Abu Eesa at his new blog Alternative Entertainment has some thoughts on insurance. He makes the usual distinction made by the scholars between mutual insurance (permissible) and commercial insurance (generally considered to be impermissible) and then proceeds to discuss some of these objections.
Leaving aside the question of whether commercial insurance is or is not permissible, the fact remains that mutual insurance is generally allowed. As Islamic Law, etc. posted some time ago, mutual insurance can be broadly defined as follows:
On the other hand, they allowed mutual insurance. Mutual companies are owned by the policyholders, while stockholders (who may or may not own policies) own stock insurance companies. A mutual company is, in the simplest terms, where all parties are members of an insurance ‘guild’ contributing to the ‘pot’. These contributions are charitable in nature and are seen as the the collective right of the guild, in which everyone agrees that if one member is faced with adversity or some loss that the money collected will be used to offset that loss.
Although the trend seems to be towards demutualisation, Australia and other Western societies do have mutual insurance companies offering a variety of consumer and business insurance products. The now demutualised AMP is one well known example, but there is also Australian Unity who continue to be mutualised.
As we have written many times before on this site, it is shameful that despite having been in this country for so many decades, we have been unable to even verify the permissibility of these existing products and structures, let alone come up with new ones (if required). This is not to say that Australian Unity or the other mutual insurance companies are offering a halal product (that requires further investigation) but certainly it would be useful for those with the requisite knowledge in our community to look at some of these existing products and structures rather than simply denounce insurance as haram (forbidden) and offer no alternative to the people.
2 comments ↓
Amir,
Many of the health insurance companies remain mutually owned - I know HBF in Perth are. Second order riba concerns are there, in that the funds in the mutual “pot” are often invested in interest bearing bonds or other haram investments, but I understand that this may not always be a problem.
A look through this list may help - but do not just look for those with “mutual” in the title. In many cases the name is incorrect as they company kept the name as they demutualised. Several of the ones with conventional company structures (Pty Ltd or Ltd) may be limited by guarantee - preserving mutual status.
If you know someone with a few days spare it may be worth ploughing through that list to identify the ownership structure of each of them and then posting those that are truly mutual. Once that is done each of the mutuals could be examined a bit further to see if there are any other Sharia issues.
This may be a good first step in this direction. If you agree that this would be a good use of time let me know and we might be able to share some resources.
[…] ~~Amir Butler works off Abu Easa’s blog entry on Insurance here. ~~Creedal and Spiritual Reflection on Imam Bukhari’s definition of Iman by Sh. Yusuf […]
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