An Evaluation of Diffusion of Agency Theory in Islamic Insurance Definition and Wakalah Model Operation

Recent Islamic insurance (Takaful) Wakalah (agency) model studies have shown that the relationship between the Islamic insurance participants and the operators is agency contract. The theory stated that the operator act as an agent of the participants to manage the Islamic insurance funds. Investigating the compatibility between the theory and the practice is an active area of research with the goal of obtaining a better understanding the neural network underlying the function of Islamic insurance. To investigate this, I examined published literature that defines Islamic insurance and the models with a dedicated analysis method and found indications that conclusions of the compatibility between the definition and Wakalah model may indeed be driven by inadequate attention and insufficient critical thinking/evaluation. Subsequent analysis of the alluded compatibility revealed that there is no such relevance between the definition and wakalah model. I come-up with a new definition, stated and justified its’ distinguish features.