Takaful is an Arabic term meaning solidarity, which is used to describe a system of Islamic insurance that functions as an alternative to conventional insurance. Takaful, as a form of insurance, is entering a fast growing global market, promoted by the growth of the Asian economies and economic prosperity in the Middle East. The Takaful system is based on the principle of cooperation or mutual assistance, and is Tabarru (Voluntary), meaning that the attendant risks are spread collectively across the group of volunteers. The Takaful system is best understood as a pact (or policy) ascribed to by a group of participants who choose to jointly guarantee themselves against loss or damage suffered by individual signatories, as confirmed in the policy. The prediction is that Takaful will be the default choice for citizens in Islamic countries in the near future. The combination of the system’s financial efficacy, combined with principles underwritten by religious correctness has accentuated the attractiveness of this, and similar, Islamic banking and financial products to Muslims. By examining the Saudi insurance sector, which is a market leader in the region, this thesis delivers a brief history of insurance in general and of the Saudi insurance legal framework in particular, and by so doing sheds light on Islamic insurance Takaful applications worldwide. It also engages in an evaluation of insurance products available in Saudi Arabia to determine whether the facilities offered by the insurance companies operating in the country incorporate obstacles and obstructions, which may impact on the effectiveness of governmental regulations and supervision in relation to setting a legislative framework. This influences the extent to which the foundations for the insurance market are secured in Saudi Arabia. The aim of the present study also leads to some suggestions and recommendations for future practice.

An adaptable service system adjusts to the operational-level environments of organisations to enable heterogeneous services. This adaptation is important for sustainability and contextual-value (benefit) creation in a service system. Academics, such as those related to the current service-ecosystem concept, acknowledge the significance of this adaptation. However, little is known about a comprehensive adaptation process and how that integrates within a design for a service system. Also, practitioners are inclined towards this development, as the financial regulator in Pakistan has established an “evolutionary framework”. This framework encourages financial institutions to design Shariah finance services (SFS) which respond and evolve to the emergent market environments. The existing SFS models take benefit from Islamic jurisprudence and economics literatures to provide designs for transactions of financial and physical assets. However, the SFS models de-emphasis the intangible service-elements, where the adaptation is more likely to occur. Currently there is a great need for models that could explain the detailed adaptation process and its placement in an SFS design. The aim of this research is to develop, evaluate and theorise a model for conceptualising a holistic adaptable service-system design. The research aim is achieved through the proposal of a novel deferred service-system design (DSD) model. The DSD conceptualises a service-system design that adapts to the operational-level environments of SFS organisations in Pakistan. The DSD has seven constructs: (i) the service creators apply centrally-planned designs to create a service ii) they adapt these designs to meet the requirements of emergent contexts (iii) the service personnel, customers and aiding parties co-create a service by integrating their (iv) roles and actions, (v) resources and usufructs, (vi) rules and control to generate (vii) value. DSD is based on service-system design (SSD) literature, SFS literature and theory of deferred action (TODA)  a theory of system and organisation design. A multiple case study strategy is employed to evaluate, extend and theorise the DSD developed in phase I. Qualitative data are collected in four SFS organisations: Islamic commercial bank, Islamic life Takaful, Islamic mutual fund, and Islamic leasing organisation. Thirty-two in-depth narrative interviews of SFS personnel are conducted and analysed using a narrative discourse analysis method. The findings are triangulated by adding focus-group discussions, visualisations and service offering documents. The empirical findings are synthesised with the extant literature to develop a novel and comprehensive DSD in phase II. The findings show that the service co-creators apply a centrally-developed planned design typology (PDT). PDT includes different blends of SFS models (e.g., partnerships, sales, leases, agency and endowment), expected varieties (list, range and negative) and addable-deductible modules. The service co-creators and their inclusive systems (e.g., families, societies, markets, regulators and other government agencies) affect the planned service-system design to adapt or migrate. The service co-creators follow a novel six-step deferred adaptation process (DAP): emergence locale, information diffusion, knowledge diffusion, indexation, specifics evaluation and adaptation/migration. The empirical findings advance our understanding of a service-system design by showing how a planned design enables adaptation through PDT. More importantly, how the service co-creators follow a systematic process, DAP, to attain the desired adaptation or migrate off the scene. The findings also broaden the conceptualisation of SFS by showing how it is co-created by the financial institutions, customers and aiding parties. This is due to the SFS being perceived as a product of financial institution alone. This research also makes a contribution to service visualisation method by extending and using the service blueprint as an additional data-collection and analysis tool. This study provided fourteen implications for the practitioners.

