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This chapter has focused on the concept of insurance to provide a base for the phenomenon of takaful, which is covered in onward chapters. Insurance is a mechanism that enables companies to perform three important functions: to transfer risk, create a common pool and set equitable premiums. These important functions create four main benefits: peace of mind, control of loss, social benefits and economic benefits. Insurance is a well-established business practice, and over time, it has developed its core principles in line with which it operates. These principles include insurable interest, utmost good faith, subrogation, indemnity and proximate cause.
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