Religious clarification on insuring according to the Takaful system

1442.08.08

2021.03.22

Assalamu Alaikum Wa Rahmathullaahi Wa Barakaathuhu!

All Praise is due to Allah. May Peace and Blessings be upon the final Messenger Muhammad (SallalahuAlaihi Wasallam) and upon his Family and his Companions!

Islam welcomes assisting each other in good efforts and engaging in charity. The Quran and Hadiths encourage this.

Allah Ta’ala mentions the following in the Quran regarding this:

وَتَعَاوَنُوْا عَلَى الْبِرِّ وَالتَّقْوٰى‌ وَلَا تَعَاوَنُوْا عَلَى الْاِثْمِ وَالْعُدْوَانِ (سورة المائدة : 02)

‘Help each other in righteousness and piety, and do not help each other in sin and aggression’ (05:02)

عنْ أَبِي هُرَيْرَةَ، قَالَ: قَالَ رَسُولُ اللهِ صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ: «مَنْ نَفَّسَ عَنْ مُؤْمِنٍ كُرْبَةً مِنْ كُرَبِ الدُّنْيَا، نَفَّسَ اللهُ عَنْهُ كُرْبَةً مِنْ كُرَبِ يَوْمِ الْقِيَامَةِ، وَمَنْ يَسَّرَ عَلَى مُعْسِرٍ، يَسَّرَ اللهُ عَلَيْهِ فِي الدُّنْيَا وَالْآخِرَةِ، وَمَنْ سَتَرَ مُسْلِمًا، سَتَرَهُ اللهُ فِي الدُّنْيَا وَالْآخِرَةِ، وَاللهُ فِي عَوْنِ الْعَبْدِ مَا كَانَ الْعَبْدُ فِي عَوْنِ أَخِيهِ،… ( صحيح مسلم : 2699)

Abu Huraira reported Allah’s Messenger (ﷺ) as saying:

“Allah helps the servant as long as he helps his brother.” (Saheeh Muslim: 2699)

The Islamic Takaful system which is currently in practice, is based upon a person assisting another person. Such a practice of collecting goods among themselves for the purpose of assisting each other has been prevalent even during the times of the Sahabas.

The following Hadith clarifies this:

عَنْ أَبِي مُوسَى رضي الله عنه، قَالَ: قَالَ رَسُولُ اللهِ صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ: «إِنَّ الْأَشْعَرِيِّينَ إِذَا أَرْمَلُوا فِي الْغَزْوِ، أَوْ قَلَّ طَعَامُ عِيَالِهِمْ بِالْمَدِينَةِ، جَمَعُوا مَا كَانَ عِنْدَهُمْ فِي ثَوْبٍ وَاحِدٍ، ثُمَّ اقْتَسَمُوهُ بَيْنَهُمْ فِي إِنَاءٍ وَاحِدٍ، بِالسَّوِيَّةِ، فَهُمْ مِنِّي وَأَنَا مِنْهُمْ. (صحيح مسلم : 2500)

Abu Musa reported that Allah’s Messenger (ﷺ) said: “When the tribesmen of Ash’ari run short of provisions during expeditions or run short of food for their families in Madina, they collect whatever is with them in a cloth and then partake equally by a vessel. They are from me and I am from them.” (Sahih Muslim: 2500)

يقول الإمام النووي رحمه الله : وإنما المراد هنا إباحة بعضهم بعضا ومواساتِهم بالموجود (شرح صحيح مسلم للنووي رحمه الله : بَاب مِنْ فَضَائِلِ الْأَشْعَرِيِّينَ رَضِيَ اللَّهُ عَنْهُمْ)

Imam Navavi (Rahimahullah) states that the particular Hadith clarifies that “The Sahaba have permitted the usage of their belongings to others, and have assisted in providing their belongings to each other” (Sharhun Navavi Ala Muslim: Chapter on the Specialties of Ash’ariyyoon).

