Impact of Current Takaful Models in Pakistan and Malaysia: A Comparative Study

Abstract

This paper is presenting basic knowledge of Takaful, its terminologies, history and development of the sector/ Industry. It is also discussing reasons behind the noncompliance model, practice and claims process. It also helps us to understand both countries' current practices of Takaful industries. Pakistan and Malaysia, considering overall operational and marginal aspects of understanding, contribution, risk management, actuarial science products & experience management, claims and the issues of shortage in risk funds and other related matters. This write-up is focused in the first part on the main applications of Takaful business in Malaysia through the Mudarbah model and Hybrid (Mudarbah + Wakalah) Model discussing the overall practices of both models from different angels of the above-mentioned management/ operations. The second part of the paper contains a comprehensive view of the Wakalah Waqf model that is being practised in Pakistan, comparing all matters with the model practised in Malaysia. And finally, an extract of the comparison of all three models is presented, which will help readers, researchers and followers to understand the actual situations of the three models and the comparison between the Takaful business of Pakistan & Malaysia.