(3)Interpretive analysis of the Sharīʿah status of insurance policies, and establishment of the alternative

  • Munib Siddiqui+Dr. Sheikh Usman Yousaf
Keywords: Sharīʿah compliance, risk, Islamic law, insurance contract, Quran, Hadith


Purpose: Despite several Fatwas available, the Sharīʿah status of insurance policies continues to be doubtful. This paper aimed to addresses the issues of Sharīʿah compliance in insurance industry. It intends to inform the stakeholders and customers of insurance industry about the insurance policies and their status in Islam. Further, as conventional insurance is not fully aligned with Sharīʿah principles, this paper attempted to explore the alternatives of it which conforms the Islamic principles and fulfill the needs of customers as well. Design/methodology/approach: An interpretive approach has been adopted to build the foundations of Sharīʿah compliance in insurance. In addition, secondary sources of authentic Islamic manuscripts have been qualitatively analyzed. The basic factors that have been focused are interest, gambling and uncertainty, because of which insurance policies have been prohibited. Findings: The basis and reasons behind the prohibition of insurance have been established and the alternate model Takaful has been proposed. Furthermore, comparative analysis has been established at the end. Originality/value: Findings can be applied to understand the dynamics of Shariah compliance issues in insurance industry. Further risk mitigation models can also be developed as an extension of these findings. This research can be applied on a standalone basis or as an extension to the conventional counterparty risk mitigation models.


1. Ahmad Bin Majid, Zuhair, H. “Albahr-uz-Zakhair” Cairo.v.2 p235
2. Al Rafiee, (1226) https://ar.wikipedia.org/wiki/أبو القاسم الرافعي القزويني
3. Al Razi, M.(1850) “Al Ikleel” Beirut, Egypt.
4. Al Zail’ee (1824) “Tabyeen-ul-Haqaiq”
5. Al Zuhaili, (1997) “Al Fiqh-ul-Islami wa adillatuhu”, Islamic Kotob, Chicago.
6. Alajmi, S. (2011). The effect of national culture on service provision (Doctoral dissertation, Brunel University Brunel Business School Ph.D. Theses
7. Algadi Abu Yalaa (380H). Matalib alnohaa.The Islamic office edition. Damascus. V3.p25
8. Alhumoudi, Y. (2013). Islamic insurance Takaful and its applications in Saudi Arabia.
9. Alsalih. M (2004) Insurance between permission and prohibition. Supra footnote 75. p.p 117-122
10. Alsanhoury, (1964). Alwaseet. V7.p 958- 986
11. Billah, M. M. (2007). Applied Takaful and Modern Insurance: law and practice: Sweet & Maxwell Asia.
12. Burhanudin, 1850. “Hidayat ul mujtahid” Idara mariful Quran, Volume 3.
13. Clark, W. L., & Marshall, W. L. (1905). A Treatise on the Law of Crimes: Keefe-Davidson Company.
14. Din “Al Aswaq-ul-Maliyah fi Mizanul Fiqh al Islamia”
15. Ewold, F. (1991). Insurance and risk.
16. Holdsworth, A History of English Law, (1925). Vol. 8, p.100
17. Ibn Abdideen(1836). Hashiat Ibn Abidin.Alhalabi for publishing. Cairo.v.2 p21
18. Ibn Abideen “Raddul Muhtaar” Darul Taba’at Egypt
19. Ibn Kodama Almaqdisy (620H). Alkafy. Dra Hajar for Publishing edition (2000). Cairo. V2.p71
20. Ibn Rushd Alhafeed.(595H).Bidait-ul-almujtahid. Ibn hazim for publishing (1999). Cairo. v2 p172)
21. Imam Abu Abdullah Muhammad Albukhari, “Sahih Bukhari” No:3
22. Imam El Nawawi(631H), Almajmoo. Dar Alfikrfor Publishing (1997).Beruit. V9.p339
23. Ismatullah. (2010) “Takaful ki Sharai Hesiat” Idara Ma'arif Karachi. pp. 10-15
24. Khan. Muhammed S. H. (1996). Alrawdah Alnadiah shareh Aldurrar Albaheyah. Alkawther for publishing, Riyadh, Saudi Arabia, 4th Edition, 1996, volume 2, p229
25. Kwon, W. J. (2007). Islamic principle and Takaful insurance: Re-evaluation. Journal of Insurance Regulation, 26(1), 53.
26. Long, R. H., & Rhodes, M. S. (1966). The Law of Liability Insurance (Vol. 3). M. Bender
27. Mehr, R. I., & Cammack, E. (1972). Principles of insurance: RD Irwin.
28. Muslim, S. Muslim b. al-Hajjaj al-Qushayrl. Sahih Muslim.
29. Usmani, (1992) “Islam or Jadeed maishat wa tijarat” Idarat-ul-ma’arif Karachi.