As the essence of insurance could be seen in the system of mutual help in relation to the custom of blood money under the Arab tribal custom, Muslim jurists generally accepted that the concept of insurance does not contradict with the Shariah. In fact, the principle of compensation and group responsibility was accepted by Islam and the Holy Prophet. Muslim jurists acknowledged that the basis of shared responsibility in the system of `aqila', as practiced between Muslims of Mecca (muhajirin) and Medina (ansar) laid the foundation of mutual insurance.
As a complete religion, the teaching of Islam encompasses the essence of peace, economic well-being and development of the Muslim at the individual, family social, state and `ummah' levels.
To illustrate the importance of this relationship in a life of a Muslim, Islam calls for the protection of certain basic rights :-
The right to protect the Religion.
The right to protect the life.
The right to protect dignity/honour.
The right to protect the property.
The right to protect the mind.
It is also a generally accepted view that Islamic insurance was first established in the early second century of the Islamic era. This was the time when Muslim Arabs started to expand their trade to India, Malay Archipelago and other countries in Asia. Due to long journeys/voyages, they often had to incur huge losses because of mishaps and misfortunes or robberies along the way. Based on the Islamic principle of mutual help and cooperation in good and virtuous acts, they got together and mutually agreed to contribute to a fund before they started their long journey. The fund was used to compensate anyone in the group who suffered losses through any mishap. In fact the Europeans copied this, which was later known as marine insurance.
In view of the above as well as the real need for insurance cover, Muslim jurists looked further into the Islamic system of insurance. Their conclusion was that insurance in Islam should be based on the principles of mutuality and cooperation. On the basis of these principles, Islamic system of insurance embodies the elements of shared responsibility, joint indemnity, common interest, solidarity, etc. According to the jurists this concept of insurance is acceptable in Islam because,
-the policyholders would cooperate among themselves for their common good;
-every policyholder would pay his subscription in order to assist those of them who need assistance;
-it falls under the donation contract which is intended to divide losses and spread liability according to the community pooling system;
-the element of uncertainty will be eliminated insofar as subscription and compensation are concerned;
-it does not aim at deriving advantage at the cost of other individuals.
As for the difference :
The generally accepted view of the Muslim Jurists is that the operation of the conventional insurance as an exchange transaction under a buy and sell agreement does not in its present form conform to the rule and requirements of the Shariah as it embodies the following three elements :-
al-Gharar
There is the element of al-Gharar (unknown or uncertain factors in the operation of a contract) in both the life and general insurance policies. This arises due to the uncertainty of the subject matter of the contract or `ma'qud'alaih' of which one of the basic rules of contract in Islam is that the ma'qud'alaih must be clear. In such a contract the insured or the policyholder agrees to pay a certain sum of premium and in turn the insurance company guarantees to pay a certain sum of compensation (sum insured) in the event of a catastrophe or disaster. But the insured or the policyholder is not informed, for example, of how the amount of the compensation that the company will pay him is to be derived nor is he certain of the amount.
In addition, any form of contract which is lopsided in favour of one party at the expense and unjust loss to the other is also classified as Gharar. This is prevalent in both the life and general insurance policies. In the former, for example the loss of premium suffered by the policyholder if he would have to cancel his policy before the policy acquires the forfeiture status. Similarly the "double-standard" condition of charging customary short period in general insurance if the policyholder is responsible for the termination of the policy whilst a proportional refund of premium is applicable if the insurance company terminates the cover.
al-Maisir
There is the element of al-Maisir (or gambling) which arises as a consequence of the presence of al-Gharar, in particular in the case of life insurance. When a policyholder dies before the end of the period of his insurance policy after paying only part of the premium, for example, his dependents will receive a certain sum of money which the policyholder in the first place has not been informed and has no knowledge of how and from where it is to be derived.
al-Riba
There is the practice of al-Riba (or interest) and other related practices in the investment activities of the conventional insurance companies which contravene the rules of the Shariah.
I get my information from a renowned insurance provider company in Malaysia. If you are interested in knowing more about banking through Sharia Law, consult any Malaysian or Saudi Arabia banks in your place.
Appreciate your sharing superb informations. Your websiteis so cool.We are stunned at information that you’ve for this blog. It reveals how nicely you perceive this subject. Bookmarked this web page, will happen backfor extra articles. You, my mate, ROCK! I found this is the info I already searched everywhere and couldn?t discover. That of a ideal website. I favor this web website plus your website is without question considered one of my new favorite ones.I’m keen on this excellent website given and possesses given me some form of dedication achievement for a few purpose, so thanks
Thank you for making the effort to go over this, I am strongly regarding it and love learning read more about this topic. Whenever possible, because you gain expertise, could you mind updating your blog with extra information? It’s very useful for me.
If you are still undecided: grab your chosen earphones, head into a Greatest coupe and enquire to plug them into a Zune then a music player to see what kind sounds better to you, and which interface makes you smile more. Then you’ll know which is best for your family.
Between me and my better half we’ve owned more MP3 players in recent times than I can count, including Sansas, iRivers, iPods (classic & touch), the Ibiza Rhapsody, etc. But, the past decades I’ve been feeling relaxed to at least one line of players. Why? Because I had been thrilled to learn how well-designed and fun make use of the underappreciated (and widely mocked) Zunes are.
I am really thankful towards the author of the post for producing this lovely and informative article live here for us. We actually appreciate ur effort. Continue the good work. . . .
Intriguing article. I am aware I’m just a little late in posting my comment even so the article would have been to the purpose and the data I’d been trying to find. I can’t say i accept all you mentioned however it was emphatically fascinating! BTW…I found your internet site through a Google search. I’m a frequent visitor for your blog all of which will return again soon.
