A scholar in economics, a permanent member of Islamic Development Bank’s Advisory Committee, read his paper in International Seminar on Takaful, organized by IDB on 12-14 August, 1996. Since Malaysia is the fastest growing economic giant based on the Islamic economic system, Malaysian scholars’ and experts’ views are more practical and reliable.

He says in his paper:

As the essence of insurance could be seen in the system of mutual help in relation to the custom of blood money under the Arab tribal system, Muslim jurists generally accepted that the concept of insurance does not contradict the Shariah. In fact, the principle of compensation and group responsibility was accepted by Islam and the holy Prophet Mohammad(ﷺ) . Muslim jurists acknowledged that the basis of shared responsibility in the system of “Aqila” as practiced between Muhajir and Ansar laid the foundation of mutual insurance.

It is also an established view that Islamic insurance was first established in the early second century of the Islamic era. This was the time when Muslim Arabs started to expand their trade to India, Malay Archipelago and other countries of Asia. Due to long journey/voyages, they often had to incur huge losses because of mishaps, misfortunes or the robberies along the way. Based on the Islamic principle of mutual help and cooperation in good and virtuous acts, they got together and mutually agreed to contribute to a fund before they started their long journey. The fund was used to compensate anyone in the group who suffered losses due to any mishap. In fact, this was copied by the Europeans which was later known as Marine insurance.

From the above research, one can conclude many important guiding factors from the life of the Prophet Mohammad (ﷺ) like: