ISLAM & INSURANCE
As the essence of insurance could be seen in the system of mutual help in relation to the
custom of blood money under the Arab tribal custom, Muslim jurists generally accepted that the concept of
insurance does not contradict with the Shariah. In fact, the principle of compensation and group responsibility
was accepted by Islam and the Holy Prophet. Muslim jurists acknowledged that the basis of shared responsibility
in the system of `aqila', as practiced between Muslims of Mecca (muhajirin) and Medina (ansar) laid the foundation
of mutual insurance
As a complete religion, the teaching of Islam encompasses the essence of peace, economic well-being and
development of the Muslim at the individual, family, social, state and `ummah' levels.
To illustrate the importance of this relationship in a life of a Muslim, Islam calls for
the protection of certain basic rights:
- The right to protect the Religion.
- The right to protect the life.
- The right to protect dignity/honor.
- The right to protect the property.
- The right to protect the mind.
It is also a generally accepted view that Islamic insurance was first established in the
early second century of the Islamic era. This was the time when Muslim Arabs started to expand their trade
to India, Malay Archipelago and other countries in Asia. Due to long journeys/voyages, they often had to
incur huge losses because of mishaps and misfortunes or robberies along the way. Based on the Islamic
principle of mutual help and cooperation in good and virtuous acts, they got together and mutually
agreed to contribute to a fund before they started their long journey. The fund was used to compensate
anyone in the group who suffered losses through any mishap. In fact the Europeans copied this, which was
later known as marine insurance.