The reality of Islamic Takaful insurance in the Jordanian insurance market

Abstract

The Islamic Takaful insurance industry has recently appeared in Jordan as an alternative to commercial insurance. This kind of insurance aims to getting rid of the criticisms directed to commercial insurance. This study aims at investigating the nature of Islamic Takaful insurance and its objectives. It also explains the difference between Takaful insurance and commercial insurance and to study the importance of Takaful insurance and compare it with the commercial one. In this study, two Islamic insurance companies were selected to compare the results and to compare it with the market results. This study was divided into three sections: the first part was devoted to showing the development of insurance sector in Jordan, the second section defined Islamic Takaful insurance and compared it with commercial insurance, and the last section was the applied part, in which two insurance companies (i.e., Islamic Insurance Company and the First Insurance Company). The study concluded that Islamic Takaful insurance has competitive advantages compared to commercial insurance. Direct installments, direct compensation, and the market share in the Islamic insurance company were more homogeneous in comparison with the First Insurance Company. This indicates the stability of market share in the Islamic insurance company grows better than the first insurance company, and the Islamic insurance company achieves an insurance surplus in a more homogeneous manner compared to the other company. The study recommends the necessity of finding Islamic insurance products directed to people with middle and low incomes. It also recommends establishing reinsurance companies that operate on an Islamic solidarity basis.