Peace and Blessings of One True God Almighty be on all of you.

Some Muslim scholars use their Ijtihad to argue that  life insurance and other types of insurance is haram for Muslims as it involves interest and gambling. As a Muslim minority living in a non-Muslim country, I beg to differ

A ruling against  insurance by  Muslims is not an uncompromising fundamental article of faith  but a matter of high controversy which requires a penetrating intellectual Ijtihad of top-class Muslim economists and  scholars to deliberate deeply, interpret judicially and find more acceptable solutions.

In the opinion of Muhammad Asad,

" Every successive Muslim generation is faced with the challenge of
giving new dimensions and a fresh economic meaning to this
term( interest) which, for want of better word, may be rendered as
usury."

So the pressing question is, "Are Muslim scholars dynamic in
reinterpreting the concept of interest in order to find solutions to
the problems arising in the modern contemporary world of advanced
economics?”

 I am sure Islamic  principles can not be as rigid as our conservative
scholars expect us to believe. Please bear in mind that European Muslims
are not governed by Wilayat-al-fiqih, but are governed by compromising
secular laws, hence we can not apply Islamic jurisprudence in their
finest details in Toto.

The basic question to be addressed is:
"Do the secular laws of Europe undermine the basic beliefs of Muslim
minorities?"

In accordance with the opinions of  world renounced Islamic scholars  Muslim minorities ought to live by the laws of the country where they live, as long as the laws allow Muslims to adhere to the basic Rukun Islam. This has been the position of millions of Muslims living in the U.S.A., U.K., France, Germany, Canada, Netherlands, Australia and in some of the Asian countries like India, China, Philippines, Thailand, Cambodia, Sri Lanka, Singapore etc

ISLAM BASED INSURANCE AND BANKING IN OTHER COUNTRIES

To take a case study, Malaysia has an excellent Islamic banking and
Islamic Insurance( known as Takaful). Islamic bankers and insurers
operate on financial rewards to the depositors and the insured,
charges on the borrowers, protection to the insured and rewards for no-
claim and eventual lump sum repayment based on both endowment and
whole-life assurance policies. The terminology varies but the basic
principles remain very much the same.

 DOES LIFE ASSURANCE INVOLVE GAMBLING?

Life assurance is a method of self-imposed savings similar to an
ordinary Bank savings account. There is no gambling here. When a
person buys a lottery ticket, he loses the money if his number does
not hit the jackpot, ( this is gambling) but the insured person is
assured of getting back his premium whether the insured event
( death ) does or does not happen. There is a guaranteed repayment.

THE CONCEPT OF INTEREST IN ISLAM:

The concept of interest is one of the most complicated in Islam.
The Prophet received the revelation condemning riba only a few days
before his Wafat and so the companions had no opportunity to ask
Rasulullah (SAW) for the fullest implications of the order. Even
Sayyidina Umar ibn al-Khattab had said,

"The last revelation of the Quran was concerning riba and the Apostle
of Allah passed away before explaining the full meaning of the passage
to us" ( Ibn Hanbal, on the authority of Said ibn al-Musayyab).

The exploitation of the economically weak by the strong is a form of
oppression. Hence, attaching profits (riba) on the personal loans
obtained by those who are really poor, downtrodden and debt-laden is a
disgrace and is condemned as haram by Islam. There can never be two
conflicting opinions on this.

But not all interest-bearing financial transactions fall within this
category of exploitation by the economically strong. Life assurance
and  buying houses on mortgage are two examples of contractual
financial transactions which fall outside this category of
exploitation.

To quote Muhammad Asad again," the question as to what kinds of
financial transactions fall within the category of riba is, in the
last resort, a moral one".

It is impossible to give an outright judgment in a non-Muslim country
banning on all kinds of interest-bearing financial transactions, in a
rigid and once-for-all manner putting the economically weak Muslim
minority in India at a greater economic disadvantage.  The
interpretation of Islamic scholars must not ignore the changes to
man's environment on his social, economic and technological
development.

