The Ruling on Cooperative Insurance

Question:
What is Your Eminence’s opinion on cooperative insurance, and the limited Islamic insurance company that is based on this insurance?

Answer:
Cooperation among people is permissible, but if it is for trade, or for a house, that is not permissible. As for cooperation where a group of people pool their money to cooperate regarding the accidents that may befall them—such as a group of specific merchants, or drivers, or thieves, or such and such—where each person contributes a calculated amount, not for riba (usury or interest), but for cooperation regarding what may befall their members so that they can settle what has occurred; this is what is called cooperative insurance, and there is nothing wrong with it, because riba is not intended by it, but rather cooperation regarding the accidents that may befall them. The Shaykh. Or between Muslims, there is no issue, and if they err greatly or otherwise, they strike at its benefit.