ISLAMIC INSURANCE

What is Insurance? An insurance contract is a contract between the insurance company and the insured individual, whereby the insurance company undertakes to pay a certain amount of money as an indemnity against a loss suffered by the insured within a period of time, provided the insured pays to the insurance company a certain amount of money or several installments usually less than the amount that the insurance company undertakes to pay.

What is Islamic Insurance? According to Mohd Ma’sum Billah, in his article: An islamic insurance transacting is a policy of mutual co-operation, solidarity and brotherhood against unpredicted risk or catastrophes, in which the parties involved are expected to contribute genuinely.

The Development of Islamic Insurance It can be classified into the following six stages: Practices of the doctrine of al-Aqilah among the ancient Arab tribes as a tribal custom Practices of the Holy Prophet (SAW) Practices of the Companions Development in the 14th – 17th century Development in the 19th century Development in the 20th century

The Concept of Islamic Insurance Sincerity (Ikhlas) Absolute Shari’ah principles Moral Attributes Element of insurance contract A contract of insurance should not be operated based on the principles of interest (riba) but should be operated based on the principles of al-Mudharabah

The Difference Between Conventional and Islamic Insurance Conventional Insurance 1. Based on a buy and sell contract. 2. The subject matter of the contract which is concluded as a buying and selling transaction contains unknown and uncertain factors (Gharar). 3. The whole business is said to have semblance of gambling as profit or loss which is depend on ‘chance’. Islamic Insurance 1. Must not be based on buy and sell contract. 2. The subject matter of the contract must be definite, clear and transparent so that it is known to all parties of the contract. 3. The system contain the element of shared responsibility enabling the spreading and sharing of profits or losses among a group of members.

Products of Islamic Insurance (Takaful) Family Takaful Individual Plans - Family Takaful Plan - Takaful Siswa - Takaful Ziarah - Takaful Sihat -Takaful Waqaf -Others Group Plans - Group Family Takaful Plan - Group Medical Takaful Plan General Takaful - Fire Takaful Scheme - Motor Takaful Scheme - Accident Takaful Scheme

Conclusion As a conclusion, even though certain aspects of conventional insurance could not be practiced by Muslims due to its involvement of some unlawful elements in the eyes of the Shari’ah, it is now the responsibility of the present Islamic scholars to be innovative and come up with an alternative model of Islamic insurance which eliminates all the elements prohibited by Islamic law, in order to ensure the Muslim Ummah to be rescued from any form of unexpected risk and peril.