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:

1. Practices of the doctrine of al-Aqilah among the
ancient Arab tribes as a tribal custom
2. Practices of the Holy Prophet (SAW)
3. Practices of the Companions
4. Development in the 14th – 17th century
5. Development in the 19th century
6. Development in the 20th century
 The Concept of Islamic Insurance

1. Sincerity (Ikhlas)
2. Absolute Shari’ah principles
3. Moral Attributes
4. Element of insurance contract
5. 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 General Takaful

1. Individual Plans - Fire Takaful Scheme
- Family Takaful Plan - Motor Takaful Scheme
- Takaful Siswa - Accident Takaful Scheme
- Takaful Ziarah
- Takaful Sihat
-Takaful Waqaf
-Others
2. Group Plans
- Group Family Takaful
Plan
- Group Medical Takaful
Plan
 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.