Many studies have focused on the insurance industry in the US and other developed countries. Few studies have investigated the efficiency and organizational form in developing countries. This is particularly true for the Takaful insurance industry. Takaful insurance is mutual insurance based on Islamic principles. The rapid growth of Takaful insurers in many countries around the world and their long existence make it important to examine them. Chapter 1 discusses the history and the practice of insurance during the time of ancient Arabs tribes. I discuss the conduct of the Holy Prophet (SAW) relating to insurance practice. I also briefly outlines the development of Islamic insurance in the fourteenth to the seventh centuries, nineteenth century, and the development in the twentieth century. Chapter 2 investigates economies of scope and agency problems for Takaful insurance companies operating in 19 countries. I test the conglomeration hypothesis, which holds that firms can optimize by diversifying across businesses, versus the strategic focus hypothesis, which holds that firms improve by focusing on core businesses. More specifically, I analyze whether it is advantageous for insurers to offer both property-liability insurance and family insurance (life insurance), or to specialize in one major industry segment. I also test for agency problems, which imply that firms must motivate the agent to ensure compliance with the principal's wealth maximization objectives. That is, I analyze whether it is advantageous for insurers to operate under a Mudharaba (profit sharing) model or operate under a Wakala (fee based) model. I estimate cost efficiency utilizing data envelopment analysis (DEA). Then, I test for scope economies and agency problems by regressing efficiency scores on control variables and indicators for strategic focus and the operating model. The results show that the Wakala operating model is cost inefficient and focused Takaful insurers are associated with higher cost efficiency. Chapter 3 investigates the relationship between insolvency risk and efficiency for Takaful insurers. I measure the insolvency risk by computing the z-score which measure distance to default. I calculate the efficiency scores using Data Envelopment Analysis (DEA). I find that efficient firms have a higher distance to default. I also find that firms which operate in multiple lines are penalized for diversification by being more likely to become insolvent. In addition, I show that investing in sukkuk and real-estate increase the insolvency risk. Chapter 4 analyzes the coexistence of Takaful and conventional insurance. I analyze the efficiency of different organizational forms in 13 countries. Technical, allocative, cost, and revenue frontiers were estimated using data envelopment analysis. I test the expense preference hypothesis and efficient structure hypothesis. I find evidence for the efficient structure hypothesis which claims that the two organizational forms serve different market segments due to differences in managerial discretion and access to capital. I also find evidence for the expense preference hypothesis which states that mutual insurers are less cost efficient than stock insurers due to unresolved agency conflicts (e.g., higher bonus consumption by mutual managers). The results provide insight into the competitiveness of conventional and Takaful insurers from different countries. Finally, chapter 5 concludes the main results of the study. / Business Administration/Risk Management and Insurance

L’assurance islamique, ou takaful, qui est apparue dans les années 1970, est un sujet d’actualité, tant en France qu’au Liban. Les sociétés d’assurance islamique voudraient opérer dans ces deux pays dont le droit des contrats, comme celui des entreprises sont dominés par l’idée de laïcité. Peut-on exercer une activité que se veut régie par des principes religieux dans des pays de droit positif laïc ? La police takaful est-elle une police d’assurance à l’instar de la police d’assurance conventionnelle ? Les sociétés takaful sont-elles des sociétés d’assurance au même titre que les sociétés d’assurance conventionnelle ? Certes, les éléments constituant le contrat d’assurance conventionnelle se retrouvent dans la police takaful, à savoir le risque, la prime et la prestation d’assurance. Ces deux contrats d’assurance couvrent les mêmes risques, sous réserve des objets et évènements considérés comme haram et prohibés par l’islam. Quant aux sociétés d’assurance takaful, elles peuvent prendre les mêmes formes que les sociétés d’assurance conventionnelle. Mais leur fonctionnement diffère de celles-ci, en raison de leur structuration en deux fonds distincts et d’un mode opérationnel qui leur est propre. Le contrôle de la conformité à la charia islamique marque les compagnies d’assurance takaful et les distingue fortement des sociétés d’assurance conventionnelle. Il s’agit sans doute du principal obstacle à leur réception par le droit positif. Mais il doit pouvoir être surmonté. / The Islamic insurance, or Takaful, that first appeared in the seventies, is a subject that has an actual importance both in France and Lebanon. The Islamic insurance companies aim at working in these two countries whereas the contracts law as much as the enterprises law is dominated by the idea of secularism. Can we practice an activity mainly ruled by religious principles in countries where the substantive law is secular? Is the Takaful policy an insurance policy like any other conventional policy insurance? And are the Takaful companies insurance companies at the same level of all other conventional insurance companies? Indeed, the elements that are the basics of the conventional insurance contract are found in the Takaful policy, meaning the risk, the premium and the insurance benefit. These two contracts cover the similar risks, except for the objects and events considered as Haram and prohibited by Islam. As for the insurance companies Takaful, they are allowed to have the same form as any other conventional insurance society. Yet, their functioning is different from the abovementioned, due to their structuring into two distinct funds in addition to an operational mode appropriate to their needs. The audit made in conformity with the Islamic sharia imprints the Takaful insurance companies and strongly distinguishes them from the conventional insurance companies. Without any doubt, the idea rotates around how the substantive law accepts them. However, the concept of Takaful should be overcome.

With the rapid development of the Islamic banking and finance in South Africa, the legal regime of South Africa, must be able to progress at the same rate of development. The recognition of a foreign legal system such as Islamic law in South Africa is challenging and difficult. South Africa, has an interest based insurance legislative framework and this is not aligned with the principles of the Islamic financial system. As a result of this, regulators have taken various measures to develop and promote the Islamic Industry. The amendment to the South African Tax legislation has created an equitable and level playing field for Islamic law. The South African government also has a further obligation which is to develop a legislative framework to govern Islamic law, as well as to enhance the regulatory and supervisory framework. The study of the development of the Islamic legal regime is an important area that aids legal practitioners in identifying and resolving legal disputes. The purpose of this paper is to examine the accommodation of the Islamic law of Takaful under the South African Insurance legal framework. / Public, Constitutional and International Law / LL. M. (Public, Constitutional and International Law)