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Commercial vs. Cooperative Insurance (Concept and Operational Framework)

Author

Listed:
  • Zahoor Khan

    (Institute of Management Sciences, Peshawar)

  • Muhammad Rafiq

    (Institute of Management Sciences, Peshawar)

  • Amjid Amin

    (Institute of Management Sciences, Peshawar)

  • Asmat Ullah

    (Institute of Management Sciences, Peshawar)

Abstract

This paper is an attempt to evaluate theoretically the views of Shariah scholars regarding contemporary insurance practices and its Shariah alternatives. The Shariah scholars' views have divided into two different extremes i.e. no concept of insurance in Islam and conventional insurance is valid in Islam. After lengthy discussions and debates a consensus emerged among the scholars that although the nature and objectives of insurance is not contradictory to Islamic principles however, the present form of this business involves elements of interest. uncertainty, gambling etc. which are strictly prohibited in Islam. Islamic insurance (Takaful) unlike the conventional insurance was suggested as substitute for contemporary insurance. On the basis of this suggestion many Takaful companies have been established and running their business quite successfully in various countries such as Malaysia, Bahrain, Sudan, Pakistan etc. By using wakalah-waqf model of Pak-Kuwait Takaful company Pakistan limited, comparison has been made to show similarities and dissimilarities between Islamic and conventional insurance. Finally, we may conclude that the concept of insurance is not contradictory to Shariah if refined, by removing undesired elements of Riba, Qimar and Gharar.

Suggested Citation

  • Zahoor Khan & Muhammad Rafiq & Amjid Amin & Asmat Ullah, 2010. "Commercial vs. Cooperative Insurance (Concept and Operational Framework)," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 2(2), pages 6-12, October.
    • Handle: RePEc:bec:imsber:v:2:y:2010:i:2:p:6-12
    DOI: .
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    File URL: http://imsciences.edu.pk/files/journals/Vol.%202%20No.2%20October%202010/Paper%20(2).pdf
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    Keywords

    Shariah; Takaful; insurance; riba;
    All these keywords.

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