Conventional Insurance:
In conventional term, Insurance is a way to provide security and compensation to what is valuable in the event of its loss, damage or destruction based on the principle of risk taking and specultion.
According to Shariah, there are two aspects of conventional insurance, namely:
1. Conceptual aspect
2. Practical aspect
So far as the concept of insurance is concerned, it is to cover the risk of loss, or fortunate many helping the unfortunate few. This concept is not only recognized, but also encourage and rewarded by islam.
"Help one another in righteousness and piety, but do not help one another in sin and transgression".(Al Quran).
The principles of muwalat, Maaqil, Kafalah(Guarantee) Dhaman( indemnity) and the establishment of islamic welfare state by the Holy Prophet (S.A.W) Waqf and Tabarru support this concept. The practical aspect of insurance, however is forbidden due to the following elements.
Qimar or Maysir (Gambling)
Riba( interest)
Since both are clearly prohibted in the Holy Quran and Ahadith.
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