-Fiqhī.

Muḥammad Saʿdū al-Jaraf. (2010). Tashrīʿāt al-Ta’mīn al-Taʿāwunī wa ʿUqūduhū wa Wathā’iquhū. Mu’tamar al-Taʿāwunī: Abʿāduhū wa ā Fāquhū wa Mawqif al-Sharīʿah al-Islāmiyyah Minhu. Ammn: al-Jamiʿah al-Urduniyyah.

Rabiah Adawiah. (2010). Al-Mashākil al-Latī Tuwājihu al-Ta’mīn al-Taʿāwunī. Mu’tamar al-Taʿāwunī: Abʿāduhū wa Āfāquhū wa Mawqif al-Sharīʿah al-Islāmiyyah Minhu. Amman: al-Jamiʿah al-Urduniyyah.

SABB Education Takāful Plan (n.d.).

SABB takāful. (n.d.). Retrieved from http://www.sabbtakaful.com/ar/about-us/home/com pany-profile (accessed on 14 August 2018).

Wahbah, al-Zuḥaylī. (n.d.). Al-Fiqh al-Islāmī wa Adillatuhū. Damascus: Dār al-Fikr.

Wazārah, al-Awqāf wa al-Shu’ūn al-Islāmiyyah. (2006). Al-Mawsūʿah al-Fiqhiyyah al-Kuwaitiyyah. (2nd ed). Kuwait: Ministry of Awqāf and Islamic Affairs.

Yunus, Ṣawāliḥī wa Ghāliyah Būhadah. (2013). Ishkālāt Namādhij al-Ta’mīn al-Takāfulī wa Atharuhā fī al-Fā’iḍ al-Ta’mīnī Ru’yah Fiqhiyyah Naqdiyyah. Majallat al-Tajdīd, 17(34), 98-121.

Ziyād Miqdād. (2005). Al-Dawābiṭ al-Sharʿiyyah Listithmār al-Amwāl. Mu’tamar al-Istithmār wa al-Tamwīl fī Falisṭīn Bayna Āfāq al-Tanmiyyah wa al-Taḥadiyyāt al-Muʿāṣirah. Palestine: Al-Jāmiʿah al-Islāmiyyah, Kulliyyah al-Tijārah.

Published

2020-05-30 — Updated on 2020-07-15

Versions

How to Cite

Basim Mohammed Ali Al -Mabadi, Asmak Ab Rahman, & Abdul Karim Ali. (2020). The Issues of Contracts Regulating The Investment of Cooperative Insurance Fund: SABB as a Case Study. The Journal of Muamalat and Islamic Finance Research, 17(1), 89-101. https://doi.org/10.33102/jmifr.v17i1.263 (Original work published May 30, 2020)

Issue

Section

Regular Issues