Legitimacy of Insurance

All praise is due to Allah, Lord of the worlds, and peace and blessings be upon our master Muhammad, the Seal of the Prophets, and upon all prophets and messengers. It is well known that insurance is an innate human need and a necessary part of dealings in trade, economics, investment, and people’s livelihoods, as it helps address fluctuations and risks that may arise and cause harm to individuals and communities—whether through natural forces or through human actions. Western economic thinkers exploited this need extensively and promoted commercial insurance aimed at profit and gain, insuring people and their property despite elements of usury, gambling, and excessive uncertainty, both in their lands and in Muslim lands as well. This increased the hardship and loss in the absence of an Islamic economic system characterized by purity, lawful earnings, and sound, safe transactions. Consequently, many Muslims avoided engaging in commercial insurance and working within it due to its prohibition, while others resorted to it out of necessity to meet their needs despite feeling religious discomfort. Moreover, the idea of an Islamic economy remained for a long time a dream-like concept with no foundation in real life, as people lived under the influence of Western methods in behavior and transactions. For all these reasons, the Muslim who is keen on his faith felt like a stranger in his own home and country. It became necessary to find an alternative that removes religious hardship and eases difficulty, considering that Islam is the final message and an integrated system suitable for all times and generations, revealed by a All-Powerful Creator who knows the universe and its secrets. Therefore, a number of scholars of Islamic law and economics, as well as financiers and business leaders in the Islamic world—especially in Sudan—came together, seeking Allah’s reward, to consult and establish a company based on cooperative insurance. This was to encourage the Islamic economy and to remove hardship from Muslim policyholders, so that a believer can insure his property with peace of mind—calm and reassured—knowing that he is cooperating and contributing with other Muslims to prevent danger and ward off harm in a spirit of donation and cooperation upon righteousness, as Allah says: “Cooperate in righteousness and piety, and do not cooperate in sin and aggression.”