The Ruling on Cooperative and Commercial Insurance
Machine translationRead the Arabic original
Question:
A letter reached the program from a listener who identified himself by the letters (K), (N), and (B) from Riyadh. Our brother says: In the name of Allah, the Most Merciful, the Most Compassionate. Your Eminence, Father Shaykh Abdul Aziz ibn Baz (may Allah preserve him), is it true that a fatwa was issued by your Eminence permitting comprehensive car insurance, as published in the attached advertisement in one of the newspapers two days ago? Please clarify this in the program: Light on the Path. May Allah reward you with good. And if nothing has been issued by you, please have this clarified in the newspapers.
And the advertisement was attached, Your Eminence. Do you see any problem with me reading the advertisement?
The Shaykh: Yes.
The presenter: The advertisement says: In the name of Allah, the Most Merciful, the Most Compasspliant. [Al-Ma'idah: 2]. Islamic Insurance Company Limited. Good news for the residents of the Northern Region... for government departments... for companies... for institutions... for individual properties. Given the importance of insuring property and its permissibility by the decision of the Council of Senior Scholars in the Kingdom of Saudi Arabia following their meeting on this matter, headed by His Eminence Shaykh Abdullah ibn Hamid, President of the Supreme Court of the Kingdom, as President, and His Eminence Shaykh Muhammad Ali al-Harkaan, Secretary General of the Muslim World League, as Vice President, and His Eminence Shaykh Abdul Aziz ibn Abdullah ibn Baz, and their issuance of Decision No. (51) permitting cooperative insurance instead of commercial insurance. Accordingly, with the praise of Allah, the final agreement was signed in the city of Jeddah to establish a headquarters for the Islamic Insurance Company. Ibrahim ibn Abdullah al-Mutaww is the authorized agent for the Northern Region, followed by Al-Jawf, Al-Qaryat, Arar, and so on. They mentioned the items they insure. And our brother, the listener, asks Your Eminence, as this letter began?
Answer:
Yes, a decision was issued by the Council of Senior Scholars permitting cooperative insurance and forbidding commercial insurance. And I am explaining to the listener the reality of this and that. What was issued by the Council as permissible is cooperative insurance, which is when a group of people come together to participate in cooperative insurance, where each one contributes a specific amount of money on the condition that this money is for limited benefits. For example, they agree that this money is for any disasters that may occur among them, and they spend from this money on them. Or if one of them becomes poor, they spend on him from this money. And the like of what they spend in the ways of righteousness and cooperation among them, and not for trade or obtaining profits. Rather, that is for doing good among them, for their poor and for those among them who are struck by a disaster, and the like of that from the Muslims to help them, not with the intention of profit or increase. This is cooperative insurance.
That the people of a village or tribe or a group of employees come together on a specific amount of money from them, where each one contributes so much every month, or so much every year, and they agree that this money is spent on what they may be afflicted with from causes: car collisions, car overturns, disasters that strike some of them. They spend on the one who was afflicted from this money, and the debt or blood money is paid on his behalf, and his poverty is alleviated, and his needs are bought for him from this money. This is not their money, but it is for the ways of righteousness and good deeds among them. And the intention is not profit and trade, so that they insure so-and-so's car, or so-and-so's car. No. Rather, the intention is that they benefit from it.
And there is no objection to their appointing an agent to trade in it, and the profit is for this benefit, and for this project, not for them. Rather, the profit is for this project. This is the cooperative insurance that the Council of Senior Scholars approved, and a decision was issued regarding it, which was submitted to the High Authority, to the position of the Custodian of the Two Holy Mosques.
And it is not the insurance that people know as commercial insurance, which is that you insure your car with a company, or your house, or your eye, or your leg, or your child, or so on. This is forbidden. And this is the second type, which is called commercial insurance. It is when a person goes to a company or a merchant and gives him a specific amount of money every month, or every year, on the condition that he will pay him what may happen to his car, or what may happen to him if he dies, or the like of that, in exchange for the money he gave. This is called commercial insurance. Sometimes it is on life, sometimes it is on the person if he is struck by a collision or other, sometimes it is on his car, sometimes it is on his house, and so on. This is the forbidden one. This is commercial insurance, and it is forbidden because of the excessive uncertainty in it, and because of the usury or interest in it; because he pays a little money and takes a lot of money. And perhaps he spends a lot of money and is not struck by a disaster, so his money is lost. Thus it becomes excessive uncertainty and usury or interest. And perhaps he pays a hundred and takes thousands because of what may happen to him.
