The Ruling on Commercial Insurance

Question:
The questioner asks, saying: I am a merchant, and I have warehouses. I import my goods from abroad via open account, meaning without letters of credit, and naturally for large amounts. Since these amounts are a debt on me to the people who send them to me, and I wish to insure those warehouses to protect them from events such as fire and the like, could you please give me a fatwa from the Sharia perspective? Is insuring them forbidden or lawful? May Allah guide you, and thank you.

Answer:
The Council of Senior Scholars of the Higher Committee for Scholarly Research and Ifta studied the issue of insurance about two years ago and decided that commercial insurance is forbidden because it contains excessive uncertainty (gharar) and usury (riba). Therefore, insuring warehouses, or a person, or a car, or anything else—this is the correct ruling on commercial insurance: it is forbidden. Even if some people have issued a fatwa that it is permissible, there is no basis for that, as it is a transaction that contains excessive uncertainty and usury; therefore, it is not permissible.
However, there is nothing wrong with cooperative insurance among people if a group gathers and agrees on a fund that they contribute to, where each person contributes a certain amount, and when disasters occur among them, they use this fund to help each other. This is cooperative insurance, which contains no usury and no excessive uncertainty. As for commercial insurance, which contains excessive uncertainty and usury, that is not permissible.