The Concept of Tabarru

Abstract

The purpose of this study is to investigate the Malaysian awareness and acceptance of the concept adopted by Takaful. The objectives of this study were to examine how far the awareness and acceptance of Malaysian on the concept adopted by Takaful which is Tabarru’ and Ta’awun. Qualitative methodological approach and questionnaire were used as the instrument in this study. Fifty respondents participated in the study and the result indicates that majority of Malaysian are aware and accept the concept adopted.  Out of 50, there is an average of 71.67% respondents that aware on the concept adopted and 28.33% were not aware of it. In addition, averages of 79.5% respondents accept the concept adopted while averages of 20.5% respondents were unsure and reject the concept. There are some limitation occur when there are respondents with zero knowledge in this area of studies either in formal or informal form of education. Future researchers may make some adjustment in selecting respondents with basic knowledge of Takaful to make the findings more accurate.

Keywords: Tabarru’, Ta’awun, Takaful, Malaysia

1. Introduction

According to Mher & Ahmad Tisman (2011, p.24), “Takaful is the Islamic alternative to conventional insurance that is based on the idea of social solidarity, cooperation and joint indemnification of losses of the members”. Therefore, it is an agreement between at least two parties that agree to jointly guarantee or take care of one another in the event of loss. Besides, Takaful means mutual help among the group that pools efforts to support the needy within them. They share the responsibility of brotherhood to take care of one another in case of any damage arise upon anyone of the members.

 Takaful has advantages in term of minimizing cost and reducing risk as mention by Swartz and Coetzer (2010) which says, “Under Takaful the up-front costs are minimized. Business can be transacted immediately. In this way, risk is capped and costs become predictable”. In addition, they said that other advantages are “...the transparent charging of fees and commissions and how these features would assist a Shariah Board to decide if a Takaful scheme is really operating in a fair, Shariah compliant way in handling deductions from its participants’ contributions”. Also, the surplus from the Takaful can be used for zakat (Swartz and Coetzer, 2010).

 In contrast, as stated by Mohd Shril, Mohd Fadzilah, Ping, Siti, Masnalliza, Hardi, Farooq & Hisham (2012), “insurance is a device for the reduction of risk of one party, called insured, through the transfer of particular risks to another party called insurer, who offers a restoration, at least in part, of economics losses suffered by the insured”. They then add that the purpose of insurance is to protect the risk-averse from suffering the full cost of any unfavourable disaster. Conventional insurance is therefore highly prohibited in Islam as it contradicts the Shariah. As stated by Swartz & Coetzer (2010), the contract of insurance contains the elements that are prohibited by the rules of Shariah including riba (interest), gharar (uncertainty) and al-maisir (gambling). In Quran Surah Ar-Rum 30:39, “And whatever riba you give so that it may increase in the wealth of the people, it does not increase with Allah”. It is stated in Surah al-Nisa’ (4:29), “O you believe! Eat not your property among yourselves unjustly (bil batil i.e. by falsehood and deception) except in a trade amongst you by mutual consent”. This is referring to gharar where Allah has reminded us that we should be aware of any deception character and not to be deceived by such temptation. In term of maisir, it is also stated in Surah Al-Baqarah: 219, “They question thee about strong drink (khamar) and games of chance (maisir). Say: In both is great sin and (some) utility for men; but the sin in them is greater than their usefulness”.

2. Literature Review

2.1 Application concept of Tabarru’ and Ta’awun in Takaful

The concept used in Takaful is based on Tabarru’ and Taawun. According to Kamaruzaman (2013), Tabarru’ means “to volunteer, contribute or donate”. Besides, he says that it can also be described as “extending or offering one’s possession to another (either in its physical form or its benefit/usufruct) without consideration, mostly as an act of philanthropy or courtesy, either with an immediate effect or to take place in the future”. In term of Taawun, it is described by Mher & Ahmad Tisman (2011) as “solidarity, trusteeship, and brotherhood”. Besides it is described as the joining of two or more persons that form a partnership and will share any possible profit and loss together.

Under this concept of Tabarru’ and Taawun, the main purpose is “to bring equity to all parties involved, and the objective of the contract is to help the policyholders through bad times” (Mher & Ahmad Tisman, 2011). According to Daud, 2009 from Swartz & Coetzer,2010, participants are given the chance to assist one another and the takaful operators are required to help those in need by accumulate as much tabarru’ funds as possible. Swartz & Coetzer, 2010 then add that “…when somebody enters into takaful scheme, he is not supposed to have any intention of making money. His intention should be to share his wealth via contributing money or giving his money as tabarru towards a fund that is used to help somebody else who acquires assistance”. So it is clear that under tabarru and taawun concept, the goal is to help people, please Allah and to achieve Allah’s fallah in this life and hereafter. Besides, “…tabarru and taawun are believed to render insurance permissible from the precepts of Shariah due to their capacity to uphold and maintain both the qualities of mutuality and co-operation. It also held by many contemporary jurists that tabarru (and perhaps taawun) contracts, unlike mu’awada, commutative contracts, would mean that Takaful is unaffected by the rules of gharar, riba, and maysir” (Kamaruzaman, 2013).

2.2 Takaful Models

There are 3 types of Takaful models which is Mudarabah, Wakalah and Waqf model. As stated by Ahmad Tisman & Mher (2013), “Mudarabah is a kind of partnership in which one party that affords supplies funds while the other offers its expertise and management”. Under this model, the two parties involved which is the capital provider or participants (Rabbul mal) and the entrepreneur (mudarib) will be sharing profit of the joint venture based on a pre-determined ratio but the losses will be only borne by Rabbul mal alone (Mher & Ahmad Tisman, 2011).