IN THE NAME OF ALLAH AMOST GRACIOUS, MOST MERCIFUL

"Help ye one another in righteousness and piety, but help ye not one

an other in sin rancour"

(Maida V.3)

The Concept of Istaniic Insurance

Insurance in islam is a co- operativ insurance that pro covers for contributions on social basis, and is not targetting profit, in contrast to the coventional commercial insurances which are transacted on commercial and defined financial principles to attain profit and hence are contradictory to the IslamicSharia Laws.

As insunince has assumed great importance to modern commerce, trade and industry, it became inevitable fur Muslim jurisprudents to deduce a pattern of insurance practice that will satisfy the essential need for Muslims and conforms with the islinicholly sharia eminent principles.

The contract of insurance had been the subject matter of prolonged, detailed, and meticulous studies, examinations and scrutiny amongst the Muslirnjurisprudents who have come out with different conclusion and opinions.

The majority of them have disapproved the conventional commercial insurance in all its forms and have justified their opposition to the said contract and practice because it is of a Gambling nature, it approved usury and most articulate it includes AL-Gharrar which is the indeterminate, doubtful and speculative transaction of sales of unpossessed things or a sale of a concealed consequence, which is prohibited according to various sayings (1 of our prophet Mohamued (May peace be upon him).

According to islamic jurisprudence, the element of kL-Gharrar disqualifies any contract if:

a) It is incorporated in financial indemnificatory or compensatory contract.

b) Its contractual effects are substantial.

c) It affects the real contractual intersts, and,

d) There is no genuine need and necessity for such a contract, The first three clcments hold good in the case of the commercial insuranc contract but the fourth has become in operative and not applicable because it has since been established conclusively that insurance protection is an inevitable need, to safeguard the economics and properties of people, that can not be evaded.

The Muslim jurisprudents confernce, held in Mecaa in 1976, have consensusly appcçved the co-poerative insurance to replace the, commercial insurance which was disapproved, because.

earlier, because

a) the co-operative Insurance is a donation contract and is a call for co-operation to spread risks and participate in losses and catastrophies which may occur,

b) The Co-operative Insurance is free of all Forms of usury.

c) Since the contributors are donators then there is no gambling, risk taking, or Gharrar as it is the case in the commercial insurance contracts.

d) The investment of collected donations shall enhance and augment the concept of co-operation