Sharia Insurance: History, Law, Products, and Operations

Abstract

This article aims to comprehensively examine sharia insurance (takaful), covering its historical origins, legal foundations, product types, and operational mechanisms in Indonesia and abroad. This study employs a library research method, reviewing classical fiqh literature, the Qur’an and Hadith, fatwas of the National Sharia Board-Indonesian Ulema Council (DSN-MUI), statutory regulations, and related academic literature. The findings show that sharia insurance is a reactualization of the al-‘Aqilah concept practiced during the time of the Prophet Muhammad SAW, operating on tabarru’ (donation), wakalah bil ujrah (fee-based agency), and mudharabah (profit-sharing) contracts, thereby freeing it from the elements of gharar, maysir, and riba that render conventional insurance impermissible. Legally, the majority of contemporary scholars and the DSN-MUI hold that sharia insurance is permissible (mubah) as long as its conditions are met. Indonesia’s sharia insurance industry continues to grow through family takaful, general takaful, and micro takaful products, although it still lags behind countries such as Malaysia and Bahrain in terms of market volume and product diversification. Key challenges include a shortage of sharia actuaries, low public literacy, and the still-limited capacity of domestic retakaful, while its prospects are driven by the growth of the halal-conscious Muslim middle class and digital product innovation.