Some Issues In Risk Management and Insurance In a Non-Muslim State

Abstract

Introduction
This paper is not intended to be a discourse on whether or not insurance
is permitted under Islam. The subject is controversial and, hence, there are
at least five different viewpoints on the subject which are:
1. Insurance is permissible (mutbuh).
2. Insurance is prohibited (haram).
3. Insurance is not permitted in an Islamic state (dar-ul-Islam) .
4 . Insurance may be permissible between Muslim policy holders
and non-Muslim insurers in a non-Muslim state where
Muslims have religious freedom and security (dar-ul-amn),
and in an enemy state (dar-ul-harb), if required to do so.
5 . Insurance provides important social benefits which are
otherwise not available at all. However, some features and/or
practices of modem insurance companies are undesirable and,
hence, they must be changed before insurance can be permitted.

The controversy on insurance is quite understandable. There was no such
institution in existence at the time of the Prophet (on him be peace) or the ...