The committee in its session of December 1965, discussed the subject of insurance deeply and concluded as follows:

The issue of the insurance, according to Islamic law, is connected with transactions. As there are always two parties to a transaction, it falls under two categories:

1. Where both parties are Muslim:
In this case the nature of transaction prescribed by Islamic law should be strictly observed.

2. Where one party is Muslim and the other a non-Muslim:
This category has two aspects; either a Muslim shall have the power to decide the nature of transaction or he shall not have such power. If he has the power, the nature of the transaction prescribed by the Islamic law should be strictly observed. If he does not have the power, it is possible to make provision, in accordance with the opinion of a committee of Muslim Jurists, to enable a Muslim to take part in such transactions under certain terms and conditions. The issue of the insurance, in the opinion of the committee, comes under the latter.

The committee is of the opinion that insurance, in all its forms, is not free from Riba and gambling. While it is incumbent on a Muslim to adhere to the principles of Islam, the committee can not ignore the injunction of Islamic laws with regard to the protection of life and property. Taking into consideration the importance of insurance, which has penetrated deep into human life, the difficulties involved in conducting business without it and specially the need to protect life and property, it seems that Islamic laws provide provision for the insurance in case of emergency.

Note:
Emergency implies a danger of unbearable loss to one’s life, property and danger to his dependants. The decision whether such emergency has arisen or not, depends upon the opinion of the person in danger, which is to be formed after due consultation with Ulema and in full realisation of one’s own responsibility to Allah.

(Source: “Insurance and Islamic law” written by Dr. Mohammad Muslehuddin, London, page 164,165. Newspaper Dawat, New Delhi, dated 4.3.1966. )