عَنْ جَابِرِ بْنِ عَبْدِ اللَّهِ رَضِيَ اللَّهُ عَنْهُمَا، أَنَّهُ قَالَ: بَعَثَ رَسُولُ اللَّهِ صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ بَعْثًا قِبَلَ السَّاحِلِ، فَأَمَّرَ عَلَيْهِمْ أَبَا عُبَيْدَةَ بْنَ الجَرَّاحِ وَهُمْ ثَلاَثُ مِائَةٍ، وَأَنَا فِيهِمْ، فَخَرَجْنَا حَتَّى إِذَا كُنَّا بِبَعْضِ الطَّرِيقِ فَنِيَ الزَّادُ، فَأَمَرَ أَبُو عُبَيْدَةَ بِأَزْوَادِ ذَلِكَ الجَيْشِ، فَجُمِعَ ذَلِكَ كُلُّهُ، فَكَانَ مِزْوَدَيْ تَمْرٍ، فَكَانَ يُقَوِّتُنَا كُلَّ يَوْمٍ قَلِيلًا قَلِيلًا حَتَّى فَنِيَ، فَلَمْ يَكُنْ يُصِيبُنَا إِلَّا تَمْرَةٌ تَمْرَةٌ، فَقُلْتُ: وَمَا تُغْنِي تَمْرَةٌ، فَقَالَ: لَقَدْ وَجَدْنَا فَقْدَهَا حِينَ فَنِيَتْ، قَالَ: ثُمَّ انْتَهَيْنَا إِلَى البَحْرِ، فَإِذَا حُوتٌ مِثْلُ الظَّرِبِ، فَأَكَلَ مِنْهُ ذَلِكَ الجَيْشُ ثَمَانِيَ عَشْرَةَ لَيْلَةً، ثُمَّ أَمَرَ أَبُو عُبَيْدَةَ بِضِلَعَيْنِ مِنْ أَضْلاَعِهِ، فَنُصِبَا ثُمَّ أَمَرَ بِرَاحِلَةٍ، فَرُحِلَتْ ثُمَّ مَرَّتْ تَحْتَهُمَا فَلَمْ تُصِبْهُمَا. (صحيح البخاري – 2483 : بَابُ الشَّرِكَةِ فِي الطَّعَامِ وَالنِّهْدِ وَالعُرُوضِ)

Similarly, during the mission of Seeful-Bahr, when the amount of food of the Sahaba were diminishing, Abu Ubaidha (Raliyallahu anhu), who was the commander of them, collected all the remaining food from them and distributed it among them. (Sahih Bukhari: 2483)

بَابُ الشَّرِكَةِ فِي الطَّعَامِ وَالنِّهْدِ وَالعُرُوضِ, وَكَيْفَ قِسْمَةُ مَا يُكَالُ وَيُوزَنُ مُجَازَفَةً أَوْ قَبْضَةً قَبْضَةً، لَمَّا لَمْ يَرَ المُسْلِمُونَ فِي النَّهْدِ بَأْسًا أَنْ يَأْكُلَ هَذَا بَعْضًا وَهَذَا بَعْضًا، وَكَذَلِكَ مُجَازَفَةُ الذَّهَبِ وَالفِضَّةِ وَالقِرَانُ فِي التَّمْرِ» (النهد) هو أن يخرج كل من الرفقاء نفقة سفره وتوضع النفقات كلها ويخلط بعضها ببعض وينفق الجميع منها وإن تفاوتوا في الأكل. (صحيح البخاري – بَابُ الشَّرِكَةِ فِي الطَّعَامِ وَالنِّهْدِ وَالعُرُوضِ)

It is recorded in the Sahih Bukhari that, during a journey it is not wrong to collect, mix and distribute the possessions that is available among those in the journey.

Since, the Conventional Insurance system (At-ta’meen at-taqleedi) that is practiced today is of the Mu’aawalaa (Commutative) contract, components that are forbidden in the religion exist, such as interest, gambling and Garar (Uncertainty).

Since, bilateral monetary exchange takes place in this method, it tantamount to interest. Meaning, at the time of compensation, either an excess amount is paid or an amount less than the premium is paid; the funds that are collected by the organization are invested based on interest; in the life insurance scheme, an excess amount is paid at the end of the term, in addition to the total installments, thereby, interest is formed.
Since, the GIVING of one party is certain, and the RECEIVING from the other party is not certain, this system resembles to gambling such as Qimar.
Initially, at the time of the contract details such as, whether compensation would be received from the other party? How much will be the amount? And when will it be received? All these details are not specified with certainty, therefore, the contract endures a state of uncertainty called Gharar.
Hence, the Conventional Insurance system (At-ta’meen at-taqleedi) that is practiced today is of the Mu’aawalaa (Commutative) contract, which includes the above-mentioned features, this form is forbidden in the religion.

As the Conventional Insurance system in practice is not permissible, and the necessity of insuring is unavoidable in business transactions, imports and exports, building construction work, and vehicle transportation, it was necessary to explore alternative methods which does not violate the Islamic Religious principles. Thereupon, the contemporary religious Scholars introduced the following two methods.

