Recently, I met a friend of mine who is an ex-CEO of a retakaful company after industry briefing by AIF (Asian Institute of Finance). He mentioned to me on a discussion a day before with ISRA and few other relevant parties with regard to MRTT covering the conventional loans. There is an initiative to prohibit such facility and ISRA is assigned to research on the matter.
I had totally a different opinion on the matter. First, I strongly believe that the proportion of those conventional loans being covered by Takaful under MRTT is extremely low and perhaps less than 1% of total loans disbursed. In other words, it is too minor issue to engage ISRA or relevant parties to research as well as debating the matter since there are many other bigger or major issues require urgent attention.
Second, Takaful companies never focus on conventional loans or trying to tap into such market since their resources are fully utilized to serve the Islamic finance industry which is continuously demanding. If there is any such cases, it is merely on accommodation basis upon special request whether the borrower or the bank. Thus, those policies which are very insignificant in volume are on individual policy basis and never be on group master policy basis. It means that takaful company does not collaborate with the conventional bank to promote MRTT as a package with their conventional loan.
Third, the nature of MRTT is to cover the lives of the borrower and not the conventional loan like credit takaful or insurance policy which indemnify the bank in the event of default by the borrower. There have been few shariah scholars which allow takaful company to offer takaful coverage to person who may involve in non-shariah activities such as prostitution, etc with the intention that takaful company is not influencing the person for such activities. Furthermore, one of the main objectives of takaful is to do dakwah thus we hope that the person is given 'hidayah' by Allah swt and slowly move towards Islam in total one day insyaAllah.
Last but not least, it can be viewed as less of two evils. For instance, assuming that the person had no choice but to take conventional loan due to whatever reason maybe an employee of such conventional bank. Now, he has a choice whether to cover himself with conventional MRTA or shariah MRTT and he is incline towards MRTT to ensure compliance with shariah principles. Unfortunately, takaful declines his application merely because his loan is conventional. Do we have the authority to reject those who want to come to Islam even not in totality? Can we reject someone who wants to embrace Islam because he want to marry a Moslem? Do we really know what is inside his heart or 'qalb" pertaining his real intention? Who will answer in front of Allah swt when he claimed that he had tried to participate in shariah compliant product but turned down by takaful?
In a nutshell, this is too minor issue to elaborate further.