So the result is that it is forbidden because of the excessive uncertainty in it, and because of the usury or interest in it. This is called commercial insurance. And a decision was issued regarding its prohibition. With this, the difference between the two types becomes clear. Commercial insurance is for the benefit of the person; he wants it to pay him what may be destroyed of his car, or house, or farm, or animal, or other, or even himself. He may be safe, or even if he dies, he is safe for his heirs, so-and-so and so-and-so. Or he is struck and dies, or is broken, or so on, and so-and-so and so-and-so is paid to him. This is commercial insurance. And this company that was advertised, if its intention is this, then this is not cooperative insurance. And this title would be deceptive. And this is not permissible. But if their intention is that they do good among themselves regarding what may happen to them if one of their cars is destroyed, or if one is struck by a collision, or debt, or poverty among them, and their intention is not profit, but rather their intention is cooperation among themselves from this aforementioned money, in which they may appoint someone to manage it so that it increases, and so that it is benefited from, but not with the intention of trade, but rather the intention is their cooperation among themselves to raise the level of their poor and alleviate his poverty, and pay off his debt, and compensate him for what may happen to his car, or happen to himself, or happen to his house, or the like of that, not with the intention of profit and interest. And Allah knows best.
The presenter: May Allah reward you with good. Your Eminence! It is observed that such an advertisement has made the fatwa fit its trade. These people, as appears from the advertisement, are purely commercial. They insure against accidents, and against currency, and against breach of trust, and against theft, and against civil liability, and all risks.
The Shaykh: We will request their system, if Allah wills, and we will do what is necessary regarding what they deserve in this advertisement if it is contrary to what was issued in the decision. We ask Allah to guide everyone.
The presenter: O Allah, amen. It is observed that it is completely contrary to the fatwa, Your Eminence?
The Shaykh: This is the apparent meaning of the advertisement.
The presenter: Yes, that it is completely contrary?
The Shaykh: We will ask about it further. I say: We will ask about it, if Allah wills.
The presenter: Then: I will keep the advertisement with you, Your Eminence?
The Shaykh: If Allah wills. Yes.
The presenter: May Allah reward you with good.
A letter reached the program from a listener who identified himself by the letters (K), (N), and (B) from Riyadh. Our brother says: In the name of Allah, the Most Merciful, the Most Compassionate. Your Eminence, Father Shaykh Abdul Aziz ibn Baz (may Allah preserve him), is it true that a fatwa was issued by your Eminence permitting comprehensive car insurance, as published in the attached advertisement in one of the newspapers two days ago? Please clarify this in the program: Light on the Path. May Allah reward you with good. And if nothing has been issued by you, please have this clarified in the newspapers.
And the advertisement was attached, Your Eminence. Do you see any problem with me reading the advertisement?
The Shaykh: Yes.
The presenter: The advertisement says: In the name of Allah, the Most Merciful, the Most Compasspliant.
And cooperate in righteousness and piety, but do not cooperate in sin and aggression.
وَتَعَاوَنُوا عَلَى الْبِرِّ وَالتَّقْوَى وَلا تَعَاوَنُوا عَلَى الإِثْمِ وَالْعُدْوَانِAnswer:
Yes, a decision was issued by the Council of Senior Scholars permitting cooperative insurance and forbidding commercial insurance. And I am explaining to the listener the reality of this and that. What was issued by the Council as permissible is cooperative insurance, which is when a group of people come together to participate in cooperative insurance, where each one contributes a specific amount of money on the condition that this money is for limited benefits. For example, they agree that this money is for any disasters that may occur among them, and they spend from this money on them. Or if one of them becomes poor, they spend on him from this money. And the like of what they spend in the ways of righteousness and cooperation among them, and not for trade or obtaining profits. Rather, that is for doing good among them, for their poor and for those among them who are struck by a disaster, and the like of that from the Muslims to help them, not with the intention of profit or increase. This is cooperative insurance.
