Sukuk Takaful (Insurance) Model Rationality and Technical Know-How?

By MohdMa’SumBillah, PhD

Abstract

For a sustainable growth of the sukuk industry, among the prime concerns is to ensure a confidence among investors by protecting them against any catastrophe and that is, why sukuk is issued as a safeguard for investors and beneficiaries. The common phenomena is that, in any sukuk structure, be one sovereign, corporate or social, investors, and or beneficiaries in the structure are protected by sukuk itself against any capital or beneficial risk or catastrophe. In reality, a legitimate question may be raised whether a sukuk itself is adequate safeguard for the investor or beneficiary against any defined risk? It is submitted that, a sukuk itself does not hold the capacity to offer adequate protection for the investor or beneficiary against risk, because the issuer may still have the legitimate right to escape the liability by a “limited liability clause” under the Company law or public policy. It may thus, be suggested that, the only way to ensure an adequate safeguard for the investor or the beneficiary in a sukuk structure is by a comprehensive insurance policy as an additional step to a sukuk certificate, may be termed as “sukuk takaful”. Today, we seek to share the emergence of sukuk takaful besides analyzing its rationality and technical know-how?