Insurance from Shari'ah Point of View - Part 1

Source - http://www.islamonline.net/english/index.shtml

Dear scholars, as-Salamu `alaykum. Kindly furnish me with Islamic views on insurance, is it a permissible
transaction? Jazakum Allah khayran.
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Wa `alaykum As-Salamu wa Rahmatullahi wa Barakatuh. In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.

Dear questioner, we are very pleased with your question which revolves around one of the economic aspects of
the Sharia`h, the divine legislation revealed to regulate man’s affairs.

As regards your question, we would like to stress that insurance companies emerged as a corporate bodies
carrying out some sort of transaction new to the Islamic Fiqh, for it was not known at the time of revelation of
the Shari`ah nor at the time of the great scholars who founded the known Fiqh Schools.

Insurance companies offer variety of services, including what is called commercial insurance. All categories of this
kind of insurance are haram from the Shari`ah point of view since they are interest-oriented dealings, and this is
something textually prohibited according to the Glorious Qur’an and the Prophetic Hadith. What also makes such
transaction haram is the fact that they involve gambling which is unlawful and gharar (undue uncertainty) which is
also prohibited for it entails devouring people’s properties wrongfully.

Tackling the issue in detail, we would like to cite for you the following fatwa issued by the prominent Saudi Islamic
lecturer and author, Sheikh Muhammad Salih Al-Munajid, in which he states the following:

All types of commercial insurance no doubt entail Riba (interest) because you pay a specific sum of money and
take a larger or smaller amount should a risk occur. Accordingly, this coverage contains Riba An-Nasi’ah interest
on lent money) and Riba Al-Fadl (exchanging a superior thing of the same kind of goods with more of inferior quality
of the same kind of goods), for as we know, the insurers take premiums from those under this coverage and promise
to give them smaller or larger amounts should a risk occur to the insured. No doubt, this is the very same Riba which
is prohibited according to many Qur’anic verses.

All types of commercial insurance no doubt involve gambling which is prohibited in Almighty Allah’s saying,
(O ye who believe! Strong drink and games of chance and idols and divining arrows are only an infamy of Satan's
handiwork. Leave it aside in order that ye may succeed.) (Al-Ma’idah 5: 90)

All types of insurance include ambiguity since the insurers say to you, “pay such premiums and in case a risk
occurs to you we will pay you such a sum of money.” No doubt, this is the very same gambling. Even distinguishing
between insurance and gambling is an unreasonable contention that cannot be accepted by sound mentality. Rather,
insurers themselves concede that insurance involves gambling.

All types of commercial insurance contain gharar, which is prohibited according to many sound hadiths. We may
cite here the hadith narrated by Muslim on the authority of Abu Hurayrah (may Allah be pleased with him) who said
that the Prophet (peace and blessings of Allah be upon him) prohibited Bai` Al-Hasa (i.e. sale by means of pebbles,
in which the purchaser tells the seller that when he throws a pebble on his goods, the sale contract will be confirmed
or the seller tells the purchaser that on whatever thing a pebble thrown by him falls will be sold to him) and Bai` Al-
Gharar (to sell a thing which one doesn't have in one's possession, nor expects to bring it under one's control, e g.
fish in the river, or birds in the air).

Insurance from Shari'ah Point of View - Part 2

All types of commercial insurance entails an unbearable amount of ambiguity or gharar , because all insurance
companies and all those who offer insurance coverage prohibit absolutely insurance against any thing that is not
liable to risks. This means that liability to hazards is a pre-condition to insurance coverage. It is also prohibited to
know in advance the exact time of happening a risk nor the amount of money you will take should an incident
happens. Thus, insurance includes the three types of the unbearable gharar.

Therefore, all categories of commercial insurance represent devouring people’s properties wrongfully which is
prohibited according to the text of the Glorious Qur’an,
(O ye who believe! Eat not up your property among yourselves in vanities…) (An-Nisa’ 4: 29)

Moreover, commercial insurance with all its forms is a trickery operation to eat up people’s property illegally. One
of the accurate statistics conducted by a German expert have proven that the proportion that goes back to people
in comparison with what they pay does not exceed 2.9%.

So, insurance is a great loss for the Ummah. As for the disbelievers whose bonds of affection and mercy were
corrupted and vanished, they were forced to resort to this kind of transactions however they hate it as they hate death.

