1. Al Aqilah or Ma’aqil:
The ancient Arab Tribal custom. There are many encyclopedias recognizing the fact that the nature of insurance practice originated from the ancient Arab’s practices. In this system, if any member of a tribe was killed by a member of another tribe, the heir of the victim would be paid an amount of blood money as a compensation by the close relatives of the killer. Those close relatives of the killer were addressed as ‘Aqila’ or ‘Ma’aqil’ in Arabic terminology. The word ‘Aqila’ means ‘Asaba’ which denotes paternal relatives of the killer. So, it was a common practice among them to contribute on behalf of the killer. Readiness of the ancient Arabs with individual contribution at that time to pay compensation seemed to be a kind of financial protection for the heir of the deceased against an unexpected death of the victim.

2. Practice of the holy Prophet Mohammad (ﷺ):
As Dr. Mohammad Hameedullah has described in detail, the development of insurance practice during the time of the holy Prophet Mohammad (ﷺ) can be seen from various situations. Numerous verdicts are found in the history whereby the Prophet Mohammad ordered to pay the blood money or Fidya.

First constitution of Madinah is the greatest example how the Prophet Mohammad (ﷺ) had legislated the insurance concept. The constitution of Madinah was declared shortly after the migration to Madinah in 622 A.D. It was meant for the people of Madinah including the Muhajireen, Ansar, Jews and Christians. This was the first social insurance policy announced by the first ever Muslim state. This appeared into three modules:

* Diyat (Blood money):
in Article 3 of the constitution the Prophet Mohammad (ﷺ) ruled that: “The immigrants among Quraish shall be responsible for their word and shall pay their blood money in mutual collaboration”. Similarly, other tribes like Banu Awf, Banu Harith, Ows, Khazraj, Banu Najjar, Banu Jusham etc. were also obliged to pay the blood money in mutual collaboration relying on the doctrine of ‘Aqila’.

* Fidya (Ransom):
Prophet Mohammad (ﷺ) declared that: The immigrants of Quraish shall be responsible for releasing the prisoners by way of paying their ransom, so that the mutual collaboration among the believers be in accordance with the principle of goodness and justice. Likewise, all other tribes were obliged to follow this rule.

* Alms and charity:
Prophet Mohammad (ﷺ) declared that the society will be responsible to establish a joint venture (Baitul Maal) with a mutual understanding towards providing necessary aid to the needy, sick and poor.

3. Practice of the companions:
Aqila system had further been developed in the period of second Khalifah Omer Bin Khattab (رضي الله عنه). He commanded that a Diwan of Mujahideen (A committee of the collectors) be established in various districts who would extend mutual cooperation to contribute the blood money for murder of their own tribesman committed by one of the same tribe.

4. Developments in 14th to 17th century:
During this period a Sufi order of the Kazeeruniyya was very active especially in the port cities like Malabar, China, etc. This order served as a kind of marine insurance company. It had been associated with the tomb of Mohammad Ishaq Ibrahim ibn Shahariyah (963-1035AD) whose blessings were considered as a protection against peril during the sea voyage.

5. Developments in 19th century:
The well known jurist, scholar and lawyer Ibn Abidin Hanafi (رحمة الله عليه) (1784-1836), the author of the well-known and one of the most authentic books on Islamic jurisprudence “Raddul Mukhtar” became the first person to draft the methodology and the legal entity of the insurance. Until now the insurance was continuing as a customary practice. He introduced the insurance in the context of a legal constitution. He too faced opposition from the traditional conservative Mullas but his idea prevailed and prompted many to involve in the insurance business. King Muller writes that the Muslims began to practice insurance business and it tempted the Europeans to become the insurer themselves.

6. Development in the 20th century:
The well known scholar, jurist and the strong follower of Jamaluddin Afghani (رحمة الله عليه), the hero of the Pan Islamism, Mohammad Abdu (رحمة الله عليه) issued two fatwas mentioning that the insurance transaction is like the transaction of Mudarebah. Secondly, a transaction which is similar to endowment or life insurance is legal.

A number of books have been written by the world renowned Islamic scholars during the last decades of the 20th century, which laid the foundation of several Islamic banks and insurance orgainsations. Some of them which brought an awakening and curiosity to more research work are:
King Faisal Award winner in Islamic Economics :
Dr. Mohammad Najatullah Siddiqui’s “Insurance in Islamic Economic”– 1985.
Mustafa Ahmed Zarqa’s, Syria’s Nizamul Tameen – 1984.
Abdullah bin Faid Al Mahmoud’s Ahkam Al Uqood Tameen-1982.
Saad abu Zaid’s At Tameen Binal Khator Wal Iibhahat – 1989

Hundreds of papers too are available about the legality of the insurance on the websites and in the libraries including the reports on seminars held in various parts of the world.