Islamic Insurance: A Modern Approach to Islamic Banking

By Aly Khorshid | Go to book overview

3

PRE-MODERN AND MODERN JURISTS' STANDING ON INSURANCE

Introduction

This chapter begins with a brief history of insurance, showing that it has surfaced throughout history and geography in many guises, even if few of them, it must be noted, are not as much profit-oriented as they are measures towards damage limitation. Then, the chapter starts to concentrate on the implications and applications of insurance where the Shari'a is concerned, before discussing the views of pre-modern jurists who had to form opinions of a type of Mu'amalat (dealing) which were known at their time as Sawkara (insurance). As we will see, the first scholar to give an opinion was Ibn Abdin, then Sheikh Mohammed Abdu, who was followed by a number of honourable scholars such as Mustafa Al Zarqa, known to approve of all kinds of insurance. Modern jurists' opinions were drawn from those of the pre-modern jurists in the light of modern Mu'amalat, and their arguments are about its permissibility within Shari' a law.


A history of insurance

Although the insurance policy as we know it is a relatively recent development, the concept is by no means new. The idea of transferring the risk of loss from an individual to his group began thousands of years ago. When a family's hut burned down, for instance, the entire tribe would rebuild it. Traces of rudimentary insurance practices are still seen among the few primitive tribes that exist today (Raynes 1948:71).

About 2500 BC, Chinese merchants were using primitive forms of marine insurance (Ibid.: 32). When boat operators reached river rapids they waited for other boats to arrive, before redistributing the cargo so that each boat carried some of the contents of the others. If one boat was lost navigating the rapids, all the operators shared a small loss but nobody had their entire cargo wiped out (Rahman and Gad 1978:32).

Benevolent societies were developed in Egypt as early as 2500 BC. There is evidence that the ancient Egyptians had writings on the walls of some of the temples in Luxor (Upper Egypt) and that they formed committees for burying

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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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