INSURANCE CONTRACT IN ISLAMIC LAW

Question:

What is the ruling on the insurance contract in Islamic Sharia ?

Answer:

The insurance contract in its current form is a new contract, and therefore the past jurists did not touch upon it, but this does not prevent us from getting to know its legal ruling because Sharia has a ruling in every event that occurs from these new facts (new contracts).

The correct method for knowing the new contract is to know its contents and present it to the meanings, rules and principles of the Shari’a. There is no doubt that it is on the basis of ijtihad and may be close or far from correctness, so the preference is for what is similar to contracts and legal principles. The permissibility of this contradictory ijtihad, because it is a kind of abnormal ijtihad. On this basis, we try to identify the ruling of this new contract, and before beginning efforts to identify its ruling, it is necessary to clarify its essence, because visualizing a thing and knowing its essence precedes recognizing its ruling.

Definition of insurance

Insurance language: it is security against fear, as this contract gives security, and it is intended to reassure the soul and its stillness by providing the reasons for reassurance, and the insurance contract is the one that tries to give reassurance and security to whoever wants it and is a party to it.

In legal terminology: it is a contract between two parties, the first is called (the believer), and the second is called (the insured) according to which (the insured) obtains a pledge for his benefit or for the benefit of another insurer if a specific accident occurs and according to this pledge the (insurer) is obligated to provide a specific performance To (the insured) in return for a certain premium or premiums that the (insured) pays to (the insured) at the agreed times.

Elements of an insurance contract

In light of this definition, its elements consist of:

• Believer
  
• Insured
  
• An undertaking by the insurer to pay a specific amount or performance
  
• The accident or danger that, if it occurs, the insurer will carry out his obligation
  
• Premiums that the insured undertakes to pay to the insured
  

The nature of this contract 

• Lawyers say it is one of the contracts of netting
  
• It is one of the possibility contracts (Gharar contracts)
  
• It is a binding contract for both parties
  

As for it being one of the compensation contracts, this is established in the sense that each party takes in return for what he gives, so the insured gives the premium and takes in return what the insured has committed to in terms of specific performance, just as the insured gives what he has committed to the insured and takes in return for that premium that the insured is obligated to pay to him. The trustee: the seeker of safety.

As for it being a probabilistic contract (al-gharar), because the issue in the gharar contracts is the ignorance of each party what he takes and what he gives, and this is apparent in the insurance contract. The believer will take the premiums, but he does not know whether he will pay what he has committed to or not. ; Because what he committed is dependent on the occurrence of the risk (the event) stipulated in the insurance, which is the verse of gharar in contracts.

As for the fact that it is binding on both parties, it is also clear that neither of the parties can deviate from what he has committed to in the contract, and this is a sign of contracts binding on both parties.

And there are those who allow it to be freely, and there are those who forbid it absolutely, and those who allow some of it, as an exception, are the cooperative contract, which is not widespread. The well-known in insurance contracts is the so-called “commercial insurance contract” or “insurance contract with a specified premium.” The insured is usually a company that undertakes the conclusion of contracts and the purpose of that profit Which types:

People insurance

One of the most common forms of life insurance is that a person applies to the company to conclude this contract with it. It is usually based on determining a specific amount to be provided by (the insured) in periodic installments on specific dates, and for a specific period such as ten or twenty years. If the period ends and the insured remains alive, the company returns to him what It is paid in installments with its interest, and it is permissible without interest if the two parties agree. If the insured dies before the expiry of the period, the company is obligated to pay the sum of the insurance in full and in full to the heirs of the insured or whoever he appoints during his lifetime, even if he paid only one premium.

Insurance on accidents that affect the body of the person who is insured
from accidents that do not lead to his death, such as losing his leg or hand or other parts of his body. The company must pay the full amount. As for the second type related to a member of its members, if this member is injured, the company is obligated to pay the amount when this particular member is injured.

Money
insurance, such as insuring a person’s home from fire or demolition, or the like, which leads to its damage, or insurance on the merchant’s assets in his shop, or insurance on goods during their transportation by land, sea or air from one place to another. The insurance contract is that the insured pays periodic premiums, either in One-time insurance. Such as insuring the merchant on his goods purchased from Europe in return for transporting them to his home country in return for an amount that he pays once. If the danger occurs, the company must pay the insured, and if it does not happen, the company does not pay any of the premiums it received from the insured.

