Islamic Perspective on Insurance: A Critical Analysis of Legality and Illegality

Insurance is one of the modern contracts by which one party, the insurer, pays a sum of money to the insured party as compensation for any damage that may occur to the insured item in the event of an accident or a similar occurrence. From the perspective of many Islamic jurists, this contract is not considered permissible under Islamic law due to the elements of uncertainty (gharar) and ambiguity (jahala) it contains, along with other evidence discussed in this study. However, from the viewpoint of a limited number of Islamic scholars, this contract is deemed permissible by analogy (qiyas) to the concept of "al-ʿaqilah" and related issues explored in the body of the study. In this context, Dr. Mustafa Al-Zarqa sees insurance not as a simple contract, but as a contractual system based on mutual compensation. Those who do not permit conventional insurance propose cooperative (takaful) insurance, which is based on the voluntary participation of members, as an alternative.