That is the adoring beauty of the Quran. It is Islam's biggest
miracle. People living the third millennium may read the same Quran
without an alphabet having been changed, but will  see totally new
light, new messages, new interpretations and new discoveries that go
beautifully and logically cognizant of the  socio-economic-
technological environment of that time that we people living in the
second millennium never ever dreamt of.

 Hence my simple assertion is that, our traditional Alims should not apply the first century Hijrah definition of Riba to solve the most complicated economic problems of the 21st century.

Pamameen.

Assallamu Allaikum

On the issue of Halal Insurance, haven't we been told in no uncertain terms in the Quran, in the Sunnah, and in all prohetic traditions, that the one Insurance is Allah (saw), that upon him we rely and on him is our Tawakul?

the concept of man run insurance contravenes the insurance from Allah, and can crudley be interpreted as nothing but a money making scheme, for , in paying a monthly or yearly sum to an organization to guarantee you against any ill omens that might befall, aren't you in blatant defiance of the being of Allah? isn't there an element of shirk, to presuppose that because one might have an accident, he/she, needs to pay to cushion the blow of it, this in a way is dealing with the unseen, which is Allah's realm, and a potential shirk.

That we need more Ijtihad, there is no doubt, that Hallal insurance, is but a back door scheme to make money and a false claim onto the realm of the unseen must not be dismissed out of hand.

Wa alaikumussalam Brother mechita,

I appreciate your unshakable belief in Tawakkul and Taqwah.

At the same time our Prophet (pbuh) said beautifully realistically as follows

“Tie your camel and have your faith in Allah swt”

This Hadis speaks volumes. Belief alone is not enough.

In a very complex, heterogeneous and sophisticated world we have to think of ways and means to achieve educational advancement, economic development, technological progress and economic independence, at the same time holding fast on to the rope of Allah SWT  

I am afraid that you have taken a very uncompromising position on Insurance and I have a feeling that you seem to be in a hurry to condemn it without fully analyzing the pros and cons.

You have to keep in mind two vital factors here

(1) not all types of insurances work on the same principles. For instance in the case of Automobile Insurance, the owner of a car does not get back his premium if the event against which the person insured, does not occur. But in the case of Mutual Life Assurance, he gets back all his premiums( savings)

(2) Islamic scholars make a clear difference in the application of insurance principles between a fully developed Shari’a based nation ( Does one such nation exist right now? is a different question) and a nation like the U.K. or India where Muslims live as minorities.

I do not think that it is wise on the part of Muslims to condemn any and every sort of insurance with an omnibus term HARAM, regardless of whether it is Takaful or not and the country where it is introduced is in an Islamic Nation like Iran or a Non-Muslim nation where Muslims constitute, say about one to 10% of the population. The interpretation certainly varies. Can you positively deny it?

But if you ask me whether the Halal and haram rule varies in similar situations about say, homosexuality or prohibition on alcohol, of course it is a positive NO, but the same thing does not apply to all sorts of financial transactions.

I request you to read more and do deeper research on Takaful which  originates from Arabic word Kafalah, which means "guaranteeing each other" or "joint guarantee". In principle, the Takaful system is based on mutual co-operation, responsibility, assurance, protection and assistance between groups of participants. It is a form of mutual insurance. These are not against Islamic principles of co-operation and joint security of the Ummah.

As a matter of fact as I have explained Life Assurance works exactly like a long term saving scheme. However, personally I am scared to trespass deeper into Islamic jurisprudence as simple folks like us due to our shallow knowledge, may easily err on interpretation.

Allah swt knew best and May He forgive me if I am wrong.

Take care and Wassalam.

Assallamu Allaikum

I thank you for elaborating, this indeed is a very complex area for me personally, and for many of us, I guess. Question to ask here is this:

Do we have a historical precedent, during the lifetime of the prophet(pbuh), of caravans crossing the Arabian desert, being insured against brigandage? and it was common at the time.

