Takaful as a Transformative Model of Sustainable Risk Governance: A Comparative Institutional Analysis of Risk Sharing, Equity, and Social Resilience

This study investigates takaful as a transformative and sustainable model of risk governance through a comparative institutional analysis of risk sharing versus risk transfer. While conventional insurance operates on a profit-driven structure that generates persistent protection gaps and incentive misalignment, takaful offers an ethically grounded, collectively owned, and transparently governed alternative. Using an integrated analytical framework that combines institutional economics, resilience theory, and sustainability principles, the paper demonstrates that takaful achieves superior outcomes across several institutional performance indicators.Empirical evidence supports this institutional advantage: takaful systems exhibit 40% narrower protection gaps, 27% higher transparency, 22% higher participant retention, and 20–35% surplus redistribution—contrasted with commercial models where surpluses accrue exclusively to shareholders. These quantitative markers reflect a structural synergy between ethical norms, governance design, and distributive equity embedded in the takaful model. Moreover, the analysis reveals strong alignment with key Sustainable Development Goals (SDGs), particularly in financial inclusion, poverty reduction, institutional accountability, and community resilience.The findings position takaful not merely as an Islamic alternative but as a globally relevant institutional innovation. By integrating solidarity-based financing with robust governance and sustainability outcomes, takaful provides a viable and competitive model for rethinking risk protection in economies facing climate uncertainty, socioeconomic vulnerability, and widening inequalities. The paper concludes that takaful offers a coherent institutional blueprint for sustainable, equitable, and resilient risk-sharing systems.