In the books of Ahadith, Sahi Muslim and Sahi Bukhari Chapter Kitabul Buy’u, there are six Ahadith, similar in the context, prohibiting the usury.
The Prophet Mohammad (ﷺ) says that any transaction or exchange of similar species with more quantity is Riba, like gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt, like for like and from hand to hand. Both parties in such a transaction or exchange are considered to be exercising usury and both are committing sin. The exchange should be in equal quantity. None should exchange an absent with what is present.
The Messenger of Allah (ﷺ) expressed his curse for the receiver of the Riba, the payer, the middle man or the witness thereof, all are equally culpable. That means, if someone exchanges higher quantity of lower quality dates with a smaller quantity of higher quality, this transaction is Riba. The Prophet Mohammad (ﷺ) has asked the buyer to sell out the lower quality dates against money or any other commodity and then purchase the higher quality dates.

Since money against money is transacted in insurance, it is generally taken for granted that this is an exchange of same species and, thus, this is illegitimate.

Before we analyse the insurance in the light of the above Ahadith, let us examine the application of the Ahadith themselves. Every sensible reader will realise that the Ahadith are referring and purifying (correcting) to a particular custom or a tradition which definitely had some concealed objectionable practice in it. Unless we know what was the practice prevailing at that time behind exchanging the gold for gold or silver for silver, etc. we can not reach to the final conclusions. At every place in the world, there are certain acts apparently simple in looking but have lot of wrong doings hidden in them. Only the native of that place can understand those practices.

For example, in our society, in the marriages, the bridegroom or his guardians demand nothing but say simply that: “Whatever you give by consent (KHUSHI SE), we are happy
But what is meant by “Khushi se“? An Indian or Pakistani knows the actual practice behind these words but an American or European does not know what exactly this system is. It is the worst social blackmailing system in which the bridegroom expects lot of money, articles and properties as bribe from the bride; otherwise he would not send the proposal to those girls whose parents are not capable of giving this dowry.
They do not demand directly but indirectly they beg everything. If a bride fails to bring enough of dowry, her life becomes miserable. Were the system of KHUSHI SE existing during the period of the Prophet Mohammad (ﷺ) , he would have cursed for this act in very clear words.

Similarly, the actual tradition behind the exchange of gold for gold or dates for dates is not known. Apparently there seems nothing wrong in exchanging low quality dates with a smaller quantity of high quality dates. It appears to be a simple business deal in which both parties are content, so it should not have been prohibited by the Prophet Mohammad (ﷺ) but he specifically banned such transactions. It clearly means that there was some hidden act of fraud or gambling, etc. existing behind this act which, unfortunately, is not known to us. There are many other things too which were known that time but are not known now.

For example, the meanings of the Quranic verses like Yaa Seen, Alif Laam Meem, Noon etc. The scholars say that the true meanings of these verses were known between Allah and His Messenger Mohammad (ﷺ) and other people do not have access to the meanings of those verses. The Quran as well as the Prophet Mohammad (ﷺ) had prohibited from arrow throwing. Fortunately, we know from the scholars that the tradition behind the arrow throwing was the gambling. Therefore, we know what exactly is prohibited i.e. it is gambling that is prohibited, not the arrow itself.

Jurists agree on the point that Riba is prohibited but there is a conflict of opinion as to the scope of this prohibition. Whether it is confined to the similar items enumerated in the above traditions or is extended to all other items of the same description. Some of the Jurists are of the opinion that its applicability is confined to the above mentioned six items only, while others maintain that it applies to all other commodities of the same kind. Those who agree to other than the six commodities differ in the point of effective cause or illa of such prohibition. In the laws presented by Imam Shaf’ai and Imam Hanbal, the Riba rules are applied to the barter of all foodstuffs. In Maliki law only to foodstuff which can be stored and preserved, while in Hanafi law they are extended to all tangible commodities normally sold by weight or measure.

However, there has never been consensus of the jurists on the interest oriented transactions and commodities, neither there was any similar opinion about the criteria of legitimacy or illegitimacy. For example, one group says Riba applies only on the six commodities mentioned above. Another group says that it will apply on all weighable and measurable commodities. A third group says it applies to only those food items, which can be stored. A commodity liable to interest in one group’s Fiqh is in another group’s view, not at all usury. The criteria of Riba too differ from group to group. Some acts come under the usury in the law of one group but they are free from usury in the laws of another group.

One can realise that where there is no direct ruling on haraam or halaal in the Quran or from Ahadith, Ulema have different opin-ions, and no one is wrong as this is the ijtehad of each scholar or the jurist.

The Shariah does not regard it as sin if one follows an opinion of an Aalim( scholar) of his confidence provided that the intention is to please Allah and not any vested interests. As far as the Quranic “Nass” (the direct injuction in specific clear words) is concerned which is present in the Quran, there is no difference of opinion among the Ulema.