Liability insurance

It is that the company bears financial responsibility for the damages caused by the insured to others by his mistake, such as insuring the owners of cars for mistakes that harm others, or insuring people who carry out work that may harm others while they are in their professions and trades. And since it is a contract of possibilities, and this is the argument of those who are forbidden to it, and they explain that, they say that gharar exists, so the trustee does not know how much he will pay until he takes the insurance amount. First:Suspicion of usury because usury is usury preferred, and it is by exchanges in the six usurious funds (gold, silver, wheat, barley, salt, dates). (Wheat for wheat, different quality and bad) and the exchange is required without the same in the two different (one kilo birr with 2 kilos of dates) and usury Al-Nasee’ah in the money provided that he returns more than what he gave him because the increase in exchange for the money and this directed him to pay (100 riyals) so he takes twice the amount and there is a facilitator Or gambling, which is forbidden by the text of the Qur’an, and the meaning of gambling is that one of the players takes money without return (there is no usual trade) and gains and loses as soon as an event occurs that he has no intention of happening, and this meaning exists because the one who is entitled to insurance is entitled to an insurance allowance when an event that has nothing to do with him such as the sinking of a ship and no relationship The believer has the right to prevent it or to prevent it, and for that reason, a group forbids it, and they are not excluded.

The arguments of the permissive

They used a set of evidence that they saw as valid in their view, for the statement of all kinds:

The principle in contracts and conditions is that it is permissible and only what is stipulated is prohibited, and since there is no text prohibiting it, it remains on the principle of permissibility.

Insurance has become a familiar thing, and since custom has a place, it necessitates saying that it is permissible, and as long as people have consented to it, there is no sense in prohibiting it with consent.

The interest is a guide to the dissolution of the contract, and it is one of the principles of Shari’a, and in this there is an interest for the trustee of his peace of mind and psychological stability in this contract because he is safe from dangers due to the existence of justice from the company, so it should be said that this contract is dissolved.

- The insurance contract is based on cooperation, so everyone cooperates and gives out of the total the amount due to the owner of the disaster, which is desirable, God Almighty said:

There is no gharar, because the trustee knows what he pays, and it is the premium, and what he takes is the security, so there is no gharar here, and a little gharar is forgiven as in the compensation contract. .

- The rational system, since the rational person bears blood money with or without the offender, the company is measured against the rational without compensation, because the rational person bears the blood money and the company compensates the loss.

- The allegiance contract that is taken in the Hanafi jurisprudence, which is that a non-Arab person comes and greets and says to the Arab, “You are my master, you inherit me if I die, and you make sense of me if I earn.” He arranges obligations in which there is deception, but forgive this because of the ignorance of the time of death.

- The retirement system that Islamic countries have adopted, as the state takes a part of the employee’s salary. If he dies or is referred to retirement, the state pledges to give him a certain amount, and what he took may be more than what the state deducted from his salary, and no one said that it is not permissible.

- Social insurance that the state takes out of the salary, and if his leg is cut off, the state compensates him in one lump sum or in the form of salaries, and this does not prevent anyone, as the factory owner insures them (ie the workers) against unemployment.

Introduction to the responses to the permissive from the scholars who say that it is forbidden, and they are sound and acceptable responses:

First, from the point of view of principles

They built their protest in three directions:

   First: clinging to the principles upon which the rulings are built, and this includes interest, custom, and necessity.

   Second: The analogy with some legal contracts such as the contract of custody and compensation, and it is also possible what the Malikis held in the binding promise.

   Third: clinging to legal systems such as the system of rational people, where the rational person is obliged to pay blood money in the event of the wrongful killing of the affiliated to it.

Responding to the arguments of those claiming the dissolution of insurance contracts

First: Reliance on interest

What is meant by it is the sent interest, and what is meant by it is that action that results in a benefit, but there is no legal evidence that calls for the permissibility of this action or its prohibition, because in the case of evidence of permissibility, this evidence is the basis for the permissibility of this act and there is no need to go to the interest, and if the evidence indicates its prohibition, then there is no Income for the accepted interest, and if we look at the insurance contract, we find that its contents and the things it mixes with absolutely forbidden things call for not accepting its solution based on the interest because there is no interest in what is forbidden or prohibited by law.

Second: As for clinging to custom and relying on it, it depends on conditions including:

That it be a valid custom and the correct one that does not contradict the meaning or a legal ruling. If it violates it, it has no consideration because the custom built its consideration on the basis of its being based on the implicit consent of the people, and consent is not considered if it violates the law. Immorality remains forbidden even if the two parties agree, and the insurance contract in its meanings and implications of the suspicion of usury, gharar and gambling is what prevents the saying considering custom and people’s habit of dealing with it.

As for  clinging to need or necessity , necessity is only permissible to take into account and consider it to commit the forbidden if it is not necessary, so that if it is not taken according to it, the person will perish. Evidence that those who take it are few people, not most of them, then the trustee did not make an effort to find an alternative, and if the existing alternative was a little or difficult to achieve, then a few would increase and the difficult matter would be facilitated, and therefore it does not depend on necessity and need, which is the status of necessity.

As for  the analogy with some contracts, the  answer is:

Some of them were built on the basis of analogy, and one of the conditions for taking analogy is the presence of the reason in the measurer and the measure against it, and the absence of the text by virtue of the measure, to the last of the terms of measurement. In the issue of royalties or custody, there is no need for correct analogy in them, so the royalties are the subject of the contract in it is known, and it is the work done by the subject. It and its not being strictly limited does not invalidate the validity of this name in this contract, just as nothing of the work of the knitter and the tailor does not, as we cannot determine the work of each of them, but the work of each of them is known, and ignorance in the amount and nature of the work cannot be determined and in guarding the subject Guarding is the work of the guard, not the security that the tenant obtains, and the work of the guard is known. As for security, it is the result of the contract, not the subject of the contract, because the subject of the contract is the work of the guard, and the company has no work to do with the tenant until we measure what it does on what the guard does.

And the claim of security is not the subject of the contract. It may be a result, for example: Whoever buys a house to live in it, the house is the subject of the contract, the residence is the target and not the subject of the contract, and in guarding, the contract is the work of the guard of vigilance and attention, and harm may reach him in the face of the thief. It is the fruit of guarding.

As for  the binding promise and  its copy with the Malikis: marry and I pay you the dowry, or buy a car and I give you such, the owners differ in its permissibility, and those who say permissibility stipulate that the work be undertaken by the promised, and in this case the promise goes to his home the donor and the insurance contract in which is compensation and not a donation.

As for the saying of the one saying:  I take this path and I am a guarantor  , as is the case with the Hanafis, then this is one of the donation contracts, then one of its conditions is not knowing the way from the one who is promised, and knowing the way from the one who promises. This measurement is correct.

As for the systems: Islam has enjoined the system of the rational, and they are the supportive men, as well as the system of expenditures and fines by melody, and analogy with the difference because this system is enjoined by Islam and insurance is brought about by the people. . Clinging to the legitimate system of rationality, and therefore the permissibility of agreement does not change the facts of things, it is an analogy with the difference.

The face of this difference is that the rational system is based on lineage and the kinship that is commanded to be connected. One of the manifestations of this connection is the cooperation between the affiliates and those related to them, and the wrongful killer deserves aid; Because he does not have a criminal intent, but rather because of a mistake from him, and the right of the wrongdoer is insurance. The most deserving of people to help him is his sane mind. Whose members support each other and is not based on profit in the first place, but is based on the implementation of a legal ruling based on ties of kinship, aiding the wrongdoer, and cooperating in righteousness.

And none of these meanings in insurance contracts. There is no relative relationship and does not support, as the company does not know the insured and does not care whether he erred or not, so this analogy is not correct.

As for  their protest to the loyalty contract  (you inherit me if I die and you make sense of me if I earn), it is an exceptional ruling, and the exception cannot be measured against, and this system makes the lord as a member of the family of the supreme lord, so it is attributed to his clan. These meanings are not found in the insurance contract system.

As for  their protest against retirement:  Retirement is a reward and punishment from the state for its employees who have served it.

What seems to me that this response is weak, but we can respond to the authorized persons that their contract should not be measured against the pension system, because what the state deducts is not considered a premium, and the rest of the employee’s salary is his real salary, and he was satisfied with that, and this part the state agreed to give on its own to the retired The state pays it, and it has no compensation after adjusting the deductible, and this is a matter of reward and not as a way of compensation, and because it is the duty of the state to commit itself to gifts to its employees, so that this is like an incentive for them to perform their jobs. .

