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Insurance and riots

In this modern world, one of the ways that can be done to reduce the risk of loss due to accident or misfortune is through insurance. Thus the Ulama of India have had a re-think on this issue in view of the great damages suffered by Muslims in India in the communal riots which destroyed their properties, homes, shops, factories and other possessions, says MH Lakdawala

Nafees Ahmed had toy manufacturing unit in Surat.It was burnt down by a mob during the current riots. Total loss Rs 36 lakhs.
Javid Surti's warehouses in Ahmedabad storing Rs 72 lakhs worth paper was reduced to ashes. Total loss over Rs 10 million.
Karim Sorathia's timber godown was set on fire by the riotious mob in Ahmedabad.Timber, plywood, cement sheet, and hardware goods worth Rs 35 lakh lost in fire.
Saurastra electronics owned by Mansoor Patel was looted and show room set on fired. Total loss over 50 lakhs.

There are numerous such example of business premises of Muslim being delibrately targeted by the mob. In most of such cases one thing is common. No insurance covers. When MG inquired into the reason why Insurance cover was not done the single answer by most of the respondent was that insurance is prohibited in Islam.

Is Insurance prohibited In Islam? A confusion still exist on this question.In situation of riots and carnage when time and again Muslim Properties are delibrately targeted by the communal forces, what should the position of Muslims be? Does Islam allow the purchase of insurance prevalent in the market today? And what about insurance itself, is it beneficial to society or is it damaging?

It is not truly known when insurance emerged as a concept or when it was first applied. Some historians claim that insurance existed in its basic form in the Roman & Greek civilizations, and that it used to have a character of cooperation. However, in its modern form the earliest known type of insurance is the commercial marine insurance that began around the 15th century.

The insurance contract is an agreement between two parties whereby one party, the insurance company or the insurer, undertakes to pay to the second part, the insured, a certain sum of money, the premium, if an accident or other specified loss occurs within a set period of time, provided that the insured pays to the insurer a certain amount of money or several installments usually less than the amount that the first party undertakes to pay. Typically, this agreement is produced in the form of a document called the insurance certificate, or the policy.

There are several types of insurance in the market today.According to the type of agreement, they are typically divided into three categories:
1- Agreements where compensations against such claims are paid out in case the insured dies. (Life assurance).
2- Agreements where compensations are only paid if the insured survives.
3- Agreements where compensations are paid in both cases mentioned above.

As mentioned before the insurance contract is a "new" type of financial dealing that was developed in the absence of a Shari'ah guidelines and for this reason it is only natural for it to be un-Islamic. Recently, however, insurance has been the subject of discussion and research by scholars. The conclusion of their majority is that insurance is prohibited or Haram. Since the Malaysian National Fatwa Council decreed that insurance is a unlawful or Fasid practice in 1972, many other council meetings and conferences have taken place in Libya (1973), in Makkah (1976 and 1977) and more recently in 1985. Furthermore, many scholars have published their own treatises and fatawa on the subject in various capacities. All of these studies prohibit the involvement in the current version of the commercial insurance because it contains the elements of Gharar, Maisir and Riba.

Our belief as Muslims is that in this world everything happens according to the Will of Allah. Therefore, any accident or misfortune that befalls us, is by the will of Allah, subhanahu wa ta'ala. This belief however should not be construed to mean that people should not plan or do whatever they can to take care of responsibilities and provide for their needs. "Leaving it to Allah" as some may say, does not mean we should not be prepared. We do not know the future but we should plan for it. What is extremely important for us to know is that whatever planning and preparation we do has to be done according to Shari'ah. And Shari'ah has taught that while we should accept whatever "misfortune" that befalls us, we are also required to avoid or reduce the possibility and/or the effects of these "misfortunes" by taking positive steps.

Anas ibn Malik reported that one day a Bedouin came to the Prophet, sallallahu alayhi wa sallam, on a camel and asked him: "Can I leave the camel alone [without tying it down] and trust in Allah?" The Prophet, sallallahu alayhi wa sallam, said: "Tie your camel first, then put your trust in Allah." (Termidhi) Here, we saw that the Prophet, sallallahu alayhi wa sallam, has taught the man to reduce the risk of losing his camel. Imam Ibn Rajab said: "You should know that having your trust in Allah does not mean abstaining from taking the necessary measures to take care of something. This is the Sunnah of Allah and His Law in this life. So using the means available to us is being obedient to Him and having trust in Allah is having faith in Him."

Similarly in many actions of the Prophet, sallallahu alayhi wa sallam, one can see that whenever possible he took the necessary steps to reduce risks although he could have done otherwise if he wanted to. For example, during the Hijrah, he went to hide in the cave first instead of going straight to Madinah. He commanded the companions to migrate to Madinah by batches instead of in one big group. Again this is to reduce risks. When he went to war, he put on his armour on instead of wearing his normal clothes.

In this modern world, one of the ways that can be done to reduce the risk of loss due to accident or misfortune is through insurance. Thus the Ulama of India have had a re-think on this issue in view of the great damages suffered by Muslims in India in the communal riots which destroyed their properties, homes, shops, factories and other possessions. They have used the Fiqah principle of, "Necessity sometimes makes the prohibition permissible." They thus gave permission for Muslims to take out insurance against damage suffered.

The situation in South Africa is similar with the high degree of crime all over the country with much robbery, theft, housebreaking, hijacking and damage to life and property. For this reason Ulemas there have used the same principle to state that in South Africa it would be permissible on a limited scale to take out such insurance against man-made damages.

Eminent ulama and Islamic organisations who have issued fatwas in favour of insurance cover for the properties include Jamaat-e-Islami, Islamic Fiqh Academy, Idara-e-Tehqiqat Nadwatul Ulama, Maulana Abul Lais Islahi, Maulana Shams Peerzada, Maulana Mujahidul Islam Qasmi etc. Maulana Shams Peerzada was in fovour of life insurance cover as a safe guard against the communal riots.

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