Dr. Najatullah Siddiqui, a prominent Muslim scholar, an intellectual and King Faisal Award winner in Islamic Economics, author of the several books and papers on the Islamic Economic system, analyses the reasons behind the suspicions against the insurance in his book “Insurance – in the Islamic Economics”.
In the foreword of his book, he says:

While studying the contemporary Islamic literature on insurance, It is observed that its technical basics have not been comprehended, neither its vital role in economics has been analysed. The common factor in all the literature available in English, Urdu and Arabic on insurance is that the “objectives and the principles” of the shariah are not focused on the wisdom of the Quran and the Sunnah but on the principles of fiqh.

The Ulema visualize the issue of insurance from Fiqh’s point of view and search the objectivity of the insurance in the Chapters of ” Al Mawalaat, Wakalat, Kafalat, and Shirkat wa Madaribat”. When they find that the insurance transaction does not fall under any of these categories, they conclude that the insurance is illegitimate. The question is; what commodities are deemed to be “Maal Mutaqawwim” and what factors can be defined as “Mahalle Uqd”? The factors in insurance that constitute the Maal Mutaqawwim and the Mahalle Uqd are searched but are not found in the scriptures of Fiqh’s Chapters, so they disqualify the insurance. Virtually, there are certain factors, which are purely a product of changing times which the man has not experienced before. For example, what kind of dealings and the methods can be determined as Maroof? What are those commodities that can be termed as “Maal” (goods or commodities) and that could be bought or sold? The objective of looking for such factors from the Shariah point of view should be that whether or not the justice is violated in such dealings, whether or not somebody is deprived of his rights, Whether or not the collective benefits of the society are damaged? Whether or not such dealings clash with the overall value system of Islam?
The research should concentrate on finding whether the new methods and new contracts are helpful in achieving the actual Shariah goals or are harmful to the Shariah. It should concentrate on whether the fair needs of the human beings as mentioned in the Quran and the Sunnah are protected or damaged, and whether such evils are taking birth which Islam wants to eradicate from a clean society. In this work, it is not possible to elaborate an eternal list of legitimate methods of dealings or contracts, neither it is possible to eternise the factors of Maal Mutaqawwim, or Mahalle Uqd. The principle references given from the fiqh were drafted by the Sharia’s experts hundreds of years ago on the same principle of “Maaroof” i.e prevailing traditions in the society at that time, and we are advised to do the same. It is inevitable with the changing times.

For a thorough consideration on insurance, we must determine the true status of our Fiqh’s capital. While making the rules and regulations, it is human nature that the man considers only those examples which either have occurred or would possibly occur at that particular time. The guidelines which our Fiqh scholars followed at the time of drafting the detailed laws were, of course, extracted from the divine eternal guidance of the Quran and the verdicts given by the Prophet Mohammad (pbuh) , nevertheless, the detailed Fiqh laws were apparently influenced and affected by the contemporary circumstances and the atmosphere prevailing in the society at that time.

The human life has changed drastically in the recent past. For example, huge increase in the population, incredible developments in the means of transportation, communication, science and technology, organization of economics and society, increasing knowledge about the pros and cons of the life’s various aspects. New institutions have come up due to these revolutions. New ways of functioning and new types of the businesses and contracts have come into existence. It is inevitable in these circumstances to think for new strategies under the guidance of the Quran and the Sunnah.
Old Fiqh can not guide in these modern issues.

Like other modern issues, in the background of the reconstruction of an Islamic society, the subject of the research on insurance is also in the preliminary stage. I request the educated elite to participate in this process of thinking and debate. Pray, May Allah bestow his help upon us to go ahead in this field.

(M.Najatullah siddiqui, Aligarh, 1st September, 1973, Translation from Urdu by the ِAuthor)