Whenever I visit this website there’s new things and improved should study on. Haha I’ve experienced your source code many times to know how you’re a little bit of things so we could wear them my site. Thanks! I could educate you about approaches to easy.
Many thanks for taking the time go over this, I feel strongly about it and love learning on this topic. When possible, as you gain expertise, can you mind updating your website with extra information? It’s very a good choice for me.
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March 16th, 2008 at 10:24 am
As the essence of insurance could be seen in the system of mutual help in relation to the custom of blood money under the Arab tribal custom, Muslim jurists generally accepted that the concept of insurance does not contradict with the Shariah. In fact, the principle of compensation and group responsibility was accepted by Islam and the Holy Prophet. Muslim jurists acknowledged that the basis of shared responsibility in the system of `aqila', as practiced between Muslims of Mecca (muhajirin) and Medina (ansar) laid the foundation of mutual insurance.
As a complete religion, the teaching of Islam encompasses the essence of peace, economic well-being and development of the Muslim at the individual, family social, state and `ummah' levels.
To illustrate the importance of this relationship in a life of a Muslim, Islam calls for the protection of certain basic rights :-
The right to protect the Religion.
The right to protect the life.
The right to protect dignity/honour.
The right to protect the property.
The right to protect the mind.
It is also a generally accepted view that Islamic insurance was first established in the early second century of the Islamic era. This was the time when Muslim Arabs started to expand their trade to India, Malay Archipelago and other countries in Asia. Due to long journeys/voyages, they often had to incur huge losses because of mishaps and misfortunes or robberies along the way. Based on the Islamic principle of mutual help and cooperation in good and virtuous acts, they got together and mutually agreed to contribute to a fund before they started their long journey. The fund was used to compensate anyone in the group who suffered losses through any mishap. In fact the Europeans copied this, which was later known as marine insurance.
In view of the above as well as the real need for insurance cover, Muslim jurists looked further into the Islamic system of insurance. Their conclusion was that insurance in Islam should be based on the principles of mutuality and cooperation. On the basis of these principles, Islamic system of insurance embodies the elements of shared responsibility, joint indemnity, common interest, solidarity, etc. According to the jurists this concept of insurance is acceptable in Islam because,
-the policyholders would cooperate among themselves for their common good;
-every policyholder would pay his subscription in order to assist those of them who need assistance;
-it falls under the donation contract which is intended to divide losses and spread liability according to the community pooling system;
-the element of uncertainty will be eliminated insofar as subscription and compensation are concerned;
-it does not aim at deriving advantage at the cost of other individuals.
As for the difference :
The generally accepted view of the Muslim Jurists is that the operation of the conventional insurance as an exchange transaction under a buy and sell agreement does not in its present form conform to the rule and requirements of the Shariah as it embodies the following three elements :-
al-Gharar
There is the element of al-Gharar (unknown or uncertain factors in the operation of a contract) in both the life and general insurance policies. This arises due to the uncertainty of the subject matter of the contract or `ma'qud'alaih' of which one of the basic rules of contract in Islam is that the ma'qud'alaih must be clear. In such a contract the insured or the policyholder agrees to pay a certain sum of premium and in turn the insurance company guarantees to pay a certain sum of compensation (sum insured) in the event of a catastrophe or disaster. But the insured or the policyholder is not informed, for example, of how the amount of the compensation that the company will pay him is to be derived nor is he certain of the amount.
In addition, any form of contract which is lopsided in favour of one party at the expense and unjust loss to the other is also classified as Gharar. This is prevalent in both the life and general insurance policies. In the former, for example the loss of premium suffered by the policyholder if he would have to cancel his policy before the policy acquires the forfeiture status. Similarly the "double-standard" condition of charging customary short period in general insurance if the policyholder is responsible for the termination of the policy whilst a proportional refund of premium is applicable if the insurance company terminates the cover.
al-Maisir
There is the element of al-Maisir (or gambling) which arises as a consequence of the presence of al-Gharar, in particular in the case of life insurance. When a policyholder dies before the end of the period of his insurance policy after paying only part of the premium, for example, his dependents will receive a certain sum of money which the policyholder in the first place has not been informed and has no knowledge of how and from where it is to be derived.
al-Riba
There is the practice of al-Riba (or interest) and other related practices in the investment activities of the conventional insurance companies which contravene the rules of the Shariah.
I get my information from a renowned insurance provider company in Malaysia. If you are interested in knowing more about banking through Sharia Law, consult any Malaysian or Saudi Arabia banks in your place.
November 5th, 2009 at 8:49 pm
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December 4th, 2010 at 12:52 pm
Thank you for making the effort to go over this, I am strongly regarding it and love learning read more about this topic. Whenever possible, because you gain expertise, could you mind updating your blog with extra information? It’s very useful for me.
December 5th, 2010 at 2:23 am
If you are still undecided: grab your chosen earphones, head into a Greatest coupe and enquire to plug them into a Zune then a music player to see what kind sounds better to you, and which interface makes you smile more. Then you’ll know which is best for your family.
December 5th, 2010 at 4:01 am
Between me and my better half we’ve owned more MP3 players in recent times than I can count, including Sansas, iRivers, iPods (classic & touch), the Ibiza Rhapsody, etc. But, the past decades I’ve been feeling relaxed to at least one line of players. Why? Because I had been thrilled to learn how well-designed and fun make use of the underappreciated (and widely mocked) Zunes are.
December 5th, 2010 at 4:49 am
I am really thankful towards the author of the post for producing this lovely and informative article live here for us. We actually appreciate ur effort. Continue the good work. . . .
December 5th, 2010 at 6:47 am
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December 10th, 2010 at 3:05 pm
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December 10th, 2010 at 3:07 pm
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