Islamic Insurance: A Modern Approach to Islamic Banking

Islamic Insurance: A Modern Approach to Islamic Banking

Islamic Insurance: A Modern Approach to Islamic Banking

Islamic Insurance: A Modern Approach to Islamic Banking

Synopsis

Some Muslims believe insurance is unnecessary, as society should help its victims. Muslims can no longer ignore the fact that they live, trade and communicate with open global systems, and they can no longer ignore the need for banking and insurance. Aly Khorshid demonstrates how initial clerical apprehensions were overcome to create pioneering Muslim-friendly banking systems, and applies the lessons learnt to a workable insurance framework by which Muslims can compete with non-Muslims in business and have cover in daily life. The book uses relevant Quranic and Sunnah extracts, and the arguments of pro- and anti-insurance jurists to arrive at its conclusion that Muslims can enjoy the peace of mind and equity of an Islamic insurance scheme.

Excerpt

What is it about insurance that is so divisive and emotive to modern Muslims? Is it not that Islam is a religion based on peaceful coexistence with fellow man, with the maintenance of stable and constructive societies? This second question is perhaps the most germane; the answer is yes, Islam is a society that cares for its most unfortunate members, the result of which is a community that can thrive, free from crime, bitterness and sorrow. And if this is the case, if communities and nations pull together to assist those most in need, there is a distribution of wealth and resources unrestricted by a nadir of charitability. The gains of the rich and comfortable, be they from skill or fortune, will help the poor with their losses, be they foolish or calamitous. Under a system such as this, why bother getting personal insurance?

There is another reason why insurance is frowned upon and outlawed in Islamic States and among Islamic communities: interpretation of many Quranic edicts brings the conclusion that insurance is not only unnecessary but highly unlawful Islamically. Chief among these are the outlawing of riba (usury) and gharar (risk). The lending of money at high rates of interest, or the payment of money for nothing are both linked with commercial insurance and contribute to its proscription. Riba is considered extremely anti-Islamic, and references to it pepper the Quran, each mention adding to its significance. Insurance is a risk. People in the West willingly pay money to insurance companies in order to buy peace of mind, with no guarantee of return. In one sense, never having to make a claim is a good thing as it suggests mishaps or tragedies have been avoided. In another, this means that the insurance company has literally been given the money, and the insured is out of pocket. Even the most generous no-claims bonus will not square this circle. To the Muslim, things that happen on earth are the will of God, and so to insure against them could be construed as questioning his actions.

Insurance is, however, something that the Muslim participates in five times a day; what is prayer if not a form of insurance premium in the hope of a divine dividend at the end of life? Faith itself is insurance, and the Quran states many examples of how worldly insurance is as sensible and as beneficial to community as is faith. This book methodically explores many of these

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