Commercial and Cooperative Insurance and Working in It

The questioner:
In the name of Allah. Regarding some of the forms. Does it fall under the category of guarantee?

The Shaykh:
No, this is consuming wealth unjustly. Insurance on cars, on people, on buildings, on ships, on boats, on taxis—it is all forbidden. This is because it is consuming people’s wealth unjustly. Yes.

The questioner:
O Shaykh.

The Shaykh:
There is no significant disagreement on this. The only ones who disagreed are some modern people whose disagreement is not considered valid. This is because insurance is a new type of contract that did not exist in the time of the early scholars. However, the principles of the Shari'ah require its prohibition because it involves gharar (excessive uncertainty in a contract), ignorance, risk, and consuming wealth unjustly. Therefore, the legal principles prohibit insurance.
Some intellectuals—we do not call them jurists—some modern intellectuals tried to permit it, but their opinion is not considered valid. It was presented to several councils and several scholarly bodies, and they all prohibited it. Perhaps one or two people permitted it, but they are not considered valid. Yes. So if it is cooperative.
Cooperative insurance means it is not investment-based. Cooperative insurance is when a group agrees and pays amounts that are collected and invested in permissible transactions. If one person needs it, or something breaks, or something happens to him, he is compensated from this as a form of assistance, not as a form of investment. Nothing returns to the contributors, neither profits nor capital nor anything else. They pay simply for assistance.
They call this cooperative. It is not cooperative; it is commercial. They call it Islamic cooperative, writing "Islamic cooperative," but it is commercial. They just want to cover it with this name. They lied to the Council of Senior Scholars, saying it permitted this. The Council of Senior Scholars permitted the type I mentioned to you: a group donates, they donate amounts that are collected and invested in permissible transactions. If one of the members is struck by a calamity, he is helped. And the one who is in no need is given nothing, because it was not paid for investment in the first place. This is cooperative, yes, a donation, a donation whose purpose is assistance, assisting the needy only. Yes.

The questioner:
Working in it is permissible.

The Shaykh:
No, it is not permissible for a person to be employed there because it involves forbidden transactions, and the one who works there becomes one who assists in the forbidden. Yes.