Moreover, Sheikh Faysal Mawlawi, deputy chairman of the European Council for Fatwa and Research, adds:
Commercial insurance is originally haram as agreed upon by most contemporary scholars. It is well known that
in most non-Islamic countries there are co-operative and mutual insurance companies. There is no harm from the
Shari`ah point of view to participate in these services. So, it is unlawful for a Muslim living in a country where there
is such a co-operative insurance company to make an agreement with a commercial insurance company. But, if a
co-operative insurance company is not found one may enter into a contract with a commercial insurance company
only by way of necessity. If a person is forced by law to insurance or by way of need, it is obligatory for him to be
content with the minimum proportion of insurance that covers his need or to the minimum of such transaction he’s
being forced to carry out.

BlockBuster Deals

I'm attracted to share my experience dealing with TM in relation with how they are being unfair to me....

this could happened to you as well.... learn from my mistakes, my dear brothers and sisters.

Day 1: call 100 to know the procedure; I talked to a lady, then before I start ask anything, she is asking my

details for their record. Happened to be, the lady who answered the call is not the correct person @ ext., and

she told me to call back 100 but this time "press bla bla bla"; immediately after hang up the call, one agent

called (looks like the lady operator is doing side business by asking details and pass it to the agents).

From there on, the agent proceed with the registrations.

Day 3: installation / registration of telephone line.

Day 5: telephone line activated; humble advice from the TM technician that, do not make any outgoing calls just

yet, wait till the installation of Streamyx. Otherwise the "sewa bulanan" will be activated. And I did as he advised.

Day 9: Installation @ setup of Streamyx (Blockbuster Deal - 1MB); yahooo internet can be used automatically.

The agent said that I can collect the free cordless phone from any TM Point outlet by showing the Streamyx

activation paper.

Day 10 onwards: make some phone calls (land line) - under Blockbuster Deals, land line phone call throughout

M'sia is free.

Day 40: first bill of close to RM100 for land line phone calls. No bill for internet. The cutoff date is Day 25.

Day 41: ambush TM Point; Customer Service said that:

- in the TnC (which is written in small font with many paragraphs that 99% of us normally don't read), it is

mentioned that the land line free calls will become active only after 1 month from the activation of the Streamyx.

It is your mistake that you make the dealings with the agents and not directly with TM Point.

At this point, I'm forced to pay RM100 for land line phone calls. And the guy advised not to make any land line

phone calls assuming they are free, cause the AGENT didn't register the Blockbuster Deals into my account yet.

Meaning, the 1 month in the TnC is not from the activation date, rather from the day the package added into the

account manually by the person in charge (in my case the Agent). The Agent didn't add the package to my phone

account until this date.

The Customer Service guy request to add the package to my account (from HQ i guess) and said that call back

to 100 and confirm the package is added into your account after 3-4 working days.

- regarding the free cordless phone, it will be sent to house and not to be collected from TM Point (the cordless

phone will be sent to house after the first bill payment or so).

Day 50: Call 100 to know the status; the package still not added.

Day 62: Call 100 to know the status; the package still not added.

The lady asked me only to call back on day 85 to confirm that the package (i.e. free land line) can be used from

Day 85 onward.

This is because the package was preliminarily added but will become active only after Day 85 (due to the package

was added after the monthly cutoff date i.e. day 55). Whateverrrrr.

Day 70: 2nd bill arrived; RM110 for land line calls. From Day 26 to Day 55 (bear in mind that my first ambush to

TM Point was on Day 40; meaning up to Day 39 I was making some land line phone calls). The bill also include

the Streamyx bill from Day 1 to Day 85 (close to RM300).

Day 72: Ambush TM Point again. This time around, the Customer Service guy took my complain and said that

RM110 need not to be paid just yet. Wait till somebody from TM to call and clarify the issues within the next 14 days.

My argument is just that in the TnC it is mentioned 1 months from the activation. A valid point, that I will stick to it.

Day 73: The day I'm writing this entry.

Moral of the Story:

1. Do not give your particulars/details to any strangers

2. Do not deals with Agents (unless recommended by someone who have used them)

3. Read TnC

4. Ask your friends / relatives / neighbors if they have experienced any unusual things in relation to the

same situations.