The paper "Takaful Insurance and Conventional Insurance: A Comparative Analysis" is a perfect example of a business case study. Insurance is a very important financial tool in all advanced economies. Insurance is particularly important as it provides people with a means to transfer the risk of uncertainty to the insurer with the insured paying an agreed premium to the insurer. In an insurance agreement, an insured undertakes to provide the insured financial compensation in the event that the specified loss occurs during the insurance period (Hussain & Pasha, 2014).
Accordingly, insurance provides society with an effective way of transferring the burden of uncertainty that they face in life for the certainty of premium. Since the premium, if specific, the insured is certain that he/she will not pay more in a certain year. Although insurance is an important financial tool for cushioning against uncertainty, quite a large number of people opt to live without any form of insurance cover be it life assurance or property insurance. However, for activities such as driving a vehicle, it is compulsory for a person to have an insurance cover (Bekkin, 2007).
Although the industry players understand how insurance works, the situation is different outside the industry, where the majority do not even know how insurance works and this contributes to the low insurance uptake by a significantly large number of people. Nonetheless, takaful being a new insurance concept is less well understood. Takaful is not well understood because of the complexity of how it operates, the arcane terminologies used and the tight rules governing the insurance business (Khan, 2011). The aim of this paper is to explain the differences between takaful and conventional insurance companies in terms of principles, terminologies, mechanisms and financial statements. Takaful Operational Model Takaful has become a common insurance practice in Islamic nations across the globe.
However, considering the globalization of world economies, takaful is also increasingly finding its way into the non-Islamic states because of the growing population of Muslim communities as is the case in the United States.
Abu Dhabi National Takaful Co PSC. (2015). Annual Report. Retrieved from http://quote.morningstar.com/stock-filing/Annual-Report/2014/12/31/t.aspx?t=XADS:TKFL&ft=&d=db0aa8c6d0bb220901d748830dfd9221
Bekkin, R. I. (2007). Islamic Insurance: National Features and Legal Regulation. Arab Law Quarterly 21, 109-134
Khan, L. A. (2011). How does takaful differ from insurance? The world takaful report. Retrieved from http://ara.assaif.org/Working-groups/Takaful
Hussain, M. M., & Pasha, A. T. (2014). Conceptual and operational differences between general takaful and conventional insurance. Australian Journal of Business and Management Research, 1(8), 23-28.
U.S. Security and Exchange Commission. (2016). American International Group, Inc. Form 10-K. Retrieved from http://www.aig.com/content/dam/aig/america-canada/us/documents/investor-relations/aig-december-31-2015-form.pdf
Wahab, A.R.A, Lewis, M.K. and Hassan, M. K. (2007). Islamic takaful: Business models, Shariah concerns and proposed solutions. Thunderbird International Business Review 49(3), 371-396.