That the people of a village or tribe or a group of employees come together on a specific amount of money from them, where each one contributes so much every month, or so much every year, and they agree that this money is spent on what they may be afflicted with from causes: car collisions, car overturns, disasters that strike some of them. They spend on the one who was afflicted from this money, and the debt or blood money is paid on his behalf, and his poverty is alleviated, and his needs are bought for him from this money. This is not their money, but it is for the ways of righteousness and good deeds among them. And the intention is not profit and trade, so that they insure so-and-so's car, or so-and-so's car. No. Rather, the intention is that they benefit from it.
And there is no objection to their appointing an agent to trade in it, and the profit is for this benefit, and for this project, not for them. Rather, the profit is for this project. This is the cooperative insurance that the Council of Senior Scholars approved, and a decision was issued regarding it, which was submitted to the High Authority, to the position of the Custodian of the Two Holy Mosques.
And it is not the insurance that people know as commercial insurance, which is that you insure your car with a company, or your house, or your eye, or your leg, or your child, or so on. This is forbidden. And this is the second type, which is called commercial insurance. It is when a person goes to a company or a merchant and gives him a specific amount of money every month, or every year, on the condition that he will pay him what may happen to his car, or what may happen to him if he dies, or the like of that, in exchange for the money he gave. This is called commercial insurance. Sometimes it is on life, sometimes it is on the person if he is struck by a collision or other, sometimes it is on his car, sometimes it is on his house, and so on. This is the forbidden one. This is commercial insurance, and it is forbidden because of the excessive uncertainty in it, and because of the usury or interest in it; because he pays a little money and takes a lot of money. And perhaps he spends a lot of money and is not struck by a disaster, so his money is lost. Thus it becomes excessive uncertainty and usury or interest. And perhaps he pays a hundred and takes thousands because of what may happen to him.
So the result is that it is forbidden because of the excessive uncertainty in it, and because of the usury or interest in it. This is called commercial insurance. And a decision was issued regarding its prohibition. With this, the difference between the two types becomes clear. Commercial insurance is for the benefit of the person; he wants it to pay him what may be destroyed of his car, or house, or farm, or animal, or other, or even himself. He may be safe, or even if he dies, he is safe for his heirs, so-and-so and so-and-so. Or he is struck and dies, or is broken, or so on, and so-and-so and so-and-so is paid to him. This is commercial insurance. And this company that was advertised, if its intention is this, then this is not cooperative insurance. And this title would be deceptive. And this is not permissible. But if their intention is that they do good among themselves regarding what may happen to them if one of their cars is destroyed, or if one is struck by a collision, or debt, or poverty among them, and their intention is not profit, but rather their intention is cooperation among themselves from this aforementioned money, in which they may appoint someone to manage it so that it increases, and so that it is benefited from, but not with the intention of trade, but rather the intention is their cooperation among themselves to raise the level of their poor and alleviate his poverty, and pay off his debt, and compensate him for what may happen to his car, or happen to himself, or happen to his house, or the like of that, not with the intention of profit and interest. And Allah knows best.
The presenter: May Allah reward you with good. Your Eminence! It is observed that such an advertisement has made the fatwa fit its trade. These people, as appears from the advertisement, are purely commercial. They insure against accidents, and against currency, and against breach of trust, and against theft, and against civil liability, and all risks.
The Shaykh: We will request their system, if Allah wills, and we will do what is necessary regarding what they deserve in this advertisement if it is contrary to what was issued in the decision. We ask Allah to guide everyone.
The presenter: O Allah, amen. It is observed that it is completely contrary to the fatwa, Your Eminence?
The Shaykh: This is the apparent meaning of the advertisement.
The presenter: Yes, that it is completely contrary?
The Shaykh: We will ask about it further. I say: We will ask about it, if Allah wills.
The presenter: Then: I will keep the advertisement with you, Your Eminence?
The Shaykh: If Allah wills. Yes.
The presenter: May Allah reward you with good.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.