Working for Insurance Companies
Commercial insurance contracts are unlawful in Islam and making contracts or promoting them is not permissible unless one cannot find any other legitimate job, and that he intends to change his job the soonest.
Working for Insurance Companies
Promotion of commercial insurance contracts.
A Muslim may work for a commercial insurance company in Muslim minority countries, promoting its products.
The normal ruling on commercial insurance contracts offered by insurance companies which work for profit is that these are unlawful. What is permissible are contracts that the law of land make obligatory and what common needs make necessary. To work in promoting or marketing such contracts is only permissible in cases of necessity or in situations of great need that are treated like necessity. Whoever finds it necessary to work in such areas should have the intention to change his job at the earliest opportunity.
Social insurance that is not intended for profit and cooperative insurance that relies on donations and offering services are permissible. Therefore, these may be taken up and Muslims may work in these institutions provided that such institutions abide by Islamic requirements when investing their capital.
This is the view of the Assembly of Muslim Jurists of America (Decision 4-5) and the European Council for Fatwa and Research (Decision 2-18). Exceptions from the prohibition are limited to four cases, as follows:
The first case is that of necessity or a great need that is treated as necessity. This would be the case of a Muslim who cannot find a suitable job except in this type of company or one who has come to know of this ruling only after having been employed and he cannot find a suitable alternative.
The second case is that of a person who has specialized in insurance and cannot work in his field of specialization except in such companies.
The third case is working in administration and services, not in making contracts or promotion.
For any of these three cases to be permissible three conditions apply: (i) The person concerned should have done his best to find legitimate alternative employment without success; (ii) he intends to gain experience; or (iii) he intends to leave such companies once he finds a legitimate and suitable alternative.
The fourth case is that of one who works for such a company and he is able to convert it into a cooperative company that is lawful in Islam, whether he can do so by himself or in cooperation with others.
Commercial insurance contracts of are invalid because they lack clarity and involve elements of ignorance and gambling, as well as other aspects that render them invalid. The only types of contracts like these that are permissable are those which involve necessity or a common need that may be treated as necessity. Cooperative insurance, by contrast, is based on mutual help and removal of distress.
A different view was expressed by the late Shaikh Mustafa al-Zarqa who gave a ruling that commercial insurance is permissible. In the Islamic Fiqh Week organized by the University of Damascus on 15 Shawwal 1380 AH, 1 April 1961, he presented a paper to this effect. Again He advocated the same view in the tenth session of the Committee of Senior Scholars in Saudi Arabia held on 4 Rabi[ II 1397 AH (1987). The session discussed the subject thoroughly and adopted a ruling prohibiting all types of commercial insurance, including life policies and insuring commercial goods. Shaikh al-Zarqa was the only scholar to oppose this ruling.
Decisions by the Assembly of Muslim Jurists of America;
Decisions by the European Council for Fatwa and Research.
Decision by the Islamic Fiqh Academy
Mustafa al-Zarqa, Nizam al-Ta’min wal-Ra’y al-Shar'i fih.