Do you know there is NO concept of financial insurance, in Islam? (God’s proposed structure – part 14)
Let us examine the structure of Insurance in four ways:
Sunan Abu Dawud Hadith 3451 (Concerning Fixing Prices):
It was recorded that Anas bin Malik stated:
“The people requested: ‘O Allah’s Messenger, the prices have gone too high, fix these prices for us.’ In response the Messenger of Allah (PBUH) stated: ‘Allah is the One Who determines prices, Who takes and provides, and He is the sustainer. I wish that I shall meet Allah with no person amongst you having any claim against me regarding any matters of blood or wealth.'” (Sahih) [Sunan Abu Dawud Hadith 3451]
1) So if Insurance is to “Fix” a financial outcome (i.e. guaranteeing the repayment of the debt), in the same concept as “fixing a price”, the Sunan Abu Dawud Hadith 3451, as shown above, forbids it.
[90. O you who believe! Khamr (Intoxicants), Maysir (Gambling), Ansab (Altar Stones), and Azlam (arrows used for making decisions) are a Rijs (abomination/sin) of Shaytan’s handiwork. So avoid that in order that you may be successful. 91. Shaytan wants only to excite enmity and hatred between you with Khamr (Intoxicants) and Maysir (Gambling), and hinder you from the remembrance of Allah and from the Salah (the prayer). So, will you not then abstain] [Quran Surah Al Maida 5 Ayat 90-91]
2) One buys an Insurance (places a bet) that gives out a known financial reward only on the occurrence of a certain event (3 Aces in a game of cards) and nothing the rest of the time. This is purely Gambling and strictly forbidden as seen in Quran Surah Al Maida Ayat 90-91, as shown above.
Sahih Al-Bukhari Hadith 2144 (Al-Limas or Mulamasa sale, i.e., by only touching the product and not looking at it.):
Abu Said (RAA) Narrated:
Allah’s Messenger (PBUH) forbade selling anything by Munabadha, i.e. the sale of a garment by throwing it to the purchaser but not letting him examine or see it. Similarly the selling by Mulamasa was forbidden. Mulamasa is when one buys a garment, for example, only by feeling it, and without looking at it. [Sahih Al-Bukhari Hadith 2144]
3) While Insurance focuses only on transacting “uncertainty”, the Sahih Al-Bukhari Hadith 2144, shown above, forbids trading in uncertainty within sales transactions such as “Mulamasa” where one is prevented from seeing the product.
Sahih Al-Bukhari Hadith 2143 (Al Gharar (the selling of what is not present) and Habal-il-Habala (i.e. the selling of what is in the womb of an animal):
Abdullah bin Umar (RAA) Narrated:
Allah’s Messenger (PBUH) had forbidden the sale called Habal-al-Habala that was a type of sale performed in the Pre-Islamic Period of Ignorance. In that, a person would pay the price for a she-camel that was not yet born but would be born to the immediate offspring of an extant she-camel. [Sahih Al-Bukhari Hadith 2143]
4) If we consider the ex-ante (before the event occurs) nature of Insurance, compared to the ex-post (after the event) world of reality, the Sahih Al-Bukhari Hadith 2143, shown above, forbids ex-ante sales (i.e. Gharar). An example of Al-Gharar sale is to sell fish that are still unfished or a bird that has not yet been caught, etc.
From all four perspectives we see that financial Insurance structures are in opposition/contradiction to the concepts being proposed by Islam. Hence, there is NO concept of financial insurance, in Islam
Do you want to know more of what is allowed and what is forbidden ? How should the economy and finance on the whole be structured?
The book “Islamic Finance and Trade: God’s Economic System”, is the culmination of over 25 years of research, to present the answer to the above question. You are kindly invited to Read, Review and Recommend the book. It is available at https://a.co/d/f1jTXvP and on all Amazon sites.
