The Issues of Contracts Regulating The Investment of Cooperative Insurance Fund: SABB as a Case Study
Keywords:Cooperative insurance, Takāful fund, Shariah contracts, Investment
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.
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