A check of $45,000 was paid to Takaful Insurance Program in December, 2012. Takaful Canada which is a joint venture between three Canadian cooperatives, received the check from the co-operators as a participation reward. Their plan was to share the reward between the Takaful plan holders as prove that the Takaful concept actually works in Canada.
According to available data, Sharia Complaint Finance (SCF) covering all areas of banking such as capital markets, asset management and Takaful (insurance) is rapidly growing as a significant component of the global financial market. Findings made by Price Waterhouse Coppers indicate that the number of Islamic financial institutions in the last four decades grew to more than 650 across 54 countries. However this rise is mainly concentrated around the Middle East, African and South East Asian countries.
Conventional institutions in the European and North American markets are now recognizing the viability of Sharia Compliant Finance (SCF) and they are tapping into the rising market demand. The alternative investment opportunities and fresh sources of funding that SCF offers has attracted the likes of HSBC and other big mainstream banks. Conventional banking giants are establishing Sharia-complaint subsidiaries with the likes of HSBC Amanah being among the top 10 Islamic finance institutions with over $15 billion in Sharia-compliant assets as of June 30, 2008.
Key developments in Canada
#1.Standard & Poor’s launched S&P/TSX as a Sharia compliant version of the S&P/TSX 60.
This provides a comparable investment index while adopting an explicit selection criteria defined by Sharia.
#2. An Islamic Finance Advisory Board (IFAB) was formed to respond to the need of independent advisory and audit services for the emerging industry.
#3.UM Financial launched its Sharia compliant pre-paid Master Card while its real estate investment subsidiary launched a Sharia– complaint home financing division.
What Really Is Takaful?
Takaful basically means the application of insurance within the parameters of the Sharia. This means that any of the parties involved, be it the insured or the insurer won’t be subjected to gambling (Al-Maisir), usury / interest (riba) or excessive uncertainty / risk (Al- Gharar). Whilst conventional insurance transfer all risks upon the insurer, Takaful insurance on the contrary shares the risks as a cooperative system of reimbursement. Companies and people under the Takaful principle make regular donations to be repaid to members suffering losses.
As more and more Muslims are awakening to the concept of cooperative and mutual insurance where losses and liabilities are divided among the community pooling system, the Takaful industry in Canada reached $12 billion five years ago. This year, this number is expected to rise to $20 billion. The industry is projected to grow further in the coming years.