We have been approached by some businessmen who are in the insurance business operating as brokers for insurance. They want us to join on to an extension of their business as investors or shareholders as they require a large amount of capital. In principal, the extension is to create an underwriting company. An underwriting company writes policies directly for clients. So, if a customer requires insurance for their home, vehicle, commercial buildings then the underwriting company would directly insure the client. A premium is paid to the underwriting company as a profit. To insure the property or vehicle, the underwriting company secures this against a bond. This bond is held in a bank account somewhere and secured in the event it may be required. The proposal requires us to invest capital for the bond that is required by the insurance industry. This would act as security for the insurance against the policies. Our potential partner mentions that they are willing to waive or forgo any interest payments and structure this part differently. Not sure how relevant this is. We would like to understand whether this industry as an investment or a shareholder is permissible in Islam for us.
بسم الله الرحمن الرحیمAnswer
The default position regarding insurance is that it is prohibited due to garar (uncertainty) and also ribā (interest) and qimār (gambling) in many of the insurance products. Accordingly, it is not lawful to invest in a firm that provides insurance services.
قال الله تعالى: وتعاونوا على البر والتقوى ولا تعاونوا على الإثم والعدوان. وعن أبي هريرة قال: نهى رسول الله صلى الله عليه وسلم عن بيع الحصاة وعن بيع الغرر. رواه مسلم (١٥١٣). وقال شيخنا المفتي محمد تقي العثماني في فقهي مقالات (١/١٤٣): لہذا اگر کسی حرام کاروبار کے لئے وہ کمپنی قائم کی جارہی ہے، مثلا انشورنس کمپنی قائم کی جارہی ہے تو اس قسم کی کمپنی کے شیئرز لینا کسی حال میں بھی جائز نہیں۔
Allah knows best
2 Rajab 1439 / 19 March 2018
Approved by: Mufti Shabbir Ahmed and Mufti Muhammad Tahir