I have not said it was Haram or hallal, but If I can avoid it, I will; for at the same time, we have to safeguard against uneslamic practices, legitimised by unscrupulous groups, for economic reasons; and let us not be taken by everything our scholars say; many of them are in the pay roll of corrupt, despotic rulers, who  themselves and their relatives have vested interest in many financial ventures. Trusting scholars, who have been telling us for centuries, to 'obey the ruler, even when he is an usurper', has proved disastrous for the Nation, I know this is another theme, but these are the same scholars, you are relying upon to tell us what is right and what is wrong; how many scholars can you name who ever stood and criticised the despotic, genocidal rulers in the Arab world? as such, we must exert extreme caution about any fatwa they decree, and that includes financial, as in the insurance, or mortgages cases. I will go further, and say, that scholars who are on the pay roll of Muslim rulers, ought not be listened to at all.

Salams Br.Mechita,

Here is an illustrated example on Islam based Insurance

I give you simplified arithmetical calculation on Islam based fire insurance and tell me how it is a back door scheme to make money. You can stretch your imagination and see how an Islam based insurance can work without the stigma of Riba attached to it.

In a village there are 100 Muslim families living in 100 huts, the average dollar value of each is say $2000.Based on calculations by actuaries, each hut owner makes a contribution of  $23 per annum to a Muslim Takaful Co-operative Society(If you do not like to  call it by the irreligious term Insurance) and hence the Society receives a total of $2300 per annum. Let us assume that the financial year starts on 1^st January and ends on 31^st December.

As on 31-12. 20xx, there were no fires or losses to the hut by any natural calamity, communal riots ( Imagine Narendra Modi’s Gujarat), floods etc.

Then the society which incurred an annual management expenditure of $300, still keeps the $2000 in shari’a based investment. For the succeeding year the Society reduces the premium to only about say $3 per annum per hut owner-this is to cover the management outlay.

Should a calamity or loss occur the owner of the hut will receive adequate compensation for the loss but the premium to be paid by every hut owner for the year after will naturally increase.

Don’t you think, a system like this is a sort of well organised mutual help between the members of the Ummah by which every participant is willing to contribute a small sum in order not to lose a large value of assets and expect charity to salvage him.

Well, in a fully Islam based country, the Govt. may come to the rescue of the victim by paying adequate compensation, but will it happen in Narendra Modi’s Gujarat?

How would a Muslim call this Haram particularly in a non-Muslim country or even in a namesake Muslim country where social justice has not been paid any serious attention to either by the individuals or the corrupt Government in power.

Assallamu allaikum

I am very appreciative of the effort you have made to make me see clearer. The mathematics make sense, I ask still to be forgiven for being a sceptic, might be won over, when I see it in practice, and corroborate with those participating in the scheme.

jazaku Allahu Khair

Salams,

My understanding of what you say is that car insurance may not be refundable to their clients in western societies. The question then is whether or not car insurance by this British  first Shari`ah-compliant insurer, is halal or not? Or does this comapany not deal with car insurance? If not then is there any halal car insurance companies either in the UK or US? And how are they halal?

Jk

Pamameen, the above post was for you, do you have any answers for my questions on halal car insurance? 

Jk.

Salam Brother Pakdil, I beg your pardon, I did not come this way for a long time. I am positive there are Islam based Car Insurance firms in the UK now. I am confident that you can find one. In case you do not find one go for a conventional one, it is perfectly okay from my knowledge of  insurance in Islam, looking at from the angle of a country where Muslims live as minorities. There is no intentional illwill or oppression there.Islam is much more logical than our traditional alims see it. Take care.

Why does everyone disapear as soon as I post?

Hello - I am a representative of Salaam Halal insurance. I noticed that several members of your community posted threads about the recent launch of our products and I am here to answer any questions...

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