Takaful in Oman

Introduction

‘Takaful' is an Arabic word which means ‘mutual or joint responsibility'. Accordingly, takaful insurance works as mutual or co-operative insurance, whereby participants contribute - by way of ‘tabarru' (donation) - a certain sum of money to a common pool.

The fund is managed by a ‘mudharib', or takaful operator, who manages the fund and compensates those participants who may require assistance.

In order to eliminate the element of ‘gharar', or uncertainty, considered to be present in conventional insurance policies, takaful incorporates the concept of tabarru, or donation. Participants in the scheme agree to give up as tabarru a proportion of their takaful contributions in the event that any of their fellow participants suffer a defined loss.

Any profits that may be derived from the operations of a takaful are made only after the obligation of compensating those participants in need has been satisfied.

Takaful legislation in Oman