Potential of Tabarru’ Fund’s Coverage for Pandemics within Framework of Takaful: Does it Necessitate Ijtihad?

Abstract: Global economic and social development has been severely inhibited by the COVID-19 outbreak. The long-term closure of economic sectors has resulted in numerous losses and presents a great challenge for many industries in recovering their losses. Pandemics are not generally covered by insurance and takaful companies because the outbreak of a disease on a global level is a rare event that requires a substantial amount of capital to cover it. Still, many insurances and takaful operators voluntarily agreed to waive this condition and circumvent relevant rules to provide coverage for COVID-19 treatment during a specific period of time. The takaful industry has been challenged in providing hospitalization benefits to COVID-19 patients where a pandemic clause is not included in the takaful contract. This conceptual paper focuses on when the contracting parties require ijtihad from shariah scholars to determine the need for tabarru’ funds when a pandemic has not been stated in the contract. By using qualitative approach, this study finds that takaful contracts require amendment of their clauses, or that other fundings need to be established for matters not specified in contracts, such as epidemics and pandemics.