Proposing Islamic insurance for securing land ownership in Malaysia

Abstract

The misunderstanding in the non-application of principle of insurance under the Malaysian Torrens System led to the increase of cases seeking remedies against the Government and the State Authority. Recent cases decided on the issue of defective titles implies that there is a security issue in the Computerized Land Administration System to the extent that damages are liable to be paid by the Federal and the State Government notwithstanding there is absence of specific provision and principle of insurance under the Torrens System in the National Land Code. The judgment of decided cases emphasized on the reconsideration for the establishment of assurance fund as suggestion to mitigate the losses suffered by the registered land proprietors due to fraud and forgery. The study aims as a whole to identify the feasible implementation of Islamic land title insurance to avoid civil liability borne by the Registrar of Land Titles and losses by registered landowners in the event of fraud and errors in land title registration matters. The objective of the study is specifically to explain the concept of land title insurance, assurance fund in conventional practice and Islamic insurance; to examine the legal framework concerning land title insurance, assurance fund and Islamic insurance; to analyse the legal issues concerning land dispute compensation in Malaysia; and to recommend guidelines on Islamic insurance for land dealings. The study utilized historical and comparative methods for data collection and analysis, and descriptive research method is extended in terms of collecting secondary data and information for the literature review. The findings of the study reveal that there is a possibility for the introduction of Islamic land title insurance and assurance fund in Malaysia, but it is dependent on the policy will to override the historical perspectives based on the need of current situation. The study thus suggests for amendment to the law and guidelines on Islamic insurance for land dealings as an option in contributing towards building the financial and social resilience of the society.