The Cooperative Insurance Company and the United Installment Company
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Fatwa No. ( 19406 )
Q: You will find attached a promotional advertisement, which appears to be for the United Installment Company, calling on citizens to insure their cars in the event of
accidents, injuries, and damages, etc. It claims that this is a matter of cooperative insurance, which is not the case. They dare to claim that the Council of Senior Scholars has issued a fatwa permitting cooperative insurance, thereby deceiving people regarding the fatwa, and mocking and deceiving the people. I ask Your Eminence to clarify and explain the correct position on this issue. If you could also publish the fatwa in newspapers and magazines and clarify what is permissible in insurance and what is not, so that people may be fully informed. May Allah preserve you and guide your steps toward what is good and right. Peace be upon you, and may Allah’s mercy and blessings be upon you.
A: What is stated in the attached statement, attributed to the Cooperative Insurance Company and the United Installment Company, is a matter of commercial insurance, which is forbidden by the Shari'ah. This and its like fall under the decision of the Council of Senior Scholars No. (55) dated 4/4/1397 AH. The justification provided by the aforementioned insurance company for the permissibility of what it published, citing the Council of Senior Scholars' decision permitting cooperative insurance, is a matter of deception and misleading the people. A statement has been issued by the Permanent Committee for Scholarly Research and Ifta, and published in some magazines, which explains this deception and lie to the people. Its text is:
Praise be to Allah, Lord of the worlds, and may peace and blessings be upon our Prophet Muhammad, and upon his family and companions. As for what follows: It has previously been issued by the Council of Senior Scholars a decision forbidding commercial insurance in all its forms; because it contains great harm and risks, and the consumption of people's wealth without right, which are matters that the pure Shari'ah forbids and prohibits with the strongest prohibition. A decision has also been issued by the Council of Senior Scholars permitting cooperative insurance, which consists of donations from benefactors, and its aim is to help the needy and the afflicted. Nothing returns to the participants from it, neither capital, nor profits, nor any investment return; because the participant’s intention is the reward of Allah, Glorified and Exalted is He, by helping the needy, and he does not intend a worldly return. This falls under the saying of Allah the Exalted:[Al-Ma'idah 5:2] and the saying of the Prophet (peace and blessings be upon him): Jami` at-Tirmidhi 1425Sahih (Darussalam) , and this is clear with no doubt in it. However, recently, some
institutions and companies have been deceiving people and inverting the truth, by naming the forbidden commercial insurance "cooperative insurance," and attributing the opinion of its permissibility to the Council of Senior Scholars; in order to mislead people and advertise for their companies. The Council of Senior Scholars is completely innocent of this action; because its decision is clear in distinguishing between commercial insurance and cooperative insurance, and changing the name does not change the reality. And for the purpose of explaining to people and exposing the deception, and refuting the lie and slander, this statement was issued. And may Allah send blessings and peace upon our Prophet Muhammad, and his entire family and companions. The Grand Mufti of the Kingdom of Saudi Arabia, and the Chairman of the Council of Senior Scholars, and the Chairman of the Permanent Committee for Scholarly Research and Ifta Abdul Aziz ibn Abdullah ibn Baz
Q: You will find attached a promotional advertisement, which appears to be for the United Installment Company, calling on citizens to insure their cars in the event of
accidents, injuries, and damages, etc. It claims that this is a matter of cooperative insurance, which is not the case. They dare to claim that the Council of Senior Scholars has issued a fatwa permitting cooperative insurance, thereby deceiving people regarding the fatwa, and mocking and deceiving the people. I ask Your Eminence to clarify and explain the correct position on this issue. If you could also publish the fatwa in newspapers and magazines and clarify what is permissible in insurance and what is not, so that people may be fully informed. May Allah preserve you and guide your steps toward what is good and right. Peace be upon you, and may Allah’s mercy and blessings be upon you.
A: What is stated in the attached statement, attributed to the Cooperative Insurance Company and the United Installment Company, is a matter of commercial insurance, which is forbidden by the Shari'ah. This and its like fall under the decision of the Council of Senior Scholars No. (55) dated 4/4/1397 AH. The justification provided by the aforementioned insurance company for the permissibility of what it published, citing the Council of Senior Scholars' decision permitting cooperative insurance, is a matter of deception and misleading the people. A statement has been issued by the Permanent Committee for Scholarly Research and Ifta, and published in some magazines, which explains this deception and lie to the people. Its text is:
Praise be to Allah, Lord of the worlds, and may peace and blessings be upon our Prophet Muhammad, and upon his family and companions. As for what follows: It has previously been issued by the Council of Senior Scholars a decision forbidding commercial insurance in all its forms; because it contains great harm and risks, and the consumption of people's wealth without right, which are matters that the pure Shari'ah forbids and prohibits with the strongest prohibition. A decision has also been issued by the Council of Senior Scholars permitting cooperative insurance, which consists of donations from benefactors, and its aim is to help the needy and the afflicted. Nothing returns to the participants from it, neither capital, nor profits, nor any investment return; because the participant’s intention is the reward of Allah, Glorified and Exalted is He, by helping the needy, and he does not intend a worldly return. This falls under the saying of Allah the Exalted:
And cooperate in righteousness and piety, but do not cooperate in sin and aggression.
وَتَعَاوَنُوا عَلَى الْبِرِّ وَالتَّقْوَى وَلاَ تَعَاوَنُوا عَلَى الإِثْمِ وَالْعُدْوَانِAnd Allah is engaged in helping the worshipper as long as the worshipper is engaged in helping his brother.
والله في عون العبد ما كان العبد في عون أخيهinstitutions and companies have been deceiving people and inverting the truth, by naming the forbidden commercial insurance "cooperative insurance," and attributing the opinion of its permissibility to the Council of Senior Scholars; in order to mislead people and advertise for their companies. The Council of Senior Scholars is completely innocent of this action; because its decision is clear in distinguishing between commercial insurance and cooperative insurance, and changing the name does not change the reality. And for the purpose of explaining to people and exposing the deception, and refuting the lie and slander, this statement was issued. And may Allah send blessings and peace upon our Prophet Muhammad, and his entire family and companions. The Grand Mufti of the Kingdom of Saudi Arabia, and the Chairman of the Council of Senior Scholars, and the Chairman of the Permanent Committee for Scholarly Research and Ifta Abdul Aziz ibn Abdullah ibn Baz
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.