Takaful is an Islamic insurance contract which was introduced to replace the contract of commercial insurance which has been rejected by the majority of Musl im scholars because it contains the elements of gharar (uncertainty), maysir (gambling) and riba (usury). Takaful is founded on the basis of cooperation and mutual help, but it is widely applied in the commercial sector. The operation of takaful business is governed by the principles of Sharl’ah and regulated by certain laws. Several models, namely the mu¢iirabah model, the wakalah model and the combination of wakiilah and mu¢iirabah model, have been used in the operation of takaful business. Many issues have arisen from the application of these models; hence the wakiilah• waqf model has been introduced and it is now in use in some countries in order to resolve these issues. The main purpose of this study is to evaluate the compliance of the operation of takaful business in Malaysia with the principles of Sharl’ah and the laws of the country. To achieve this aim, a qualitative research method was used for this study. The Sharl’ah rules applicable to takaful were analysed and the legal requirements for the operation of takaful business imposed by the Malaysian laws were examined. Small-scale fieldwork was also conducted to evaluate the application of different operational models by several takaful operators in the country.