The 1985 Islamic Fiqh Academy ruling
Resolution No. (9) Concerning Insurance And Re-Insurance
The Islamic Fiqh Academy, emanating from the organisation of Islamic Conference, meeting in its Second Session in Jeddah, Kingdom of Saudi Arabia, from 10 to 16 Rabiul Thani, 1406 H (corresponding to December 22-28, 1985).
- And after reviewing the presentations made by the participating scholars during the Session on the subject of 'Insurance reinsurance';
- And after discussing the same;
- And after closely examining all types and forms of insurances and deeply examining the basic principles upon which they are founded and their goal and objectives;
- And having looked into what has been issued by the Fiqh Academics and other institutions in this regard;
RESOLVES
- The Commercial Insurance Contract, with a fixed periodical premium, which is commonly used by commercial insurance companies, is a contract, which contains major element of risk, which voids the contract and, therefore, is prohibited (Haram) according to the Sharia.
- The alternative contract, which conforms, to the principles of Islamic dealings is the contract of co-operative insurance, which is founded on the basis of charity and co-operation. Similarly is the case of re-insurance based on the principles of co-operative insurance.
- The Academy invites the Muslim countries to work on establishing co-operative insurance institutions and co-operative entities for the re-insurance, in order to liberate the Islamic economy from the exploitation and violation of the system, which Allah has chosen for this Ummah.
European Council for Fatwa and Research ruling
Cooperative and mutual insurance
“Commercial insurance is originally haram as agreed upon by most contemporary scholars. It is well known that in most non-Islamic countries there are co-operative and mutual insurance companies. There is no harm from the Shari`ah point of view to participate in these services. So, it is unlawful for a Muslim living in a country where there is such a co-operative insurance company to make an agreement with a commercial insurance company. But, if a co-operative insurance company is not found one may enter into a contract with a commercial insurance company only by way of necessity. If a person is forced by law to insurance or by way of need, it is obligatory for him to be content with the minimum proportion of insurance that covers his need or to the minimum of such transaction he’s being forced to carry out.”
Sheikh Faysal Mawlawi,
Deputy chairman
European Council for Fatwa and Research
Source: islamonline.net
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