A concept for the sharing of risks based upon Islamic laws. Structured much
like mutual insurance, takaful allows participants to pool their exposures to
loss by each paying in a specific sum to assist each other in the time of need.
The members essentially guarantee each other, with the losses being spread
across all participants. A requirement of a takaful cooperative is that it may
not invest its funds in any companies viewed to be involved in activities
prohibited by Islamic law. For example, investment is forbidden in
organizations having any dealings with tobacco, pork, alcohol, entertainment,
or gambling. And since the traditional insurance product is considered to have
elements of gambling, uncertainty, and interest, investment in a traditional
insurer is barred.