~~~~~~ من تساعدني في تلخيص ورقة ؟ ~~~~~~

يالله احاول معاكي حطي الصفحه وان شاء الله بسوي اللي اقدر عليه

Permissible Insurance
Alternatives
When thinking about reducing certain types of risk (one can never “eliminate”
a risk in the sense of full “insurance”), one often thinks of “buying
insurance”. The typical financial insurance contract used in North America
and elsewhere would entail signing a policy with an insurance company
whereby the insured makes periodic premium payments, and the insurance
company promises to compensate the insured for damages or part thereof
according to a well-specified formula. The majority of Islamic jurists have
concluded that this contract is invalid based on the prohibition of Gharar
Moreover, since many insurance contracts also include an investment component
(e.g. certain types of term and life insurance), the insurance companie
investments in interest-bearing bonds render such contracts invalid based on
the prohibition of Rib¯a.
The first thing to notice is that “buying insurance” is not the only method
of risk reduction. We have already seen in the previous chapter how simple
diversification schemes can reduce risks. As a matter of fact, the endorsed
Islamic alternative to conventional insurance is the notion of cooperative or
mutual insurance,1 which is based precisely on the same logic of diversification
used in that chapter.

1
Jurists often use the Arabic term “tak¯aful”, which means cooperative mutual insurance,
for this contract. However, since variations on this term have recently been “trademarked”
in Europe and the U.S., I shall refrain from using it lest the reader assume that
I am endorsing any particular institution to the exclusion of others.
23
24 CHAPTER 4. PERMISSIBLE INSURANCE ALTERNATIVES
4.1 Prohibition of financial insurance
Let us abstract from the prohibition based on

Rib¯a for a second, and consider
only the argument for prohibiting financial insurance based on the prohibition
of Gharar. This prohibition, unlike the prohibition of Rib¯a, is relative. Al
B¯aj¯ı Al-’Andalus¯ı (n.d., vol.5, h.
¯ash
¯
iyah, under bay‘u al-Gharar) states
His (pbuh) prohibition of bay‘u al-Gharar renders such a sale defective
The meaning of bay‘u al-Gharar, and All¯ah knows best
refers to sales in which Gharar was the major component (gh
¯
alaba alayhi) until the sale is justifiably described as bay‘u al-Gharar
This is the type of sale which is unanimously forbidden. On the
other hand, minor (yas¯ır) Gharar does not render a sales contract
defective, since no contract can be entirely free of Gharar. Thus
the scholars differ in determining which contracts are defective
due to differences in opinion regarding the extent of Gharar
inherent in each: sic. whether it is substantial and invalidates
the contract, or minor and retains the contract’s validity.
Taqiyyud¯in Al-Subk¯ı explicitly summarizes the opinions of earlier jurists
thus (Al-Nawaw¯ı (continuation by Al-Subk¯ı) (1995, vol. 9)):
The scholars said that the criterion for invalidity of the contract
based on Gharar, or its validity despite the existence of Gharar
¯

is thus: if necessity dictates committing Gh
¯
arar which cannot be
avoided without incurring an excessive cost, or if the Gh
¯
arar is
trivial (h.
aq¯ır), the sale is rendered valid, otherwise it is rendered
invalid.... Thus, the differences among scholars are based on this
general principle, where some of them render a particular form
of Gh
¯
arar minor (yas¯ır) and inconsequential, while others render
the same form consequential, and All¯ah knows best.
’Ibn Taymiya (1998, vol. 4) makes the same point as follows:
In this regard, the corrupting factor in Gh
¯
arar is the fact that it
leads to (kawnuhu mat.iyyat) dispute, hatred, and devouring others’
wealth wrongfully. However, it is known that this corrupting
factor would be overruled if it is opposed by a greater benefit
(al-mas. lah. ah al-r¯ajih. ah).



4.1. PROHIBITION OF FINANCIAL INSURANCE

25
Thus, Al-D. ar¯ır (1997, pp.44-51) lists four necessary conditions for Gharar
to invalidate a contract:
1. It must be major.
2. The potentially affected contract must be a commutative financial contract
(this includes sales, but excludes gifts and charitable contributions,
including “sharing” arrangements).
3. The Gharar must affect the principal components of the contract (e.g.
the price and object of sale, language of the contract, etc.).
4. That there is no need met by the contract containing Gharar which
cannot be met otherwise.
Many contemporary jurists, e.g. Al-Zuh. ayl¯ı (1997, vol.5, pp.3415-3431),
have argued that commercial insurance satisfies all four conditions. This
opinion dates back at least to ’Ibn ‘¯Abid¯ın (n.d., vol.3, p.273 onwards), who
issued a fatw¯a forbidding marine insurance.2 The Gharar, it is argued, results
from the fact that the premium (price) is paid, where what is being bought
is not well defined. The proponents of this view say that the insured may
pay one small premium and collect a large sum if he can make a legitimate
claim, and he may pay many premia without ever collecting any sum of
money. Notice that “security/insurance” itself is not a valid object of sale
under Islamic jurisprudence. In commercial insurance, jurists argue:
1. The Gharar is argued to be quite substantial, since the amount to be
collected from the insurance company may vary between zero and a
very large sum, depending on chance.
2. The commercial insurance contract is a sale contract, which is a commutative
financial contract.
3. The Gharar affects the object of sale, and therefore it is integral to the
contract.