Takaful operators: analysing segregated accounts between operator/participants

What is it about?

This paper provides an analysis on whether takaful operators actually maintain separated and segregated accounts between the operator and participants’ funds, thereby conforming to Shari’a compliance requirements or not. The research uses a qualitative methodology by analysing secondary data relating to two takaful operators in each of the jurisdictions of the Kingdoms of Bahrain and Saudi Arabia. The findings generally reveal that the financial statements and Shari’a Supervisory Board annual reports of the takaful operators in the Kingdom of Bahrain evidences the Shari’a required maintenance of separate accounts between the operator and participants, while reveals transparency issues in the same regard and Shari’a governance weaknesses for takaful operators in the Kingdom of Saudi Arabia. Generalizing based on a single case study may affect the accuracy of the findings. It may also be argued that qualitative researches are generally considered as less valid than quantitative researches. This research may have provided empirical data that did not previously exist in literature.

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