Understanding Islamic Insurance and Investments

This Islamic finance and banking course gives an overview of the basics of Islamic insurance, mutual and investment funds. In this course, you will learn about The Concept of Takaful Ta’awuni (collaborative), The Basis for Takaful, Takaful vs Conventional Insurance, The Tabarru or donation - based Takaful Model.

You will also learn about Islamic Perspectives on Mutual Funds and Real Estate Investment Trust (REIT) and Islamic Investment Funds.

No previous knowledge is needed.

Why Islamic finance is important for the global financial industry

Islamic finance has grown rapidly, with the trend expecting to continue. Although the concept has been around for much longer, Islamic finance only attained a formal status in Muslim-majority countries in the 1970s. Today, it has become a global phenomenon, eliciting increasing interest around the world, including from non-Muslim countries like the United Kingdom, Luxemburg, Kenya, South Africa, and Hong Kong. Islamic finance has grown into a huge industry with total worldwide assets estimated at about US$2 trillion.

Islamic finance has the potential to contribute to higher and more inclusive economic growth by increasing access of banking services to underserved populations. In addition, it has the potential to promote financial stability due to its risk-sharing feature and its financing being asset-backed and thus fully collateralized. Moreover, Islamic banks offer profit-sharing and loss-bearing accounts that can help mitigate losses and contagion in the event of banking sector distress. These are all indications that Islamic finance is converging to the global finance industry and hence all international finance professionals should be aware of Islamic finance.

Week 1 - The Islamic Takaful System-Part 1

• Introduction
• Islamic Appraisal of Conventional Insurance
• The Need for Sharī‘ah-Compliant Insurance
• The Concept of Takaful Ta’awuni
• The Shari’ah Basis for Takaful
• Takaful vs Conventional Insurance

Week 2 - The Islamic Takaful System-Part 2

• Introduction
• The Tabarru-based Takaful Model
• The Mudarabah-based Takaful Model
• The Wakalah-based Takaful Model
• Profit vs. Surplus for Takaful Products
• Deviations in Mudarabah and Wakala Takaful
• Sharing Expenses in Takaful Products
• Other Issues in Takaful Products
• Applications of Takaful in Family Insurance
• Applications of Takaful in General Insurance

Week 3 - Mutual Funds and Islamic Perspectives

• Introduction
• Mutual Funds and Their Advantages
• Various Structures in Mutual Funds
• Debt Funds
• Equity Funds
• Hedge Funds
• Real Estate Investment Trusts (REITs)
• REIT Structures
• Islamic Perspectives on Mutual Funds and REITs

Week 4 - Islamic Investment Fund

• Introduction
• Islamic Debt Funds
• Murabaha-Based Commodity Debt Fund
• Ijarah-Based Debt Fund
• Islamic Equity Fund
• Conditions Governing Islamic Equity Funds
• Islamic Hedge Fund
• Islamic REITs
• Sukuks
• Recognised Sukuks
• Ijarah Sukuk
• Salam Sukuk
• BBA Sukuk
• Muqaradah Sukuk
• Musharakah Sukuk
• The Advantages of a Sukuk Market
• The International Sukuk Market
• Challenges for Developing a Sukuk Market