Islamic Insurance or Takaful: Implementation Problems and Solutions
Keywords:
Islamic insurance, traditional insurance, mutual insurance, takaful, principles and features of takaful, Sharia prohibitions, takaful operatorsAbstract
Islamic insurance, or takaful, has emerged as a significant component of the global Islamic financial system, demonstrating consistent growth and expanding its presence in diverse markets. While takaful operates on principles of mutual assistance and Sharia compliance, differentiating it from traditional commercial insurance, its institutional, legislative, and organizational mechanisms remain underdeveloped in many countries, including Uzbekistan. Despite increasing global market demand projected to reach USD 115.11 billion by 2034 there is limited scholarly work addressing the practical challenges of introducing takaful into national insurance systems lacking established regulatory and operational frameworks. This study aims to analyze the economic essence, principles, and operational mechanisms of takaful, assess its compatibility with existing insurance structures, and propose solutions for its effective implementation within the national market. Through literature analysis, comparative evaluation, and functional assessment of key stakeholders, the study identifies critical operational principles, highlights differences between traditional, mutual, and Islamic insurance, and outlines a structured algorithm for introducing takaful. The findings reveal that while takaful can coexist with other insurance forms, its success depends on Sharia-compliant governance, targeted legal reforms, and stakeholder capacity-building. The research offers a comprehensive, context-specific framework for the organizational and economic integration of takaful in Uzbekistan, aligning global best practices with local regulatory and cultural requirements. The results provide policymakers, regulators, and industry practitioners with actionable strategies to expand insurance market coverage, foster financial inclusion, and promote sustainable development through Sharia-compliant risk-sharing mechanisms.
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References
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