THE PARTICIPATION INSURANCE IN TURKEY AND ITS IMPORTANCE IN INSURANCE SECTOR

Abstract

One way of attracting customers in financial markets is presenting different financial instruments organized in various concepts. While examining various financial instruments, we come across a system organized for people having interest intolerance. The system is called as “ Islamic Finance “ or “Non-Interest Finance” and works in the principle of profit- loss participation. The aim of the non-interest finance system is trading the collected funds in its own principles and banking transactions complete each other as banking and insurance. Participation banking is a system that is based on collecting funds in non-interest way and profit- loss participation in terms of application of funds. Participation Insurance or “Takaful” system is existing as an alternative for conventional insurance in terms of interest and uncertainty. Participation banking, one of the two main elements of finance system in our country, dates back to 1983 but participation insurance is a new concept. The aim of this study is pointing out the general concept of takaful system, indicating working principles by comparing them with conventional insurance applications and examining local applications in various countries. According to the qualitative and quantitative data, it is determined that various problems for developing of participation insurance are existing and the system has not developed as expected even though it has high potential of developing.