Islamic Insurance: A Modern Approach to Islamic Banking

By Aly Khorshid | Go to book overview

1

THE MEANING OF INSURANCE IN ISLAM

Introduction

To Muslims, Islam is a complete way of life that endeavours to construct the entire fabric of human life and culture in the light of values and principles revealed by God for man's guidance. The basis of Islamic belief is included below as a guide to readers unfamiliar with the details of the religion. In essence, Islam revolves around Mohammed's Revelation of the word of God, Allah, and a Muslim must adhere to His teachings, which are covered by the 'Five Pillars' of Islam.

The world of early medieval times, when Islam was young and starting its spread, was of course a very different place than the world of today or, indeed, of any period in the interim. Like any revealed faith, it has had to reinterpret-and then justify or forbid-trappings of an ever-changing human environment (the discoveries of lands hitherto unknown to adherents, new inventions, scientific discoveries, changing mercantile and financial methods, the migration and merging of civilizations and peoples, to name but a few). It was up to Imams, scholars and clerics to debate and decide whether an innovation or discovery could be circumscribed by Islamic teachings; their weighty opinions were and are hard to contradict, versed as they are in the technicalities and implied messages behind every passage of the Quran, just as a solicitor's knowledge of the minutiae of a legal Act is essential in fighting a legal case. In banking and insurance schemes that were benefiting Western traders and businesses, many of the scholars saw contradictions with Quranic teaching should their application spread to Muslim lands. The second part of this chapter explores Islamically legitimate banking as an example of how careful and fastidious interpretation, not the mere search for loopholes, can find practicable and beneficial solutions.


Islamic revelation

Just as Christianity is an updated version of Judaism, Islam is a more modern interpretation of Christianity. The three major religions of the world share many common points but jar on many others, the fundamental areas of disagreement

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Islamic Insurance: A Modern Approach to Islamic Banking
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Tables ix
  • Introduction xi
  • Acknowledgements xiv
  • 1 - The Meaning of Insurance in Islam 1
  • 2 - Riba (Usury) and Gharar (Risk) 31
  • 3 - Pre-Modern and Modern Jurists' Standing on Insurance 44
  • 4 - The Development of Mutual Insurance in the West 97
  • 5 - The Development of Islamic Banking and Insurance in Malaysia 113
  • 6 - The Development of Islamic Banking and Insurance in Saudi Arabia 132
  • 7 - Basic Principles for an Insurance Scheme Acceptable to the Islamic Faith 155
  • 8 - Conclusions 166
  • Appendix 1 173
  • Appendix 2 180
  • Appendix 3 183
  • Appendix 4 206
  • Notes 208
  • Bibliography 216
  • Index 223
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