SHARĪʿAH ISSUES IN THE OPERATION OF RETAKĀFUL AND REINSURANCE: A PRELIMINARY EXPLORATION FROM SHARĪʿAH PERSPECTIVE*

Abstract

This article attempts at exploring various Sharīʿah issues related to the practice of takāful, retakāful, insurance and reinsurance and interaction between them in the practice of retakāful. It explores the practice of retakāful and its importance in modern takāful. The paper discusses the ruling disallowing takāful companies to cede part of their exposure to reinsurance companies on the premise of ḥājah and necessity. It also discusses the permissibility of allowing retakāful companies to accept ceding from conventional insurance. Various opinions, fatwa and rulings and other relevant issues have been analysed. It is found that these practices could be accepted subject to certain conditions. The paper argues that since they are allowed based on hājah and ḍarūrah, a revision should be conducted from time to time to ensure that the practice is really in compliance with this exceptional ruling.