1. Entering into an agreement based on voluntary contribution known as Tabarru’, instead of the Mu’aawala contract, during the insurance process.

The money collected based on this would form a fund. This fund would have its own legal personality. Thus, it is legally permitted for the fund to do transactions independently.
When a person joins this scheme upon his own preference, the person self-necessitates himself to donate a certain amount for this fund.
Similarly, the fund too self-necessitates itself to contribute a certain amount during the times of crisis for any of its members.
This practice of self-necessitating something is called ‘Al-ilthizam bith thabarru’.

It is compulsory upon a person to carry out the matter that was self-necessitated; and could be prosecuted if not performed, according to the Maliki School of Thought upon which, the afore mentioned method is based.

Hence, this contributory agreement is based upon one of the four accepted Schools of Thought (Mad’habs), Maliki Mad’hab.

Those who run the organization can obtain wages based on Wakala bil Ujra (Accepting responsibility based on wages).

Furthermore, it is their responsibility to invest the money received through these contributions, in ways that are permissible to generate profit, in the religion.

This method is stated by some Scholars who are experts in Islamic banking and, also from the Shafii School of Thought such as, Ash Shaikh Wahba Az-Zuhayle and Ash Shaikh Abdus Satthar Abu Guddha (Rahmathullahi alaihima), and by contemporary Scholars such as Ash Shaikh Ali Muhyiddeen Qarra Dhaagi, and Ash Shaikh Nilam Muhammad Saalih Ya’qubi (Hafilahumullah).

Moreover, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) which consists eminent Scholars from all four Mad’habs have accepted this method and endorsed it in their Shari’ah Standards.

المعيار الشرعي رقم 26 – “التأمين الإسلامي” (المعايير الشرعية النص الكامل للمعايير الشرعية التي تم اعتمادها حتى صفر 1439 هـ نوفمبر 2017 م)

2. Insurance through the concept of Waqf, instead of Mu’aawala

If insurance is to be carried out in this method, any asset needs to be donated as Waqf (endowment). It can be either a movable or immovable property.

There are two opinions among the religious Scholars in the matter of donating money as Waqf. Those of the Hanafi Mad’hab permit it while, those of the Shafi Mad’hab cite that, due to the possibility of its unstable nature, the endowment of money as Waqf is invalid.

An asset that is declared as Waqf belongs to Allah. So, none of the people can claim ownership to it.
According to the Religion, the Waqf has authority to buy and sell. Waqf has the right to buy anything or receive anything as a donation. Anything received as such belongs to the Waqf.
It is compulsory to implement all the conditions laid out by the person who declared it as Waqf without any alterations. Hence, the person who donates the Waqf, should declare at the time of endowment that those who contribute a specific amount during a specific period to this Waqf, should be given an appropriate sum when specified requirements arise. It shall be compulsory to implement such a condition as it is.
It is permissible in the religion for those who manage the Waqf to be remunerated appropriately.
The contributed funds to the Waqf must be invested in a permitted manner to generate profits and, must be disbursed among the needy participants as per the conditions laid out by the person who declared it as Waqf.

This method is stated by Moulana Muhammad Thaqi Usmani (Hafilahullah) who is one of the most prominent contemporary Scholars in Hanafi Mad’hab and also a specialist in Islamic Banking.

تأصيل التأمين التكافلي على اساس الوقف والحاجة الداعية اليه – القاضي تقي العثماني

Another most popular contemporary Scholar from India, Al Alim Khalid Saifullah Rahmani (Hafilahullah) has cited the afore-mentioned two methods.

المؤسسات المالية الحديثة في ضوء الفقه اللإسلامي : 110, 111, 112

Generally, when a person engages in transactions or investments with an organization, it is one’s responsibility, to consider whether the organization comes under the legal purview of the government, its reliability and to verify if it functions in accordance to the religious principles.

Allah, The Almighty is the All Knower.

Ash Shaikh M.L.M. Ilyas

Secretary – Fatwa Committee

All Ceylon Jamiyyathul Ulama

Ash Shaikh I.L. Hashim Shoori

Supervisor – Fatwa Division

All Ceylon Jamiyyathul Ulama

Ash Shaikh M. Akram Nooramith

General Secretary

All Ceylon Jamiyyathul Ulama

Ash Shaikh A.J. Abdul Khalique

Vice President

All Ceylon Jamiyyathul Ulama