Takasure vs. Takaful

Takasure is a response to challenges faced by the takaful industry, the same challenges that have inhibited global scaling and have resulted in large numbers of underinsured Muslims worldwide. Our mission at TAKADAO is to provide:

• Global access to shariah-compliant insurance through the use of public blockchains and cryptocurrencies

• Transparency, trust and community engagement by establishing true ownership of the takaful fund by participants in the form of a DAO as a sovereign self-governing entity

• Better outcomes for all participants and stakeholders

To achieve these goals, Takasure builds on Takaful fundamentals with several added features:

• Strict separation between funds owned and controlled by the takaful operator (herein known as the “Operator fund”) and funds owned and controlled by the participants (herein known as the “DAO fund”). Each fund is owned and controlled by separate legal entities that have separate governance structures.

• The conventional “sum assured” is now a “benefit multiplier” to de-risk the DAO fund and to ensure solvency. In simple terms, the benefit in the event of a claim is based on the amount contributed to the DAO fund and the individual risk. In conventional insurance, only individual risk matters in claims calculations, the amount contributed doesn’t factor into the claim.

• The “benefit multiplier”, which determines claims amount, will vary in a given range, based on the performance of the DAO fund. If the fund performs well, the benefit multiplier (and claim amount) increases, if the fund performs badly, the benefit multiplier decreases.

• The distribution of the underwriting surplus is “on-demand” (subject to lock-up periods) as opposed to being tied to the fiscal year end.

	Takasure	Traditional Takaful
Legal entities	2 separate legal entities. Takaful operator that owns and manages funds generated from management fees DAO entity that owns and manages funds generated from participants’ contributions. Funds are held in the name of the DAO entity. The DAO entity may appoint treasury managers to manage funds on their behalf.	The takaful operator is the single legal entity that manages all funds. Funds are accounted for separately, but are held and managed by the same entity. Participants have no say in who manages the funds.
Participants	Participants are owners of the DAO fund and are known to one another. Their ownership and equity stake is represented by DAO tokens. DAO governance by participants is engaged in through voting. Ultimately 1 token = 1 vote.	In theory, participants are the owners of the takaful risk fund, but in practice, they have no legal right nor access to the monies in takaful risk fund
Board of Directors	Board of directors of the DAO fund is selected from participants and voted in by participants. They represent the interests of the DAO fund solely. They are not to be confused with the board of directors of the Takaful operator.	The participants are not represented by an independent board of directors. The board of directors of the takaful operator represents the interests of both the takaful operator and participants.
Benefit amount in the event of a claim (for life insurance)	The participant/insured is assigned a benefit multiplier at the initial underwriting of the policy. To determine the actual benefit amount, the total contributions are multiplied by the benefit multiplier. The more contributions are made, the larger the benefit amount.	The participant/insured is guaranteed a certain “sum assured” in the event of a claim. This sum assured is determined at the initial underwriting of the policy and is not conditional on a certain amount of contributions being made. If someone makes 1 month of contributions, he will be paid the same sum assured as someone who makes 48 months of contributions.
Fixed vs variable benefit	The benefit amount varies within a stated range according to the performance of the DAO fund. In case fund performance is better than projected, benefit amounts increase and vice versa.	The sum assured stays the same no matter the performance of the fund.
Distribution of underwriting surplus	Real-time tracking of the underwriting surplus with redemptions “on-demand”. Unstaked tokens (i.e. the underlying insurance contract has expired) can be redeemed for the underwriting surplus, tokens are then burned. In case of underwriting deficit, the takaful operator provides a no-interest “qard hasan” loan to the DAO fund. The loan should be repaid in subsequent years when an underwriting surplus is realized.	Declared at the discretion of the takaful operator and usually at the end of the fiscal year end. In case of underwriting deficit, the takaful operator provides a no-interest “qard hasan” loan to the takaful risk fund. The loan should be repaid in subsequent years when an underwriting surplus is realized.
Regulatory regime	The takaful operator is regulated as a for-profit entity providing consulting and technical services to the DAO fund. The DAO fund is regulated as a non-profit association or foundation engaged in a risk-sharing pool. Participants are protected from personal liability.	The takaful operator is regulated as an insurance company engaged in risk-transfer insurance contracts.