An Analysis of Takaful: The Potential and Role in Financial Inclusion and Challenges Ahead

  • Amela Trokic Politecnico di Milano, Heriot Watt University, Umea Univesity, University of Sarajevo and University of Bolton
Keywords: Islamic insurance, poverty alleviation, financial inclusion, economic development


This paper will look to analyze Takaful and the Takaful industry in existence today with regards to its potential for growth and the challenges associated with its development. The possibilities associated with Takaful are numerous primarily due to its widened market reach and adaptability; Takaful, unlike conventional insurance, is permissible to Muslims and non-Muslims alike providing more versatile offerings. The Takaful industry is also one of the fastest growing businesses, substantially contributing to the global insurance industry as a whole. However, despite the prospects of Takaful, the industry today faces many obstacles. Above all, the total value of the Takaful industry with regards to its combined total assets and contributions (premium) is negligible if we consider both the size of the Muslim population and the conventional insurance industry. Not to mention the challenges associated with monitoring and transparency, standardization and lack of knowledge. Therefore, this paper will analyze the economic potential and influence of the Takaful industry as well as investigate the role of Takaful in poverty alleviation, where some research has already proven successful. It will also look into the challenges faced by the industry, stalling its development and deterring it from reaching its full potential.


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