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Ruling on Taking Reinsurance Commissions

Answered according to Shafi'i Fiqh by Darul Iftaa Jordan
What is the ruling when Islamic insurance companies take reinsurance commissions from non-Islamic reinsurance companies or other companies in the form of shares, and deposit them in the fund of their shareholders?

Answer:

All perfect praise be to Allah, The Lord of The Worlds, and may His blessings and peace be upon our Prophet Mohammad and upon all his family and companions.

The Iftaa` Council of the Hashemite Kingdom of Jordan has already pointed out, in Resolution (46)/2001, that reinsuring with non-Islamic reinsurance companies is among the essential needs of this age. Therefore, the Council is of the view that: "It is permissible to deal with non-Islamic reinsurance companies as long as there aren`t Islamic ones, and calls for founding Islamic reinsurance companies as soon as possible.

Should an Islamic Insurance company reinsure with an Islamic reinsurance company, it is permissible for the former to take the reinsurance commissions. But, if it reinsured with a non-Islamic reinsurance company, it isn`t permissible to take those commissions. However, it is permissible for the Islamic company to ask the non-Islamic reinsurance company to reduce the subscription amount, as viewed by  the Accounting and Auditing Organization for Islamic Financial Institutions(Criterion (41), Article (7/2)): "It isn`t permissible for the Islamic insurance company to take the reinsurance commissions, but it has the right to ask the non-Islamic reinsurance company to reduce the subscription collected by it."

In case the non-Islamic reinsurance company refused reducing the subscription amount, then the Islamic insurance company is allowed to take the reinsurance commissions provided that they are given to charities and used for the common good. And Allah knows best.

 

This answer was collected from the official government Iftaa Department of Jordan.

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