These meanings are not present in insurance, as the company does not return the premiums as a matter of sponsorship, but rather it is its net profit, so this analogy is not correct.

As for what the agencies make of deductions and gifts in old age for their workers, it can be relegated to the status of what the state does, and the difference between them is that employers oblige the government and what they give from it, it is not permissible for insurance companies to be compared to what the government does.

Conclusion: From what we have mentioned, it is likely for us that it is not permissible, and these images are far from the solution and bring it closer to the prohibition if it does not fall into it.

Q: What is the alternative?

Answer: Some have argued that the alternative is cooperative insurance, and is it suitable to cover the needs of those wishing to have insurance? And answer them: What is the difference between the two pictures?

The absence of a third party, which is the companies, and there is no difference, and there is deception and suspicion. What you fled from is present. It is a gift tainted with compensation, so it becomes a sale, even if its date is delayed. What the forbidden, which is cooperative insurance, must be explained.

The nature of cooperative insurance:That a group of people who earn their profit from a specific business, such as the owners of planes and transport, agree among themselves on a specific profit, monthly or for several months in one fund, and they agree that whoever suffers harm from them, he is compensated from this fund according to a specific system, such as compensation for the whole or half less or More in view of the assets of this fund, and this fund was authorized by the Islamic Fiqh Academy and those who say that it is forbidden and justified this is that it is free from gharar and profit and because those who participate in this type are considered believers and trustees in this matter, there is no foreigner as in the contracts of companies and because what each one of these offers is in a way The pure donation, as well as what the victim receives from this fund, as if others donate from their money and premiums that they gave to this fund, and with this adaptation, it can be said that it is resolved and there is still something in the soul from it, because every motive for the premium on the face of the donation is waiting for it instead, which is what he receives from compensation if he suffers a catastrophe And the gift with the condition of the compensation implicitly or explicitly, the consideration takes it out of the nature of the gift and the gifton the condition that the consideration is a sale, and in this case we are faced with a big thing, which is that what the participants pay is a donation based on the hope that the participant will be compensated for that, with evidence that the fund does not compensate non-participants, so their donation is attributed to the waiting for the consideration. So, it establishes multiple funds for different people according to their professions, provided that the amount of insurance is in the appropriate amount. These premiums are only part of what the state is doing, which is to compensate the affected, because the aggrieved person deserves the guarantee from the treasury in the event of disasters. Thus, we have reduced the gharar and the profit intent carried out by the company, and we have reduced Al Mubaiheen view of cooperative insurance, notethat the amount of insurance be in the appropriate amount, and these premiums are only part of what the state does, which is to compensate the affected, because the aggrieved person deserves the guarantee from the treasury in the event of disasters. Thus, we have reduced the gharar and the profit intent carried out by the company, and we have reduced the view of those who allow cooperative insurance, notethat the amount of insurance be in the appropriate amount, and these premiums are only part of what the state does, which is to compensate the affected, because the aggrieved person deserves the guarantee from the treasury in the event of disasters. Thus, we have reduced the gharar and the profit intent carried out by the company, and we have reduced the view of those who allow cooperative insurance, note  The Fiqh Council in Makkah Al-Mukarramah in its session prohibited all types of commercial insurance because of the suspicion in that, and we support it and see what they saw.

Compulsory insurance: or obligatory insurance on cars or others: we look at the necessity or need for the car or the thing purchased. The necessities allow the prohibitions of one’s death or exposing himself to perishing, and these insurance contracts may not be entered into except when necessary, if the acquisition of the car cannot be dispensed with And he cannot buy a car, so his rule is the rule of the one who is forced, and if the necessity is not fulfilled, it is not permissible to buy it. Likewise, the Islamic state may not borrow with interest except for an urgent necessity such as buying a weapon, and it is not necessary to borrow to build a house for dancing.

Among the forms of cooperative insurance that were permitted by the Fiqh Council and other councils is that the people of a village agree to donate in a fund in which everyone shares in order to guarantee one of them for damage, or they cooperate in digging a well by donating in equal installments . If they were widowed during the invasion or their families’ food was less in Medina, they gathered what they had in one garment and then divided it among them in one vessel equally, so they are from me and I am from them.”   And it came in Muslim’s explanation of al-Nawawi: What is not meant here is the division known in jurisprudence with its conditions and its prohibition in usury, but rather the permissibility of some of them. Condolences to each other with the presence.