Insurance In ISLAM

The concept of takaful, or Islamic insurance, where resources are pooled to help the needy does not contradict Shariah (Islamic Law). The concept is in line with the principles of compensation and shared responsibilities among the community. It is not a new concept, in fact it had been practiced by the Muhajrin of Mecca and the Ansar of Medina following the hijra (migration) of the Prophet over 1400 years ago. It is generally accepted by Muslim Jurists that the operation of conventional insurance does not conform to the rules and requirements of Shariah. Conventional insurance involves the elements of uncertainty (Al-gharar) in the contract of insurance, gambling (Al-maisir) as the consequences of the presence of uncertainty and interest (Al-riba) in the investment activities of the conventional insurance companies which contravene the rules of Shariah. Takaful is an alternative form of cover which a Muslim can avail himself against the risk of loss due to misfortunes.