Mutual and Cooperative Insurance

Compiled By:
Prof. Dr. Mohd. Ma’sum Billah
masum2001@yahoo.com
masum@applied-islamicfinance.com
+6019-3699542

“Commercial insurance is originally haram as agreed upon by most contemporary scholars. It is well known that in most non-Islamic countries there are co-operative and mutual insurance companies. There is no harm from the Shari`ah point of view to participate in these services. So, it is unlawful for a Muslim living in a country where there is such a co-operative insurance company to make an agreement with a commercial insurance company. But, if a co-operative insurance company is not found one may enter into a contract with a commercial insurance company only by way of necessity. If a person is forced by law to insurance or by way of need, it is obligatory for him to be content with the minimum proportion of insurance that covers his need or to the minimum of such transaction he’s being forced to carry out.”  
                                  Sheikh Faysal Mawlawi,

                                  Deputy chairman of the European Council for Fatwa and Research

                                 (www.islamonline.net )

http://www.islamonline.net/fatwa/english/FatwaDisplay.asp?hFatwaID=58824