Abstract
The primary objective of insurance is to facilitate co-operation between two parties, in which one party offers to protect the other party against unexpected peril. In such a scenario, the parties agree that one party will pay a particular premium to the other party, who undertakes to compensate the former in consideration of the paid premium(s) against an accidental loss or injury, which might happen to the subject matter of the contract. In an insurance contract, the party who pays the premium(s) is called the insured or the policyholder, and the other party, who undertakes to compensate against the risk, is known as the insurer. The contract itself is often referred to as the policy. The payment made by the insured is identified as the premium, while the event insured against is usually termed the risk.
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Notes
- 1.
The suggestion is made relying on the logical fact that an insurance contract under Islamic law operates on the basis of the principle of Al-Mudharabah (profit and loss sharing). Hence, the benefits (over and above the policy) should also be disbursed according to this profit- and loss-sharing technique. It is sincerely believed that this suggestion could work well in an equitable nature.
- 2.
Since a general policy is only for a short period, in an effort to be fair to the insured, the insurer has to deduct the service charges (for the management of the company) including the percentage for the charitable account from the paid-premiums according to the company’s financial policy.
- 3.
Mudharabah is a mutual financing technique in Islamic commercial law in which two or more parties agree that one will provide capital while the other may offer a service or skill in a particular business in view of sharing the profits and losses accordingly. Today’s Islamic banks and insurance companies operate on the basis of Al-Mudharabah, which is an alternative to interest-based transactions.
- 4.
The Islamic part is based on (with possible revision) one of my unpublished manuscripts entitled “Islamic Insurance: Its Original Sketch and Development Scenario.”
- 5.
See “al-‘Aqila”, in Gibb, op. cit., p. 29.
- 6.
The literature which focuses on the ruling of Mudarabah, Musharakah, Wakalah and Wadiah etc.
- 7.
Bukhari and Muslim, (agreed), Kitab al-Wahi, (trans. Eng.) Khan, M. Mohsin, op. cit. Vol. 1, No. 1, p. 1.
- 8.
Sahih al-Muslim, See An-Nawawi, Riyadhussalihin, (trans by) Ali, Maulana Syed Muhammad et al., Riadussaliheen, Vol. 1 Bangladesh Islamic Centre, Dhaka, 1990, No. 7, p. 5.
- 9.
Among the cases, the decision of Amtul Habib vs Musarrat Parven (1974) PLD 185 (SC) in which it was held that the nominee in a policy shall not be regarded as an absolute beneficiary but a mere trustee.
- 10.
The Principle of ‘al-Daman’ is highlighted in detail in Hamilton, Charles, The Hedaya, op. cit, Vol. II, pp. 318 ff.
- 11.
See, Government of Pakistan, Council of Islamic Ideology, Offences against Human Body, (Enforcement of Qisas and Diyat) Draft Ordinance, 1981, at S.94.
- 12.
See Mudharabah Companies and Mudharabah bond Control Ordinance 1980 (The Gazette of Pakistan, extra, June 26, 1980, part 1) Article 2(2).
- 13.
For further detail, on “Mudharabah” see Niazi,op. cit., at 227ff and for “Sharikah,” see p. 420 f.
- 14.
Sahih al-Bukhari, Kitabul Adab, op. cit., Vol. 8, No. 725, p. 477 f.
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Billah, M.M. (2019). Governing Principles of Takaful and Re-takaful Products. In: Islamic Insurance Products. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-17681-5_3
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DOI: https://doi.org/10.1007/978-3-030-17681-5_3
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