Abuja — Malam Usman Muhammad Zunnurain is an Islamic scholar, a lawyer by profession and the deputy dean, faculty of Law, Bayero University Kano. In this interview he explains the position of Islam on insurance, an alternative system that could be accepted in Islam and other issues related to insurance.
What is the position of Islam on insurance?
Looking at the concept of insurance, what the basis is, these are companies dealing in risks. They insured your risks so that whenever an unforeseen contingency happens, they will intervene and pay you compensation. Meanwhile, you are expected to be paying some premium, on the basis of paying the premium; you are having a cover. You are being covered of the risk on the consideration that you are paying the company the premium.
Now looking at this arrangement from Islamic perspective, you can hardly find it to be acceptable to Shariah. This is because Shariah, in its pristine nature does not allow any transaction which has some elements of uncertainty. If there is any element of uncertainty which we technically call Garar(uncertainty) from the Shariah perspective, then that Garar tainted whatever contract it enters into.
Looking at this thing; these are the people who are dealing in risk; the risk is not definite that it will happen, is quite uncertain. So on that basis of Garar, you find that insurance might not be acceptable in Islamic law of contract or transaction generally.
Secondly, on the issue of paying your premium in expectation of the happening of an accident or something that would bring about the risk that has been covered, you are still doing something that can be liken to gambling, gambling in a clear cut text of the Holy Quran has been prohibited. God says gambling and alcoholism are prohibited from Shariah perspective.
So, looking at the uncertainty, you are just speculating whether it will happen or not; somebody is going to gain and somebody is going to lose; there is then some element of gambling which Shariah can hardly accept. The problem will even be more pronounced when you are dealing with life insurance because it is dealing with your death which has been predestined by God. Somebody is insuring his life that if he dies, the annuity or whatever should be paid to his family. That can hardly be acceptable from the Shariah perspective. In a nutshell, this is the stand of Shariah on the conventional insurance system.
Is there anything closer to insurance that can be acceptable from the Shariah perspective?
Yes, we have Islamic alternative to the conventional insurance. If you go to Malaysia and other Middle Eastern countries, they have what is called Attakaful-Islamiy. Takaful is like a cooperative arrangement; people of the same profession or business come together and say, we are facing a lots of risks and problems, why not do something that will assist us and our professions. They can agree on setting some minimal amount every day with the intent of assisting any one among them that find himself in problem. So there is this arrangement called attakaful. This attakaful has been institutionalised by the noble prophet (SAW) himself. There was a time when some group of people where on a journey and some of them ran out of foodstuff, the noble prophet (SAW) ordered for a piece of cloth to be spread and whoever that was having some food item with him was asked to drop it on the piece of cloth. After collecting all that were with them, it was further shared between them all. That is a kind of takaful, and that is the insurance that is accepted in Islam. It is not somebody trading on your risk but you are putting it on the basis of ta'awun (helping one another).
Some people are saying insurance is the same with saving for unforeseen contingencies, is there any similarity between the two?
Even the issue of banking is another Pandora's box that we shouldn't open here, because when you talk about the interest given to the savers or borrowers; whether it is Riba (interest) or not, is something which is contentious among the jurists but the most preferred view is that interest is Riba. To say that when you are entering into insurance with an insurance company, is just like you are saving for the rainy day, is not like that. Look at the concept, how do they operate? What are the facts on ground? The facts on ground are that you are expected to pay some premium and you are expected to comply with certain conditionality that they give you. If you default in paying the premium, they will not refund your previous premium; they will not refund the payments you made to them.
That's what tells you that it is not the same with saving because if it is saving, you will be paid back your money. So if they are paying you, it is not like saving. You are paying premium because they are rendering you a service; a service that does not exist. This is the element of Garar we are talking about.
Secondly, when there is this problem, certain profession are involved like actuaries; somebody that will come and take the actual happening and give analysis that you are within the bounds of given to you by the company or you violated the conditions. Once you are in violation, whatever premiums you have been paying have gone like that. This is the kind of things that Islam will not condone.
Is it possible to have the takaful system in Nigeria?
Well, one should be optimistic at all times but despite our optimism, we should still be realistic in our analysis. Look at Jaiz bank, for how many years up to this time it couldn't take off, it is still in the pipeline; which is even a little not complicated. It is straight forward and a profit earning venture.
Takaful-islamiy in most cases is based on assistance and cooperation; you are trying to assist your brother.